Non-Fungible Tokens (NFT) has helped to buoy the blockchain frenzy, incorporating the art industry, giving artists a robust chance to increase their earnings with their crafts while protecting their patent.
Since March 11, when Christie’s auctioned off a digital collage of images, “Everyday’s—The First 5,000 Days,” created by Mike Winklemann (Beeple) for $69.3 million, a horde of artists, including Snoop Dogg and Paris Hilton, have jumped on the new market that has become another segment of the everyday crypto talks.
While the frenzy entices and welcomes more artists, concern has been emerging over its sustainability even with massive support of Silicon Valley elites. The concern stems not far from the cryptocurrency volatility, and now some experts think the NFT frenzy will be short-lived.
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In an interview on Bloomberg TV this week, Coinbase cofounder Fred Ehrsam drew parallels between the rise of cryptocurrencies and the dotcom boom of the 1990s.
“I go so far as to say that 90% of NFTs produced, they probably will have little to no value in three to five years,” Ehrsam said. “You could say the same thing about early internet companies in the late ’90s.”
‘Ehrsam left his position as a Goldman Sachs trader in 2012 to combine his passions of computer science with gaming – and help set up Coinbase, the largest cryptocurrency exchange in the U.S. with Brian Armstrong. In 2017, he left the day-to-day operations at Coinbase to launch his own investment firm called Paradigm, also focused on blockchain.’
Now he thinks NFTs are no different than any other crypto project born out of the hype overnight, even though he believes, despite the recent crash in the crypto market, that cryptocurrency is truly “the next internet-sized opportunity for the United States.”
“People are going to try all sorts of things. There’ll be millions and millions of cryptocurrencies and crypto assets, just like there were millions and millions of websites. Most of them won’t work,” Ehrsam explained.
While he believes the NFT craze will die prematurely, Ehrsam said the blockchain system is here to stay, and will command a future of global financial system powered by DeFi.
“The world doesn’t change overnight, but you can see the seeds of exponential growth occurring already,” he said in the Bloomberg interview. “I do think we will live in a future where for us to coordinate, we won’t need these centralized platforms today. That’s already true of financial services, in that you can be your own bank. You don’t need a central institution to hold your money anymore.”
Coinbase went public earlier this year at a colossal valuation of $100 billion. But like other exchanges and the entire crypto market, its market cap has since shrunk by half as crypto trading declines amid concerns about the impact of mining energy on the environment and governmental crackdown in China, cryptocurrency’s biggest mining hub.