Cryptocurrency

Are NFT markets in a death spiral or ready for a resurgence?

Published

2 weeks ago

September 12, 2023

Nonfungible tokens (NFTs) saw a massive surge in popularity in 2021, accompanied by sky-high prices, but the market has since come crashing back to earth, and it’s unclear whether there will be a resurgence.

NFTs are unique digital tokens recorded on a blockchain to certify ownership and authenticity. They can’t be copied or substituted but can be transferred and sold by their owner.

According to analytics platform NFTGo, the NFT market cap valued in Ether (ETH) is down 40.59% over the past year at the time of writing, with trading volume down 40.81%.

The market cap in U.S. dollars is down 41.16%, and its volume has dropped 66.77%. At the same time, market sentiment is ranked 13 out of 100, with an overall rating of “cold.”

The NFT market has fallen even further in the latter half of 2023. Source: NFTGo

Arno Bauer, senior solution architect at BNB Chain, told Cointelegraph that from a utility perspective, NFT projects are increasingly adding value and that this growth in functionality is where the future of NFTs likely lies.

Bauer said the NFT market is showing “promising signs of innovation and creativity,” which holds great potential for the growth and evolution of the tech.

“Market sentiment, cultural shifts towards digital ownership, and the potential for NFTs to be integrated into various aspects of our lives also contribute to a positive outlook for the future of NFTs,” he said.

“While current market conditions might seem subdued, the ongoing innovation and potential for integration with both digital and physical worlds suggest that NFTs have not had their day and that their continued relevance and growth are highly probable,” Bauer added.

NFTs in the long term

As for long-term use cases, Bauer said NFTs will “likely evolve” over time and become increasingly linked to real-world assets, such as property ownership or unique physical goods.

Currently, NFTs have been most successful in the art world, with some selling for tens of millions of dollars.

Digital artist Pak sold an NFT project titled “The Merge” for $91.8 million on Nifty Gateway in 2021, while Mike Winkelmann, also known as Beeple, sold “Everydays: The First 5000 Days” for $69.3 million via Christie’s auction house the same year.

Blockchain games also use NFTs to represent in-game items such as weapons and armor, and there is speculation the tech will make the jump to mainstream games. Various types of music assets are also being sold as one-of-a-kind NFTs.

Bauer thinks that as more robust technology provides enhanced use cases and ownership security, NFTs will likely become more attractive to mainstream markets.

He speculated that NFTs could link to financial instruments, representing shares in companies or investment funds, and social achievements, where they could symbolize badges of accomplishment in various fields.

“Beyond art, the ability to tokenize unique assets and provide verifiable ownership will create numerous applications across various domains,” Bauer said.

“Collaborations with traditional industries, technological advancements, clear regulatory frameworks and educational efforts can significantly boost NFT utility and adoption.”

“Addressing sustainability concerns could make them more appealing to a broader audience,” he added.

NFTs have the potential to make a comeback

Jason Bailey, co-founder and CEO of NFT tool and self-custody solution ClubNFT, told Cointelegraph he thinks “NFTs will come back and go mainstream” because crypto and NFTs rebound cyclically, just like previous tech crashes.

According to data gathering platform Statista, the NFT market is projected to continue growing in revenue, users and market capitalization.

As of 2023, there are 13.95 million NFT users, but that’s expected to hit 19.31 million users by 2027.

However, Bailey believes NFTs currently have some issues, most of which were amplified by rampant market speculation, that need to be solved before NFTs can go mainstream.

He said NFTs and the ecosystem around them are so complex that almost everyone is still vulnerable to many risks they may not even know about.

“Many of us have been trying to educate and onboard people into the space thoughtfully so they can be safe, but the truth is that NFTs won’t go mainstream until the complexity is replaced with a safe-by-default easy path,” Bailey said.

“For example, the vast majority of people don’t realize that an NFT is almost always at risk in a sense, except for fully on-chain NFTs, which are a truly tiny fraction.”

“The steps needed to protect the art from disappearing, and prevent the NFT from breaking, are complicated, time-consuming and error-prone,” he added.

Bailey believes that in the long term, NFTs or similar tech could prove invaluable in validating digital documents such as marriage certificates, diplomas and licenses.

Overall, he thinks NFTs solve too many of the current problems associated with digital ownership — including scarcity, authentication, provenance and provable ownership — to be ignored.

“We need to build infrastructure now, during the bear market, for smoother onboarding and to protect NFT adopters from malicious actors in the next NFT bull market,” he said.

“Once these issues are solved, NFTs will absolutely go mainstream because the train of digital ownership left the station decades ago, and there is no stopping it.”

Meaningful projects could be a game changer for NFTs

Speaking to Cointelegraph, Andy Ku, founder and CEO of digital content Web3 ecosystem Altava Group, said he thinks the previous highs in the NFT market were based on a hype cycle, so it’ll be hard for an individual NFT to reach such lofty heights again.

asked google bard to write me some tweets about NFT market right now…
mf really went for the throat on these… pic.twitter.com/aLjUbwH3gT
— beeple (@beeple) August 22, 2023

According to CoinGecko, many of the top NFT collections have seen significant drops in value over the past year.

