What Brands Can Learn From The Failure of NFTS
The rise of NFTs was epic; so too was the fall.
TL;DR
A fun-sized summary of this article
In the thick of the AI craze, let’s look back at the evolution - and then failure - of NFTs as a roadmap of how to navigate the market when new tech disrupts it
The rise of NFTs
There was a time when NFTs were the biggest thing in the new media cryptocurrency space, at the cutting-edge intersection of emerging technology and decentralized finance. By the end of 2021, the market for them was an estimated $41 billion.
So what happened to CryptoPunks, Bored Ape, Cool Cats? Welp - the NFT bubble burst.
In late 2022 trading volumes decreased by 97%; the market now is only around $4 million. Why? A combination of price drops, low trade value, and negative media. Turns out, most NFTs have little lasting value beyond the initial buzz.
Why did it flop so hard?
Investments are always risky, especially those in new media innovations that bank their value in disruption. But the NFT boom is a cautionary tale on speculative marketing and the toxic hype machine it can create. New and novel, NFTs generated a lot of buzz (and a massive influx of investment) from both brands and consumers hoping to ride the wave of the next Big Thing in the digital space. The promise of it was shiny and expensive; it had the gleam of any get-rich-quick scheme worth its salt.
But then, that shiny, expensive bubble burst. Questions began to emerge in the finance forums, and then the news cycle. What intrinsic value does this asset have? How is this a sustainable investment? And why do the grift-fluencers seem to be the only people making any money from this?
The cracks began to show before the ceiling caved in, but the signs were always there; across the board, NFTs rarely had the structural integrity to support significant investments.
What actually worked
Of course, now all NFTs were catastrophic failures. Brands that rooted their acquisition in product-aligned utility made NFTs integrate into the purchasing experience for customers, providing tangible value. For example, Nike, a fan fave as always, collaborated with RTFKT Studios to produce digital sneakers that could be transformed into customizable physical shoes, and it was wildly popular. So while flashy, technically innovative products initially hit the market hot, it’s often also fleeting; investments that pay off in longevity are anchored in genuine consumer demand and utility.
What Brands Can Learn
Of course, in 2024, NFTs are past due in terms of the cultural conversation; these days, everyone's turning their attention to AI and the seemingly endless ways we can integrate it into products, shopping experiences, and daily life. But NFTs have a lot to teach us about the Gold Rush of new tech on the market; namely, they provide a pretty thorough road map of what not to do.
Integrating new technology is essential for the growth of any brand in the modern day, but the era we live in is not in any shortage of shiny new things promising industry disruption; it is much more important to prioritize innovations that tangibly enhance user experiences.