NFTs Unveiled: The Rise, Fall, and Future

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Do you remember the famous NFT called “The First 5000 Days” by Beeple? It was sold for $69.3 million. 

But what exactly are NFTs?

Non-fungible tokens (NFTs) are assets like artworks, images, GIFs, videos, tweets, documents, and more. These tokens are created using blockchain technology, such as Solana, Ethereum, Cardano and others. 

Each NFT has some unique identification codes created through an encryption function from metadata. These tokens are then stored on a blockchain ledger while the assets themselves are stored in other places, the connection between the token and the asset is what makes it one-of-a-kind and irreplaceable.

The very first NFT sold was “Quantum”, created by Kevin McKoy in 2014 on blockchain (Namecoin). With the advent of Ethereum blockchain in 2017, the NFTs started gaining much recognition.

However, the NFTs market has experienced a dramatic roller-coaster over the past 3 years characterising a meteoric rise, rapid fall and now signs of revival in 2025. 



The Rise: 2021–Early 2022

2021 the Golden year for NFTs. The initial hype and speculation were soaring NFT prices and trading volumes at record high. Big celebrities, influencers and brands entered the space, fuelling mainstream interest and FOMO (fear of missing out). Some iconic sales included "The first 5000 days" sold at 69 million, "The merge" by Pak sold as one of the most expensive NFT at $91.8 million. By the end of 2021, the NFT market had reached a staggering $17 billion in value.

 

The Fall: Late 2022–2024

By mid-2022, the bubble burst came quickly, NFT trading volumes and prices dropped sharply. The market became oversaturated with thousands of collections launched daily, with too many low-quality projects, making it difficult for invest to distinguish. 

Majority NFTs lost nearly all their market value, with estimates suggesting over 95% of collections became “dead”—no trading activity or utility. Sales volume of NFTs dropped down to $8.8 billion in 2024 from $23.7 billion in 2022.

 


Key reasons for the decline:

  • Market overload: Collections like “Bored Ape Yacht Club” and “Crypto Punk” actually set trends. However, most NFTs bought were an impulsive move by the investors. Soon thousands of new collections appeared with no utility or benefit to holders such as discounts and digital games, innovation and competitive advantage.
  • Hype and scams: The rapid adoption of NFTs made people believe that it could revolutionise a lot of sectors. Many investors joined just to make money quickly. After the bubble burst of 2021 hype, the expectations of people dropped quickly, most collections became worthless. Fraudulent projects and “rug pulls” (creators vanished with the loot money from investors) shook investors' confidence.
  • Regulatory challenges: Some NFTs acted like a security token, offering utility and rewards to investors, apparently giving a share of revenue to holders. This procedure must strictly comply with the regulatory entities such as SEC (Securities and Exchange Commission). Also, the further taxation rules for declared profits made a little discomfort and complex to the investors.
  • High cost and accessibility issues: The process of buying NFTs requires setting up digital wallets and a fee payment to miners (known as Gas Fee) to complete the transaction and write it on the Blockchain. Even a small transaction can cost $100 considering the asset value much higher, thus blocking many small investors. 
  • Decline in crypto market: The NFT market is heavily dependent on cryptocurrencies like Ethereum, any kind of interruptions in crypto market will have a negative impact on the NFT market. Major downturns in the crypto market like failure of Terra Luna and FTX, reduced the amount accessible for NFT.

 

Comeback & Maturity: 2025

Despite the crash, NFTs are not dead yet. The market in 2024 was different from the speculative frenzy of 2021. Instead of overpriced hype collectibles, NFTs are evolving to multi-functional digital assets connected with technology and real-world applications. The sector is maturing, moving towards stability, practical use and moderate growth in 2025. 



What is fuelling the comeback?

  • Evolved utility: NFTs are no longer just digital arts, they are now used for ownership in real estate and luxury goods, events tickets, in-game assets with actual value, and membership access. These real-world applications boosted investors' interest. 
  • Integration with emerging technologies: AI-generated and AI-curated NFTs are on the rise, where artificial intelligence creates unique collections.
  • Gaming Dominance: Gaming NFTs now contribute to 38% of total NFT transaction volume. Popular games let the players buy and own assets. This has broadened the NFT market.  

At the peak of NFT hype, some artists and collections skyrocketed in value. Some of the most expensive NFTs sold are: 

  1. The Merge by Pak - $91.8 million
  2. Everydays: The First 5000 Days by Beeple - $69.3 million 
  3. Clock by Pak and Julian Assange - $52.7 million
  4. Human One by Beeple - $28.9 million
  5. CryptoPunk #5822 - $23.7 million

Use cases of NFTs:

  • Games and metaverse: NFTs have the ability to allow the use of certain characters, weapons, qualities, armours in a video game. Even in the metaverse, the NFTs can be linked to specific land and plots, which can further be used by the holder for the promotion of a business or personal use.
  • Art and collectibles: NFTs allow artists to tokenise their works for authenticity and ownership. These collectibles can be digital art, music, video, GIFs, gaming avatars, virtual reality estate and more. Popular collections like CryptoPunks and Bored Ape Yacht Club showcases how artists can sell their creations uniquely. 
  • Real estate and physical asset ownership: through tokenisation, NFTs can represent ownership in real estate and in physical assets like cars, luxury goods and yachts. They also allow multiple partners to invest in a property. The tokenisation of deeds and property rights facilitate easier and transparent real estate transactions.
  • Tickets, Memberships, and Event Access: NFTs serve as secure, transferable tickets for concerts, sports events and more. They can grant special access or function as proof of membership in exclusive clubs and programs. 
  • Documentation, Certification, and Identity: NFTs are used for secure digital documentation, certificates (for education, professional credentials, etc.), and digital identity management. They are stored on a blockchain, these records are secure and verifiable. 

Conclusion:

The journey of NFTs is still unfolding and becoming clearer as time goes on. In 2021, NFTs were all the rage, with lots of excitement and buzz surrounding them. However, after that initial hype, the market experienced a sharp downturn over the next three years, leaving many people wondering what would happen next. It seemed like the future of NFTs was uncertain and a bit shaky.

But as we look ahead to 2025, we can see that this year could be a turning point for NFTs. It represents a shift into a more sustainable era where the real value of NFTs is determined by their actual use in the real world, their practical benefits, and their long-term adoption by people everywhere. This means that instead of just being a trend or a passing fad, NFTs could become something much more important and useful.


References:

https://yellow.com/research/the-rise-fall-and-resurgence-of-nfts-7-reasons-why-theyre-not-dead-in-2024

https://trakx.io/resources/insights/are-nfts-dead/

https://www.iiprd.com/the-rise-of-non-fungible-tokens-nft-in-the-digital-age/

https://restthecase.com/knowledge-bank/is-nft-legal-in-india

https://cryptoslate.com/nfts-stage-comeback-with-530m-in-july-trades-flipping-defi-user-activity/


Blog by Gourav Pradhan and Nidhi Attri, M.Com Students.


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