When Jack Dorsey posts his first tweet in December 2020, he will have produced a non-fungible token (NFT) out of it. An NFT was born when he converted a five-word tweet into a digital file that could be stored on a blockchain. The image sold for $2.9 million a few months later. Despite this, no one bid more than $280 for it during an auction this week. Only $10,000 is currently being auctioned on OpenSea, a 99 percent decrease in value. There was a commotion.
When Dorsey's NFT was up for auction in December 2020, only a few thousand dollars were offered. At the time, there were very few individuals who believed in NFTs. OpenSea monthly sales jumped from $8 million to roughly $150 million in March of 2021, when the market entered excitement mode. Dorsey’s NFT was purchased for $2.9 million by Iran's Sina Estavi, an Iranian crypto entrepreneur who was swept up in the craze. NFT's uniqueness and connection to Twitter made him shell out so much money, he tells Forbes.
In spite of the historical significance of the first-ever tweet from Dorsey, the $2.9 million price tag is nearly incomprehensible. The greater fool theory is in full effect when it comes to the price Estavi paid for his house in a bubble. "I'm not sure what that NFT serves." The chief of marketing for an NFT trading company, Mitch Lacsamana, is an NFT collector and wonders aloud, "Does Jack Dorsey take you out to dinner in Silicon Valley? Can you tell me what the genuine value proposition is here? I believe time has told us, and it is most likely nothing."
For $50 million on April 5, Estavi put the NFT on auction for 14,969 ether. Astonishingly, no one bid more than $280. No one knows why the bids were so low, says Estavi. Few individuals seemed to take it seriously. Buyers only now understood it was a publicity stunt. Collector Blake Moser, who has approximately 400 NFTs, describes it as a technique to gain visibility. Sina Estavi, in my opinion, has achieved his goal of gaining attention for his NFT.
It's true that Estavi has received a lot of attention, but he appears to be completely out of touch with the quickly evolving NFT sector. Lacsamana argues that "the market isn't ready to jump onto practically anything that a celebrity or someone of high standing might release," he says. "Last year was an excellent moment for it, but many people have grown tired of cash-grab techniques."
Trade volume on OpenSea has increased from $150 million to $2 to $3 billion a month in the past year, even if the buzz around NFTs has faded. All-time high prices are still being paid for some NFT collection like "Born an Ape Yacht Club."
According to Estavi's account, the whole NFT story is a case of him buying something for $2.9 million and then remorse and a new bid for attention. As of right now, Oracle Bridge is little more than a white paper for what it claims to be: a way to make data on blockchain systems more simply consumable. While in prison in Iran last year, Estavi claims, he was forced by Iranian authorities to shut down the company for nine months. In a hazy voice, he says, "They accused me of disturbing the economic system." He's now attempting to resurrect the business.
The bids for the Dorsey tweet NFT have grown to almost $10,000 in the last 24 hours. Less than $50 million, Estavi claims he will not sell.
NFT sales have fallen by 17.24 percent in the last 14 days, according to statistics from Coinmarketcap.com. Is this a sign that the public's interest in NFTs is waning? Is the NFT market in trouble?
For those who are unfamiliar with the term, NFTs are a sort of digital asset that makes use of blockchain technology to document the ownership of goods such as photographs, films, and other collectibles, among others.
Is There a Decline in People's Interest in NFTs?
Inflation and the ongoing Russian-Ukrainian conflict, among other things, have slowed the NFT market and other crypto assets, according to several industry analysts.
"It's impossible to say that interest in NFTs is waning. In addition to the many unknowns surrounding the legislation, there are a number of other things to consider. In spite of this, NFTs offer significant promise for authentication using blockchain technology in the long run", argues Edul Patel, CEO and co-founder of Mudrex, a global algorithm-based Crypto Investment Platform.
Indian NFT trading is currently in a "go-slow" mode because of the lack of clarity on tax regulations or the declaration that tax rates will be reduced, according to analysts.
It's possible that the lag is due to the fact that exchanges are experiencing payment troubles again, and this could be a contributing factor. According to Anshul Dhir, a DeFi loan platform co-founder and COO, "As soon as we can have some adjustments in the tax rules implemented, we will see these transactions return to normal," he adds.
Some industry insiders think that the NFT market is not inherently dangerous, and that NFTs serve a specific purpose in helping artists and creators monetize their work while also serving to strengthen communities. "These strong fundamentals will help this sector's long-term sustainability." Despite this, the value of some NFTs has risen as a result of increased excitement. The Dialogue, a public-policy think tank founded by Kazim Rizvi, stresses the importance of thorough research and due diligence before investing in a particular NFT.
Recently, criminal activity has made its way into the NFT space as well. Chainalysis, a Singapore-based crypto crime research firm, highlighted the dangers of this new technology in its 2022 study. It is estimated that at least $44.2 billion worth of cryptocurrency has been transferred to two types of smart contracts linked to the NFT marketplace. This is an increase from the 2020 level of $106 million.