In a recent discussion at a major technology conference about generative artificial intelligence, the topic of buzzwords arose.
In the technology space, we agreed, one constant is change—but change can be anything: good or bad, forward or backward, signal or noise.
Some tech is life-changing and world-altering, but much of tech (in hindsight at least) is just buzz. For every Internet, there’s a million internet startups adding little value to the chain.
Generative AI, for example, possesses legitimate potential to be an Internet-level genuine game-changer. An excellent example of “buzzword tech,” in contrast, may be non-fungible tokens.
Hype around NFTs peaked in a 2022 bull run that “captured the collective imagination worldwide with multiple news reports of million-dollar deals for sales of certain NFT assets,” a report on the state of NFTs from crypto analysis website dappGambl reads.
But trading volume of NFTs is today at 3% of its 2021 peak.
“NFTs had a bull run, then crashed—hard,” the report states.
Using data provided by NFT Scan, of the 73,257 collections identified, nearly 70,000 have market cap of zero ETH.
“This statistic effectively means that 95% of people holding NFT collections are currently holding onto worthless investments,” according to the report. “This highlights the incredibly high-risk nature of the NFT market and underscores the need for careful due diligence before making any purchases.”
This high risk level concerned the Canadian Securities Administrators, who last year warned that trading in crypto assets comes “with elevated levels of risk that may not be suitable for many investors, in particular retail investors.”
By the end of 2022, the tone had shifted. Headlines here on Fintech.ca included How Investors Can Invest Safely in NFTs and NFT Fund With Heightened Focus On Security For Investors.
In 2023, Canadian NFT startups like the formerly white-hot Dapper Labs are frozen in their tracks by a crypto winter.
Canadian investors are faring no better. Data shows almost 80% of NFTs have never been resold—confirming a wildly imbalanced scale of supply versus demand. A lot of coins were tossed into wells that may never yield water, let alone wishes.
While digital pictures of apes may not be valued highly by many, some of the technology behind NFTs still shows promise and is being used by innovating companies in 2023.
For example, ethos is on a mission to accelerate the Canada’s adoption of digital assets such as NFTs by facilitating experiences for brands and their customers. In March, they made it easier than ever to display NFTs on devices. The Vancouver startup followed this up with the launch of Gated Experiences in May.
The startup looks to create value-add along the crypto chain through “Added utility” for brands to leverage—which can include discounts, air drops, early access, or special products. Token-gated commerce, as it has been referred to, “offers a fundamentally new way to deepen connections and reward true fans and VIPs by giving NFT holders exclusive access to products, perks, and experiences,” according to e-commerce pioneer Shopify in 2022. “The most exciting experience isn’t selling NFTs—but activating them.”
“The real beauty behind an NFT launch,” agrees ethos, “is that it enables businesses to unlock new value.”
Ethos’ utility-first platform is now integrated with Shopify and available to merchants, who work with ethos to gate specific products and enable discounts on products to holders of their digital assets.