NFTs double the strangeness of the “fygital” trend
It would be an understatement to say that crypto is going through a difficult time. Since bitcoin reached its record high of almost $ 70,000 last year, it has lost 70 percent of its value. The entire market has shrunk by trillions of dollars.
When I traveled to Amsterdam last month for FT’s The Next Web (TNW) conference, a gathering of technical leaders, developers and investors, I was curious about the mood of the participants. I was wondering how many people would fight for crypto; how many hardcore believers were left to preach using acronyms like “HODL”, short for “hold on for dear life”. To my surprise, people were far from shy about discussing the industry. If anything, there was renewed enthusiasm for proclaiming the long-term value of crypto. As the saying goes, in the middle of a downturn, “now is the time to build”.
Today’s topic was non-fungible tokens (NFTs), digital collectibles whose buyers receive ownership certificates on the blockchain. They are usually bought with cryptocurrency. Like the wider community, their greatest believers remained confident. Perhaps because the tokens are associated with the optimistic notion of the Web3 Internet, allegedly driven by the forces of social connection and decentralization. But also because sales of NFTs last year amounted to almost $ 41 billion, triggering a gold rush that led companies and artists to enter the market and rush to release their own versions.
Some panelists evangelized about an NFT utopia where tokens would bridge our online and real life. “I hate this word,” said Sandra Ro, CEO of the Global Blockchain Business Council, “but I’m going to say it: phygital.”
“Phygital”, a collection of “physical” and “digital”, was created more than a decade ago by advertising manager Chris Weil to describe what he called the “enormous potential for brands” to engage consumers in both worlds. The concept has since taken on a life of its own. The fashion industry held “fygital” shows during the pandemic, while the word is also used to describe a generation that has grown up inhabiting both physical and digital worlds at once.
Praise for the use of “fygital” referred to a type of NFT that is partly aimed at addressing skepticism about their real usefulness. A phygital gives the buyer access to something real alongside the digital resource – such as an actual designer T-shirt that your avatar can also wear in a metaverse.
Phigital is also the name of a soon-to-be-launched marketplace for 3D NFTs, although these will initially only be digital. I asked Julian Picaza, product manager for Smart MFG, which owns Phigital, if he was worried about the future of NFTs, given the cryptocurrency. “Not in the least,” he replied. Amy Wu, who heads FTX Ventures, a venture capital firm, was more cautious: “We are in a long cycle here. We may not see mainstream adoption in a couple of years. “
There has been momentum in some use of NFTs as a sport. But as cryptocurrencies have fallen, sales of tokens have also plummeted. The monthly trading volume of OpenSea, the largest NFT marketplace, fell by approximately 85 percent in the first half of this year.
Many people at TNW were clearly happy to participate in real life this year. When I left, I wondered if this might be a clue as to why, despite the NFT evangelism, the promise of owning a part of the digital world does not yet seem so compelling outside the crypto bubble.
Scott Chipolina is FT’s digital assets correspondent
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