Does the fall in cryptocurrencies mark (already) the end of NFTs? – TOM.rejse

While several major voices in the economy are raising their warnings against cryptocurrencies, many people are warning of NFT fraud. At the same time, non-fungible “works” and tokens lost more than half of their value. Do cryptocurrencies represent the economy of the future? What if the NFT market disappeared as fast as it emerged? Joint interview with Godefroy Jordan, President of Starting Dot, and Guillaume Dejean, Senior Macroanalyst at Western Union.

In May last year, Christine Lagarde, President of the European Central Bank (ECB), described cryptocurrencies as “very speculative” and stated that they “was worth nothing”. In March, François Villeroy de Galhau, governor of the Banque de France, declared cryptocurrency “is not a stock of value, but rather a speculative asset”. “Bullshit”, “scam”, “worthless”, other terms have recently been used to describe the virtual currency market. For Guillaume Dejean, this economy, which has become very important today, is in fact the victim of numerous speculations. The real problem? Its value is not based on any basic factors: “There really is no rational explanation for the price of, for example, Bitcoin. It is just linked to a value of supply and demand. There is therefore a risk of losing a lot of money by wanting to invest when you do not know the sector ”.

Optical effect and explosion of the bubble

Regarding the NFT market: “There’s a big optical effect where we tend to bury NFTs with cryptocurrencies when they fall victim to the collapse of some virtual currencies that have fallen in value. We need to interrupt the price of NFTs. in crypto value “, explains Godfrey Jordan. While many works have seen their value fall in a matter of days, the art and NFT market had reason to wonder. According to him, the NFT market in the art sector does not represent more than 300,000 collectors, which is nothing compared to the total number of classical art collectors around the world. In 2021, 80% of NFT buyers made purchases based on pure speculation: “This means that the market is governed by speculators who apply inadequate marketing principles. In other words, it is the Wild West ”. But for the president of Starting Dot, the bursting of this bubble is not so bad: “Now we can get started and create something solid with established rules and jurisdiction. It is essential if we want to create a market that works in the long term ”.

More regulation and disintermediation

The good news: the European Union has recently validated two new regulations with the creation of a regulation on cryptocurrencies MiCA and the regulation on transfers of funds TFR. “The fact that we are setting a framework is good news for the market”, admits Guillaume Dejean. For Godefroy Jordan, we should also have the opportunity to do “skip the crypto barrier to acquire an NFT”, with the option to pay with your credit card e.g. A point that seems to be complicated, since the very principle of NFT is based on payment in virtual currency and without mediation, ie without intervention from banks. And that may be the very core of the problem. To Guillaume Dejean: “The fact is, central banks are pointing the finger at cryptocurrencies because they have no control over it … and they’re working to create their own virtual currency.”. According to him, physical currency will gradually disappear in favor of virtual currency, which would call into question our entire global economic model.

A chance for artists to seduce a new audience

But for NFTs, the challenge will also be about creating real artistic content (or not): “The same terms and conditions as the traditional art market must apply to NFTs”, explains Godfrey Jordan. To date, according to him, the promises have not been kept: “We need to change the content of NFT by perhaps making it dynamic, more intelligent or turning it into a quality work of art. All this will be built gradually over one or two decades, especially if we move towards mass use in the metaverse ”. Being able to acquire NFTs and democratize cryptocurrencies will then be crucial: “Speculators will leave the market to make room for players who want to build something healthy. It is also a chance for the artists who will find a new audience there,” he said. he concludes.

Opening image: @shutter_speed

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