In 2017 Non-Fungible Tokens gained popularity on the Ethereum blockchain platform. It was there a game called CryptoKitties made its way into fandom. The problems began early. Heavy gaming activity on the platform caused system resource shortages and user fee increases. Since then a number of independent projects have debuted and the NFT market seemed to be on a meteoric rise. Even big companies are getting into the act, game developer Ubisoft, comic book publisher DC and outdoor adventure and travel company Outside - all announced their involvement in NFT projects. Art NFTs featuring modified traditional or pop culture art have been at the heart of this fast moving market. One of the biggest projects to date is the online NFT marketplace OpenSea. The platform allow users to "mint" or essentially create art NFTs, add them to its store and sell for a profit. Collectors can buy and download unique digital art assets within the marketplace as well.
Besides their novelty, casual observers are interested in knowing what the hype is about. What can collectors come to expect from their favorite comic book character or an image of a gorilla in a crypto token? NFTs are being marketed as unique photos, music, pop culture images within a cryptographically issued, blockchain registered token. At their heights these digital creations have sold for over $100,000 in the case of CryptoKitties. The Beeple NFT sold at a Christie's auction for $69 million dollars. Some creators of these digital assets are reported to have earned millions from selling their collections. There are no shortages of these stories floating around the internet. Opinions on the value of NFTs have been said to be everything from supporting artists, crowdfunding entrepreneurial projects to participating in important global issues. All reasons to expect these mind-bending novelties to stay around for sometime.
So what appears to be the problem with the NFT market? 2022 seems to have brought with it a slew of disasters for this hyped and sometimes obscure digital art token. According to reports by both Forbes and the Wall Street Journal sales of NFTs have fallen over 90% since 2021 highs. Downloads and installations of related crypto apps are also down over 90%. Other shocking news to hit the NFT market this year came with the revelation of insider trading, a consumer data breach, a malware attack and a disgruntled gaming coomunity over NFTs in the gaming space.
Last month, the US Justice Department reported an employee at OpenSea had been indicted on wire fraud and money laundering related to an inside trading scheme - the first case of its kind. To make matters worse, eight weeks later, OpenSea was back in the news. CoinMarketCap reported, OpenSea user data was compromised by a third party's employee who is said to have, " 'misused' employee access to download and share contact details." In May, Malwarebytes posted details on their site about a malware attack targeting freelance artists. The perpetrators try to convince artists through an online communication the artist can participate in an NFT project. Once the victim uses the accompanying link in the message and clicks on the perpetrator's NFT images as instructed, a spyware program is activated. Members from the art community also report getting spammed with this phishing message on various social media platforms.
Ubisoft included NFTs in its online game Ghost Recon Breakpoint. Their decision was met with disappointment by gamers. Sentiment analysis gathered on the issue shows a 96% dislike ratio. Ubisoft stated they will discontinue adding NFTs to Breakpoint, but would continue adding NFTs to other game titles despite heavy player disapproval.