At the time of writing, Bored Ape Yacht Club has fallen by 67.1%, CryptoPunks by 33.2%, Mutant Ape Yacht Club by 59.2% and Azuki by 49.3%.

Ku believes that if we can see more meaningful NFT projects on the market offering tangible benefits to more people, then it’s possible to have the combined volume bring the overall market value up.

“NFTs should offer value and utility beyond just a digital art or PFP. The two areas I particularly believe in are asset-backed NFTs and a membership NFT,” he said.

“NFT’s core value of being an immutable representation of something is a great fit for assets and membership.”

NFTs for subscription, membership-based models and loyalty programs are starting to gain traction, with examples in hospitality venues and gyms already on the market.

“In terms of asset-backed NFTs, master artworks, real estate and precious metals like gold are all good examples of assets in which people believe,” Ku said.

“NFTs would make a great proof-of-ownership for these assets as well as being extremely portable,” he added.

Cryptocurrency

Coinbase holds 5% of all Bitcoin in existence: Data

Published

3 hours ago

September 23, 2023

Blockchain intelligence platform Arkham recently identified that crypto exchange Coinbase holds almost 1 million Bitcoin (BTC) in its wallets. The coins are worth more than $25 billion at current market prices for BTC.

According to Arkham, the exchange’s holdings amount to almost 5% of all existing Bitcoin. Arkham said that Coinbase holds a total of 947,755 BTC. At the moment, Bitcoin’s circulating supply is around 19,493,537, according to coin information website CoinGecko.

Arkham has now identified $25B of Coinbase Bitcoin reserves (~1M BTC) on chain.
This makes Coinbase the largest Bitcoin entity in the world on Arkham, with almost 5% of all BTC in existence – about as much as Satoshi Nakamoto. pic.twitter.com/7sDOczS7WT
— Arkham (@ArkhamIntel) September 22, 2023

Furthermore, Arkham also noted that it tagged and identified 36 million Bitcoin deposit and holding addresses used by the exchange. According to Arkham, Coinbase’s largest cold wallet holds around 10,000 BTC. Based on the exchange’s financial reports, the intelligence company believes that Coinbase has more Bitcoin that are not yet labeled and could not be identified.

While Coinbase holds over $25 billion in BTC in its wallets, the exchange only owns around 10,000 of all the Bitcoin it holds, which is worth roughly $200 million, according to recent data.

Meanwhile, community members expressed varying reactions to the news about the amount of Bitcoin the centralized exchange holds. Some believe it’s a sign to withdraw their BTC from exchanges, warning holders not to wait until exchanges start to halt withdrawals. Others say that since there are legitimate concerns over cold wallets, there’s no good way to store their assets.

When it comes to Bitcoin ownership by companies, business intelligence firm MicroStrategy still owns the most BTC. In earnings results posted on Aug. 1, the firm’s co-founder Michael Saylor declared that the company owns 152,800 BTC, worth over $4 billion at the time of writing.

Magazine: How to protect your crypto in a volatile market: Bitcoin OGs and experts weigh in

Cryptocurrency

Coinbase CEO warns against AI regulation, calls for decentralization

Published

3 hours ago

September 23, 2023

Brian Armstrong, the CEO of crypto exchange Coinbase, expressed his stance on artificial intelligence (AI) regulation in a recent post on the social media platform X (formerly Twitter).

On Sept. 23, Armstrong explained that he believes that AI should not be regulated. According to the Coinbase CEO, the AI space needs to develop as soon as possible because of reasons such as national security. In addition, Armstrong also noted that despite the best intentions of regulators, regulation “has unintended consequences,” arguing that it kills innovation and competition.

Count me as someone who believes AI should not be regulated
We need to make progress on it as fast as possible for many reasons (including national security). And the track record on regulation is that it has unintended consequences and kills competition/innovation, despite best…
— Brian Armstrong ️ (@brian_armstrong) September 22, 2023

The Coinbase executive cited the internet as an example. Armstrong believes there was a “golden age of innovation” on the internet and software because it was not regulated. The Coinbase CEO suggested the same should be applied to AI technology.

Furthermore, Armstrong also presented an alternative to regulation in terms of protecting the AI space. According to the executive, it would be better to “decentralize it and open source it to let the cat out of the bag.”

Meanwhile, various jurisdictions across the globe have either started to regulate AI or express concerns about its potential effects. On Aug. 15, China’s provisional guidelines for AI activity and management came into effect. The regulations were published on July 10 and were a joint effort between six of the country’s government agencies. This is the first set of AI rules implemented within the country amid the recent AI boom.

