Almost a million accounts actively bought or sold NFTs at the start of the year, but the number has since declined to 491,000, blockhain analytics company Chainalysis found.
The number of accounts trading NFTs has dipped sharply in recent months, new research has found, indicating that the digital art and collectible boom that started in 2021 may finally be cooling off.
Short for nonfungible tokens, NFTs are a kind of digital contract that use blockchains to prove ownership of a particular digital asset, like an image or a GIF. NFT trading exploded into an estimated $40 billion market last year.
But a report released Thursday by the blockchain analytics company Chainalysis found a steep decline in NFT trading. Almost a million accounts were actively buying or selling NFTs at the start of the year, but that number has since declined to about 491,000, Chainalysis found.
“NFTs saw explosive growth in 2021, but this growth hasn’t been consistent and has leveled off so far in 2022,” Chainalysis wrote in its report.
While NFTs have been a windfall for some traders and artists, they’ve also attracted hackers, thieves and scammers. An NBC News investigation last year found that the largest NFT marketplace, OpenSea, had done little to moderate the problem of people uploading and selling other artists’ works as NFTs. Hackers deliberately target NFT accounts to steal their assets and take over social media accounts to sell NFTs of their own. An earlier Chainalysis report found that some people repeatedly auction and purchase their own NFTs in an attempt to drive up their value.