Hi, welcome to another episode of Cold Fusion. When future historians study the year 2021, they'd note a few interesting things. They'd observe that we were all stuck in our homes with nothing to do.
Stimulus checks were raining from the sky and speculation on financial assets were off the charts. But when they look at March of 2021, the historians would first be confused and then shocked because Christy's auction house, one of the oldest in the world, had just sold something intangible for a whopping $69. 3 million.
It wasn't anything you could hold in your hands or hang on a wall. It was a digital image, a JPEG file by an artist named People. In the same month, an image of the first tweet from Jack Dorsey, the founder of Twitter, sold for $2.
9 million. These are of course stories of the great NFT bubble. Now forget the historians.
Even for us looking back, this is hard to believe. But for a short couple of years, the hype was very real. Jimmy Fallon, Snoop Dogg, Paris Hilton, Louis Vuitton, YouTube, and the University of California, Berkeley all got sucked into the delusion of NFTts or just wanted a quick buck.
And the numbers were unlike anything the art world or the internet had ever seen. By the end of 2021, NFT trading volume had ballooned to around 17. 6 billion, up from just 82 million a year before.
That's a 21,000% increase in just one year. But these would be the dying months of the NFT craze. Soon, it would all fall apart.
That same people JPEG that sold for $69 million is now reportedly worth around $2,300. And that Jack Dorsey tweet that sold for $2. 9 million was last valued at $280.
That's a 99. 9% loss. Those viral board ape NFTts that celebrities paid hundreds of thousands of dollars for are barely moving for a fraction of that.
This all paints a graphic picture, a catastrophic collapse in value. The NFT platforms are now shutting down. The auction houses quickly packed up their NFT departments and some of the celebrities who promoted these things are now facing lawsuits.
According to some studies, it's likely that 95% of NFT art has no value at all. But even after the disaster, some advocates insist that the underlying technology still has important uses, and they dream that it may yet rise from the ashes. But could this be a possibility?
The rise and fall of NFTTS tells us something special about human psychology. It's also a lesson in the fundamentals of markets and how value is determined. And besides, it's a great story for a little laugh.
a time where the world went crazy over JPEGs. So, what exactly happened here? And was there ever anything real underneath all the hype?
Come on, let's take a look. You are watching Told Fusion TV. This is Neon Cat.
He's part cat, part Pop-Tart. The gift of a rainbow casting feline was a viral meme back in 2011. Fast forward to February 2021.
The original gift was sold at an online auction for 300 Ether, the cryptocurrency that powers the Ethereum network. That was equivalent to nearly $600,000 at the time. You may be asking how someone can own the original copy of a gift that was pervasive around the internet.
It's because it was sold as an NFT or nonfgeable token, which acts like a digital certificate of authenticity. An NFT or nonfgeible token is essentially a certificate of ownership recorded on a blockchain. You're not buying the asset itself, whether that be an image or anything else.
You're buying a digital record that says you own it. Think of it like buying a deed to a house. The house still exists.
Anyone can drive past and take a photo, but only one person holds the deed. Despite how out of control the NFT space would get, the original concept came from a good place. In May of 2014, two guys, an artist Kevin McCoy and a tech entrepreneur Anel Dash, decided to digitize works of art while at a New York City hackathon.
Here's Anil talking about it in 2021 in a perfectly titled piece called NFTts weren't supposed to end like this. Quote, "The only thing we wanted to do was to ensure that artists could make money and have control over their work. " End quote.
For digital art, that was genuinely a new idea. A painting is one of a kind by nature. A digital file, however, is the opposite.
Anyone can copy it, download it, screenshot it. NFTs offered for the first time a technological answer to that problem. And for a lot of artists, the timing felt like a lifeline.
I'll share a few world examples of how NFTs made some artists rich later in the episode. Now, on Cold Fusion, we regularly cover cuttingedge tech, but one part of technology that's becoming ever more important is software. That's why we've partnered with our sponsor boot.
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dev for supporting Coldfusion. Now, back to the story. From 2018 to 2021, there was a meteoric rise.
The advocate said NFTts would revolutionize art and ordinary people could become millionaires in months. And for a while, this seemed true. Artist Tyler Hobbes put up 999 pieces and cleared them almost instantly for nearly $400,000 in Ethereum.
One thing that made the idea of NFT so powerful for artists is that if a buyer sold it to someone else, the original artist will still receive a percentage of the royalties. So, in Tyler's case, secondary royalties pushed his value up to $9 million. An 18-year-old designing logos on Discord for pocket money minted one cartoon that ended up clearing his family's mortgage and car debt.