In the United Kingdom, the competition regulator studied AI in order to identify its potential impact on competition and consumers. On Sept. 18, the U.K.’s Competition and Markets Authority concluded that while AI has the potential to change people’s work and lives, the changes may happen too fast and could have a significant impact on competition.

Magazine: ‘AI has killed the industry’: EasyTranslate boss on adapting to change

Cryptocurrency

Bitcoin miners double down on efficiency and renewable energy at the World Digital Mining Summit

Published

3 hours ago

September 23, 2023

Bitmain rolled out its next-generation Antminer S21 and S21 Hydro ASIC miners at the World Digital Mining Summit (WDMS) in Hong Kong on Sept. 22, revealing the crucial performance stats the entire industry has been waiting for. The S21 has a hash rate of 200 terahashes per second (TH/s) and an efficiency of 17.5 joules per terahash (J/T), while the S21 hydro hashes at 335 TH/s and 16 J/T, which is notable given that until recently, most Bitcoin ASICS were operating above the 20 J/T level.

With electricity costs continuing to rise year-over-year and the Bitcoin halving projected to occur in April 2024, ASIC efficiency is quickly becoming the paramount focus of miners, and many are also pivoting toward folding in renewable energy sources as a core component of their operations.

Bitcoin miners focus on efficiency and renewable energy

Sustainable development in the mining industry was a core theme discussed in a majority of the panels at the WDMS. In the opening roundtable, team members from Terrawulf, Core Scientific, CleanSpark and Iris Energy shared their perspectives on how further integration of renewable energy sources will become a critical strategy to implement for many miners after the April 2024 Bitcoin supply halving.

*Bitmain World Digital Mining Summit. Source: Cointelegraph*

According to Nazar Khan, Terrawulf’s chief operating officer:

“There’s a significant transition going on in the supply side of the generation process; there’s a concerted effort to decarbonize the entire supply stack, and so when we talk about Bitcoin miners consuming more renewable energy, that’s part of a broader theme that’s happening across the United States without Bitcoin mining as well. The role that we play is locating our Bitcoin mining loads in places where that’s happening and how do we facilitate that decarbonization process.“

One impact of the upcoming supply halving is that miners will maintain the same capital and operational costs, plus the need to pay down any revolving debts, while essentially seeing their block reward distribution cut in half.

For this reason, miners will either need to increase the percentage of their hash rate derived from sustainable energy sources or make efficiency adjustments to their ASIC fleet to maintain or increase their profitability.

Regarding the rollout of the Antminer XP 21 and its potential impact on the mining industry, BMC founder Justin Kramer said:

“The S21, if reliable, fairly priced and readily available — and yes, that’s a lot of ifs with Bitmain’s history — could revolutionize the crypto mining landscape with its efficiency. It is basically packing the power of two S19 100T miners into one unit. Despite this, the burgeoning aftermarket firmware market, coupled with hydro/immersion systems, give miners more tools to keep older generation miners, such as the S19, profitable also. Thus, while the S21 represents a notable advancement, it may not render sub 110 TH/s miners entirely obsolete.”

When asked about the more exciting aspects of the new S19 XP, Kramer noted that:

“I like that Bitmain is rewarding environmentally friendly mining farms with better pricing and advanced delivery with their new Carbon Neutral Certificate. But, I’ll add that, it was a little surprising when I noticed that both new S21 models offer 33% more hash rate (S21 200T versus 151T on S19j XP; S21 hydro is 335T versus the S19 XP Hydro at 257T). Is this a coincidence? I’m doubtful, and it likely signals more of the same systematic model releases from Bitmain where a slight tweak to the firmware and maybe a few other items that are adjusted results in a moderate increase in hash rate and a brand-new miner.”

Bitcoin is en route to becoming an ESG asset

A theme of the past few years has been an increase in Bitcoin miners and BTC advocates pushing back against the assertion that Bitcoin mining is bad for the environment, and that the industry’s reliance on carbon-based energy production accelerates emissions.

Countering this perspective, Hong Kong Sustaintech Foundation professor in accounting and finance, Haitian Lu, bluntly announced that:

“Bitcoin mining is promoting renewable energy adoption in many areas.”

Lu explained that “over the years, Bitcoin mining has become more efficient and is also using cleaner energy. History tells us that human development from an agricultural society to industrialization to the future of a digitalized economy goes with every increasing energy consumption per capita. What makes the difference is human’s ability to use renewable energy increases, thus achieving sustainable development.”

Like the perspectives shared by other panelists, Lu said that Bitcoin miners’ participation in demand response agreements with power producers and distributors leads to energy grid efficiency, and they “provide an economic incentive for the development of renewable energy “promotion and development of renewable energy projects.”

In addition to Bitcoin mining tapping into stranded energy, encouraging the development of renewable energy projects and helping to balance electric grids, the efficiency advancements of next-generation ASICs like the Antminer S21 reduce miners’ energy consumption while also allowing them to boost their profits.