Metaverse and NFTs are going bust

The Metaverse and NFTs are Going Bust? Not Really

Lara Raven

Lara Raven

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Although the metaverse has been rightly described as Web3, and terms like cryptocurrencies and non-fungible tokens (NFTs) are no longer buzzwords, a change seems to be underway.

Since January 2022, public interest in both the metaverse and NFTs has fallen, as evidenced by a reduction in global keyword search volume for both terms.

In addition, the average NFT price has fallen from $6,800 in early January 2022 to around $2,000 in recent weeks.

Although many observers have noted that these are signs that these buzzwords are finally going bust, the reality is quite the opposite. Firstly, these aren’t buzzwords. They are real technologies that are shaping the third version of the internet.

Second, a reduction in value and a general loss of interest in these terms among internet users are not indicative of NFTs and the metaverse becoming irrelevant.

These trends merely reflect adjustments and corrections that take place after the initial hype.

Why is NFT Reducing in Value?

NFTs rose in popularity last year when many artists began to offer digital works that couldn’t be replicated. Everyone who had the slightest inclination towards technology joined the NFT bandwagon to release digital artwork.

It was finally possible to verify the authenticity of the artworks, and their ownership thanks to blockchain technology.

NFT is declining in value because of these reasons

As digital work is prone to be copied multiple times over, NFTs and blockchain-based technologies provided the ammunition to assign value and ownership.

Soon after NFTs came to be sold online, many went up for sale for millions of dollars. For instance, the Crypto Punks project achieved the highest sale price of a little more than $20 million.

However, some tech pundits noted that for the first time since January, monthly NFT buyers fell below 800,000.

In addition, the NFT market cap has plummeted from $23 billion to $10 billion. Even the search volume for the keyword “NFT” reduced drastically.

Although sales with humongous figures have diminished in numbers, NFTs continue to find a market among social profile pictures, logos, and digital works that need to be copyrighted purely for business purposes.

Consequently, to say that NFTs are losing their grip over the market is not the intelligent insight one might think one is making.

Is Metaverse a Fad?

Metaverse, often described as the third version of the internet (Web3), came to prominence last year, when Facebook changed its name to Meta. The company explained the move as a strategy to brace for an internet that is more immersive and interactive than it ever has been.

Metaverse consists of 3D virtual worlds that are enabled by augmented reality (AR) and virtual reality (VR) technologies.

With a strong focus on the social, virtual worlds on metaverses allow users to interact with each other, with companies, and also with artificially intelligent beings.

As a result, the metaverse is largely described as the next version of the internet which is immersive and interactive, with a strong basis in 3D virtual worlds.

Today, many large companies like HSBC, Adidas, Ubisoft, and others have begun to buy virtual plots on metaverse to create experience spaces for their target audiences.

These 3D spaces help users to learn, experience, play and get entertained in an immersive atmosphere. It is no wonder then that metaverse platforms such as Decentraland and The Sandbox are popular with artists, brands, and financial institutions.

What Challenges Do Metaverse and NFTs Face Today?

There are several challenges at the moment, which might tempt one to believe that the metaverse will go bust.

  1. Not many people know what metaverse, NFTs, blockchain, and cryptocurrencies mean
  2. People are not aware that the internet is now more sensory and immersive
  3. Even tech experts erroneously believe that the metaverse and NFTs are buzzwords
  4. Many countries are currently drawing up rules and regulations regarding crypto transactions
  5. Policymakers are yet to have a conceptual idea regarding metaverse and cryptocurrencies

Why the Metaverse and NFTs are Here to Stay

Although naysayers have been busy downplaying the importance of metaverse, it simply does not make sense to ignore the obvious.

  • People like immersive social experiences
  • Most activities have gone online post-pandemic
  • Learning, entertainment, and gaming are now enabled by cloud technologies
  • Cryptocurrency and NFTs have given financial credibility to transactions on the metaverse
  • Blockchain technology ensures that all transactions on the metaverse are verified to be authentic and genuine

These factors suggest that the metaverse is going nowhere, and the NFTs are here to stay, just like cryptocurrencies are going to.

Web3 Will Continue to Evolve with the Metaverse and NFTs

Web3 combines sensors and the Internet of Things (IoT) with VR and AR technologies to build immersive experiences on various metaverse platforms such as Decentraland and The Sandbox.

However, there are technological, legal, and policy-related challenges that affect NFTs and the metaverse. These are real challenges and most people in the know are themselves unclear about how this will pan out.

The truth is it is an evolving technology, much like the internet during the 1990s.

As a result, fluctuations in the price of NFTs, virtual plots on metaverse, and volatility of cryptocurrency value can be expected in both the short and the long terms. Hence, there will be price adjustments, corrections, and new compliance requirements.

While these policies are being drawn up globally by governments, and while developers continue to build technologies that seem futuristic at the moment, to say that the metaverse and NFT boom will go bust is more than a bit of a stretch.

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