One UCLA digital arts graduate quit his day job after his first NFT sales, telling reporters that it was the best thing that ever happened to him. Meanwhile, famed British conceptual artist Damian Hurst went off the deep end. He created NFTts for thousands of his paintings.
Then he burned the originals. I'm not burning my art, he proudly declared. I'm transforming it into NFTTS.
Stories like this spread fast and in no time it was a case of monkey see monkey do. I want to get rich too. So as these things always go, money has a way of attracting a very different crowd once the stories get big enough.
When the celebrities started endorsing and promoting, the hype went to the stratosphere. Paris Hilton, who had been in the space since 2020, went on to launch multiple collections of her own. >> Since then, Forbes has named you one of the 50 top uh 50 most influential people in the NFT space.
So, congrats on that. You know what you're doing. >> Thank you.
I'm so proud. I love being part of this community and being a voice and sharing my platform and just getting the word out there cuz I think it's just such an incredible thing to be a part of. >> Yeah, I jumped in.
>> I know. I heard. I'm so happy I taught you what they were.
>> You did. You taught me what's up and then I bought an ape. >> I got an ape, too, because I saw you on the show with people and you said you got a moon.
So, I went and I copied you and did the same thing. >> You did? >> Mhm.
>> This is your This is your ape. We >> debuted. That's really cool.
>> Like the hat, the shades. >> Now, what >> celebrities were going around on national television showing off cartoon apes that they'd paid hundreds of thousands of dollars for. Other big names like Eminem, Snoop Dogg, Steph Curry, and Serena Williams all took the plunge.
By this stage, it was clear that something had shifted. It definitely had stopped being about the art and was just another way to make a boatload of money. But some others viewed NFT trading as a community.
That's exactly what the board apach club was built for. It was launched in April of 2021. 10,000 algorithmically generated cartoon apes were sold for eyewatering amounts.
But the product being sold wasn't really the image. There was a membership, a private club, exclusive IRL events, a members only Discord, and a very public signal that you had arrived. Justin Bieber paid around $1.
3 million for his. The status symbol had a price tag that anyone could look up, which was sort of the whole point. Global brands were watching this closely, and they started jumping in to get in on the action.
Nike acquired a virtual sneaker company, RTFKT, in late 2021. Adidas launched its own collection. At one point, even Charm and Toilet Paper was selling NFTts, and that probably should have been a warning sign.
So anyway, NFT trading volume went from 82 million in 2020 to 17. 6 billion in 2021. And that kind of growth almost always means one thing, a massive bubble.
>> What the hell's an NFT? Apparently cryptocurrency. Everyone's making so much money.
Can you please explain what's an NFT? Anil Dash, one of the creators of the NFT, looked on in horror solemnly. He noted in 2021, quote, "Nothing went the way it was supposed to.
" End quote. So, at this stage, people believed in the technology and the demand. It looked real.
So, what went wrong? Let's begin with that sale that started it all. The buyer of that $69.
3 million people image was a Singapore-based crypto investor who went by the pseudonym Metakovven. Bele himself seemed to know that the market was shaky. As reported by Bloomberg just days after the sale, he went on Fox News and said it directly.
Quote, I absolutely think it's a bubble. To be quite honest, I go back to the analogy of the beginning of the internet. There was a bubble and the bubble burst.
End quote. The $69 million sale was far from the only problem. Wash trading was rampant across the whole market.
And the concept is straightforward. You sell an NFT to yourself at an inflated price using two wallets. Anyone checking the history assumes that that's what the market thinks it's worth.
As reported by Bloomberg, on one marketplace called Looks Rare, Wash Trading accounted for $18 billion. Roughly 95% of its reported trading volume. So, a significant chunk of the numbers that made the NFT market look enormous were in a very literal sense made up.
As the bubble was growing, many critics, myself included back then, were asking themselves, "What is the true value of an NFT? " The NFT basically gave you a receipt, not the file and not the copyright. If you don't own the rights, what are you really buying?
Yes, you bought a JPEG, so at first glance, the value of that should be zero. It's simply enough for anyone to copy and paste that image and view it for free and have the same viewing experience as the person who paid millions of dollars for it. But others would argue that it's more than just an image.
It's digitizing the very concept of ownership. Whoever bought the NFT has verifiable ownership on the blockchain. So ownership was the real value.
But there's a problem there. Even if this was valuable, early on in the NFT hype cycle, questions were being raised about this. How do you know that the original seller of an NFT is actually representing the real artist?
What if that owner on the blockchain is not, you know, the real owner? In 2018, Terrence Eden proved this point. He managed to put himself as the owner of the Mona Lisa on the blockchain.
It was verified by Verestart, a blockchain art certifier. Although quickly resolved, the stunt proved a point. Ownership only meant something if everyone agreed it did, and eventually enough people stopped agreeing.
