This text is taken from our newsletter “Le Courrier de l’économie” of May 23, 2022. To subscribe, click here.
Non-fungible tokens (NFTs) are a curiosity for many people. And we understand it! The concept is not so easy to grasp.
These are unique digital assets authenticated on the blockchain – the technology that serves as the basis for cryptocurrencies in particular. There are a multitude of variations! They can be found as collectible digital sports cards, artwork, or real estate properties in the Metaverse!
Is it safe? It all depends on what you mean by that. In principle and operation, yes. Thanks to the blockchain, “the NFT has a history which makes it possible to know who created it, who bought it and for what price. It’s all very clear. So there could never be any doubts whether it was stolen or not, for example,” explained last year to the To have to Guillaume Déziel, digital culture strategist.
But is it a safe investment? The answer is probably no. It is true that some have hit the jackpot thanks to this technology. For example, maybe you’ve heard of Montreal artist Aeforie (Alexy Préfontaine), who raked in half a million US dollars in one night selling his work in March 2021. But right now, NFTs are experiencing a very difficult stage.
NFTs saw a drop in spending volume of 75% between February and mid-April, according to consultancy Chainalysis.
Evidence of the industry’s rout: The NFT of the very first tweet in history, which was purchased for nearly US$3 million in 2021, was re-auctioned on April 7. Its owner expects 48 million dollars. However, for the moment, the best offer is only a little over $20,000. “Ouch,” you might say.
In short, like cryptocurrencies, NFTs are very speculative assets. But that does not mean that their underlying technology is not interesting, far from it!