Vijeta Raghav
After Bitcoin demonstrated the world’s decentralized banking, a flood of other blockchains and technologies emerged. Non-fungible tokens (NFTs) stood out because the community identified many uses for them.
NFTs appeared everywhere on the market, from video games to works of art, with many people profiting from their trade. It is alarming to many users that NFT prices are declining, given their previous highs. Before moving further, we should know everything about NFTs. Let’s have a look at NFT and collect the information to know why its prices are crashing.
What are NFTs?
Non Fungible Tokens (NFTs) have characteristics that define them apart from other assets. NFTs are specialized digital assets that can be tracked and traced back to their original owner. Non-fungible tokens are not interchangeable with one another in the same way that cash, bonds, stock certificates, and bitcoins are. You shouldn’t treat them the same way you would your Ethereum or Bitcoin assets while dealing or swapping them.
Cryptocurrencies are currencies despite their attempts to mimic the attributes of assets, whereas NFTs are actual assets. One Bitcoin is equivalent to another Bitcoin, but not so with NFTs. It is because of this that the term “non-fungible” was coined. Most often, Ethereum or Solana NFTs are purchased using cryptocurrencies and recorded on a blockchain, a digital ledger that may be used to keep track of purchases. Since they are recorded in a public ledger, it is simple to determine where an NFT came from and whether or not it has been altered.
A steep decline in NFT pricing now
Let’s get down to brass tacks now: NFT market prices have been decreasing. Average NFT prices have fallen, causing community anxiety; after peaking at over $6,800 in January, they have dropped to below USD 2,000 on average in March, a decrease of 70%.
As a result, many NFT investors are feeling uneasy about their holdings. There is widespread anxiety over whether or not the market has already crashed.
Why are NFT prices falling?
Let’s check out a potential cause for the decline in NFT pricing. Some have speculated that the current flurry of new rules is to blame for the price decreases that have hit not just NFTs but also Bitcoin and other assets. For example, the United States has just passed new cryptocurrency regulatory rules. Since NFTs are based on blockchain technology, this has also had an effect.
The widespread opposition to government involvement in cryptocurrency regulation is not surprising. This is possible whenever the government pays attention to the cryptocurrency industry. Bitcoin and subsequent blockchains were created to eliminate the need for a centralized banking system.
Leaves a trace on the environment
When it comes to NFT transactions, appreciating art comes with the guilt of doing damage to the environment. How? Every day, we contribute to the increase in carbon footprints by consuming excessive energy. This is not due to our lifestyle but rather to the fact that we can afford to enjoy the available pleasures. I will not offer you a brief but a combined computation on a specific NFT commodity you purchase.
Let’s run some numbers to see whether the Cryptopunks are environmentally responsible. A single transaction on NFT using Ethereum generates 146 kg of carbon dioxide. In the last 12 months, it has racked up $7,570 in sales. This amount of CO2 is similar to driving 7,570,000 kilometers on gasoline. Therefore multiplying 146 by 7570 yields 1,105,220 kg.
Then, we consider being vegan due to environmental concerns and not eating beef. Whether or whether one should eat meat depends on their health. The decision to skip meals in favor of playing with NFTs is not good. As the world continues to spiral further into a disaster due to rapid climatic shifts, we need to evaluate our options, regardless of whether or not they provide us with a steady stream of passive income. That said, concerns about doing morally wrong by the planet might contribute to the recent collapse of the NFT industry.
The influence of one's feelings
Many people get the same impression about their Bitcoin holdings, and the analogy is apt. Specifically, the Fear and Greed Index provides consumers with a mechanism for doing so. Like a social thermometer, this indicator may be used to get a feel for the general atmosphere in a particular area.
If we were to use a term like “great terror” to characterize what NFTs would feel right now, that word might be appropriate. If people are selling their crypto for other cryptocurrencies or converting their funds into fiat money, then it stands to reason that values will fall.
Some people may see this as a great chance to stock up on more items. However, not everyone can afford to make new investments. Therefore many are resorting to HODLing to hedge against more losses.
Regarding NFTs, the community still has a lot of ground to cover. If we look at the historical pattern of NFT growth and compare it to the recent low, we can be confident that this is not the end of the NFT market. We’ve established that it’s beneficial to take a step back and consider things from a new angle. Companies are already planning how to create their own NFTs for the open Metaverse.
It’s important to remember that cryptocurrencies and the blockchains that record transactions are both cutting-edge technology and in their infancy. Nobody can know for sure what will occur in the future. This is the most incredible opportunity and significant cause for concern in the cryptocurrency market.
Going beyond NFTs
NFTs have a promise that has not been completely explored. Therefore, given this information, how can we state with certainty where it’s heading? If you’re worried about your financial future, keeping tabs on market events is a must.
And obviously, if you’re seeking some extra tranquility with your money, shifting it into Bitcoin could be the way to go. While it’s possible that it could have periodic declines in the future, its rapid ascent over the last decade has persuaded many of us of its value.
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