Key Points:
- Former SEC official highlights the risks in the NFT market.
- Cryptocurrency’s lack of regulations and transparency raises concerns.
- Assessing the viability of crypto as an investment and its impact on traditional banking.
Once a bustling arena for million-dollar transactions, the world of Non-fungible Tokens (NFTs) is now grappling with a concerning revelation. A recent study, examining 73,257 NFT collections, has unveiled that a staggering 95% of them currently lack any value in cryptocurrency, particularly in ether. This revelation comes less than two years after the NFT market experienced a massive surge.
Former SEC official John Reed Stark has shed light on this startling revelation. Among the collections under scrutiny, a whopping 69,795 of them possess a market capitalization of zero ether, effectively rendering them virtually worthless. Even in the upper echelons of NFT collections, the prevailing price for an NFT has plummeted to a mere $5-$10.
Ironically, a select group of venture capitalists and Wall Street investors profited substantially by championing NFTs as instruments of decentralization, financial inclusivity, and instant wealth. However, for most retail investors, this dream has turned into a financial nightmare marked by significant losses.
Stark’s critique extends beyond NFTs; it encompasses the entire cryptocurrency industry. He argues that cryptocurrency is not a secure “investment” due to its lack of regulations, transparency, and investor protections. He further asserts that the industry is tainted by deception and fraud, creating an uneven playing field. While these criticisms may appear harsh, they serve as a stark reminder that the crypto sector must address its issues to earn the trust of all stakeholders.
It’s Official: NFTs Will Go Down in History As Pet Rocks On Steroids (And Crypto Is On The Fast Track To Do The Same)
Stick a fork in the NFT marketplace, it’s dead. Remember when NFTs sold for millions of dollars? 95% of the digital collectibles are now probably worthless, less…
— John Reed Stark (@JohnReedStark) September 21, 2023
Stark contends that cryptocurrency falls short in multiple aspects. It fails to function as a reliable “investment” because of its absence of rules, safety mechanisms, and vulnerability to fraudulent activities. Additionally, its volatility, high fees, and inherent risk undermine its suitability as a “currency.”
Furthermore, cryptocurrency’s inability to maintain a stable value raises questions about its intrinsic worth as a “store of value.” Moreover, it poses risks for individuals who lack access to traditional banking systems, potentially making them vulnerable to manipulation. Lastly, the absence of regulations and protective measures casts doubts on its suitability as a “safe haven.” While traditional banks may have their own set of issues, cryptocurrency does not appear to offer a solution.
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Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.