As time progressed, the value of NFTts kept falling. And it turns out that the value of that blockchain ownership for art was almost zero as well. Buyers didn't know at the time, but the hype machine was about to run out of steam.
The collapse happened the way that most bubbles deflate. Gradually at first, then suddenly in May of 2022, daily NFT sales had dropped 92% from the September 2021 peak. Active wallets had fallen 88%.
From 119,000 down to around 14,000. The buyers dried up. The flippers stopped flipping.
And the collections that had commanded hundreds of thousands of dollars started sitting unsold. Remember Justin Bieber paying $1. 3 million for his Board Ape?
By early 2026, that same NFT was worth around $12,000. The board ape yacht club, once the symbol of the whole movement, had a floor price of around $429,000 at its peak. By 2025, it had now fallen to around $27,000, wiping out roughly 93% of its value.
The wider data of the market overall was equally stark. NFT trading volumes collapsed by 93%. A 2024 report found that 96% of NFT projects were effectively dead.
The average lifespan just over a year. The institutions quietly started backing out. Christy's auction house, that outfit that sold the Bele NFT, admitted defeat and closed their digital arts department in September of 2025.
Another auction house, Sophies, laid off most of its NFT team in 2024. In early 2026, Nifty Gateway, one of the original NFT marketplaces, shut down entirely. At their peak, they moved over 300 million in sales.
Then came the lawsuits. Nike quietly shut down its virtual sneaker NFT unit, RTFKT, in December of 2024. Buyers sued for $5 million, accusing the company of hyping up the project and then walking away.
They left buyers holding assets worth a fraction of what they paid. Other big names like Shaquille O'Neal paid out 11 million plus attorneys fees to buyers of his astral project NFTts. And although Bitcoin and Ethereum have rebounded in price since the crash of 2022, NFTTS never did.
Now, stepping back and looking at all of this together, what you're seeing is a complete unraveling. The celebrities are gone, the brands pulled away, the platforms vanished, and the money went up in smoke. The pattern was pretty consistent.
Generate excitement, take the money, and leave. The people left holding the bag were on their own. So, is there anything left?
Sort of. Some argue that the speculation is now gone, but the underlying technology didn't disappear with it. And when you look at where the serious money has actually moved, there's something to that.
Real world asset tokenization is the idea that's gained the most traction. Instead of cartoon apes, the idea is to tokenize assets that already have real world value. Things like property, private credit, or commodities.
By Q3 of 2025, that market had crossed 30 billion with institutions like Black Rockck and Franklin Templeton actively involved. Web 3 gaming is another space to be watched here. NFTts could carry real in-game utility rather than just a price tag.
So, we'll see. The honest take is that the technology was real. The frenzy that turned it into a $17 billion market in a single year was never the technology's fault.
It was the fault of human greed. Interestingly, while many NFT companies died, companies like Louis Vuitton, Disney, and the NBA do have NFTs that are stable and selling well, so the story may not be over. The NFT boom was a perfect example of a fatal flaw in financial markets.
The object for sale is only worth what a buyer is willing to pay. If, for one reason or another, the majority of buyers have shared psychosis and become delusional, they bid the prices higher and higher, more people see that high price and they want to make money, too. And in that you have the beginnings of a bubble.
For the case of the NFT, it was clear that a copy and pasteable image wasn't worth hundreds of thousands of dollars, but the prices sent the clear signal that some of them were worth that much. However, the big dogs in the NFT trade knew what game they were playing from the start. Reflecting on the mania in 2025, Colin Lee tells the Australian Financial Review, quote, "We were very much about getting in and getting out within 24 hours.
" And that just sums it up. When you sell a JPEG for $69 million or a cartoon ape for half a million, the question becomes, what were people really buying? Ownership, status, the feeling of being early to something, or maybe just the greater fool theory wrapped in crypto language.
The technology is still here, but the jury is still out on its mainstream use case. So, what do you guys think? Were NFTs just ahead of their time, or was it always bound to end up as a disaster?
Let us know in the comment section below. For me, looking back, I do find it hilarious just how overinflated the market got. Obviously, not for the people that lost money, but just all the hype around it.
It does make you think about how things are today. And just maybe we're doing the same thing again with LLMs. Sure, they're definitely useful and worth something, but hundreds of millions to trillions of dollars in their current state, it could be seen as yet another case of overenthusiasm for something that's new to the mainstream.
Anyway, thanks for watching. My name is Dogo and you've been watching Cold Fusion and I'll catch you again soon for the next episode. Cheers guys.
Have a good one. Cole's fusion. It's new thinking.
