95% of NFT Collections Hold No Value in Cryptocurrency, Study Finds
A recent study analyzing 73,257 Non-fungible Token (NFT) collections has revealed a grim reality for the marketplace. The study found that 95% of these collections currently have no value in cryptocurrency, specifically ether. This revelation comes just a couple of years after a massive surge in the NFT market.
The Worthlessness of NFTs
The study further highlighted that out of the collections analyzed, a staggering 69,795 of them have a market capitalization of zero ether, rendering them virtually worthless. Even within the higher-end NFT collections, the prevailing price for an NFT has dropped to as low as $5-$10.
Investor Profits vs. Retail Investor Losses
Interestingly, while venture capitalists and Wall Street investors made substantial profits by promoting NFTs as symbols of decentralization, financial inclusivity, and quick wealth, retail investors have experienced significant losses. This disparity has transformed the dream into a financial nightmare for many.
Crypto’s Lack of Regulations and Trust Issues
Former SEC official John Reed Stark criticizes not only NFTs but the entire cryptocurrency industry. He argues that crypto is not a secure “investment” due to its lack of regulations, transparency, and investor safeguards. Stark asserts that deceit and fraud are prevalent in the industry, creating an unfair environment. These critiques serve as a reminder that the crypto sector must address its issues to gain trust from all stakeholders.
The Shortcomings of Crypto as an Investment and Currency
Stark argues that crypto falls short in several areas. It is not a reliable “investment” due to the lack of rules, safety mechanisms, and susceptibility to fraud. The volatility, high fees, and inherent risk also undermine its viability as a “currency.”
The Challenges of Being a Store of Value and Safe Haven
Crypto’s inability to maintain stable value raises questions about its worth as a “store of value.” It also poses risks for individuals without access to traditional banking systems, making them vulnerable to manipulation. Furthermore, the absence of regulations and protective measures casts doubt on its suitability as a “safe haven.” While traditional banks have their flaws, crypto does not seem to provide a solution.
Hot Take: NFTs Face an Uphill Battle to Regain Trust
The study’s findings paint a bleak picture for the NFT marketplace, with the majority of collections holding no value. It raises concerns about the credibility and sustainability of NFTs as an investment. Additionally, the critique of the broader crypto industry highlights the need for regulations and transparency to establish trust among all stakeholders. The NFT market and the crypto sector as a whole must address these issues if they want to regain trust and attract widespread adoption.
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