The Current Meta
As July 2018 draws to a close, the broader cryptocurrency market sits deep in bear territory. Bitcoin hovers around $8,200, down over 60% from its December 2017 all-time high near $20,000. Ethereum trades near $467, a far cry from its peak above $1,400. Total crypto market capitalization has contracted from roughly $830 billion at the start of the year to approximately $254 billion by the end of July.
Yet beneath the gloom of falling prices and waning retail interest — Coinbase web traffic has plummeted from 126 million monthly visits in January to roughly 29 million by June — a quiet revolution in digital ownership continues to evolve. Non-fungible tokens, or NFTs, barely eight months removed from the CryptoKitties phenomenon that congested the Ethereum network in late 2017, are proving that blockchain-based digital collectibles have staying power far beyond speculative hype.
Volume and Floor Dynamics
CryptoKitties remains the dominant NFT project by volume, though trading activity has understandably cooled from its December 2017 frenzy when the game accounted for over 25% of all Ethereum network transactions. At its peak, some CryptoKitties sold for over $100,000 worth of ETH. By mid-2018, the average sale price has settled into a more sustainable range, with rare “fancy cats” and generation-zero kittens still commanding premiums of several hundred dollars.
The secondary market for CryptoKitties tells an important story: while speculative flippers have largely exited, a core community of collectors and breeders remains active. Dapper Labs, the Vancouver-based startup behind CryptoKitties (originally Axiom Zen), has continued developing the platform, releasing new features and limited-edition cats to maintain engagement.
Beyond CryptoKitties, a growing ecosystem of NFT projects is emerging. Platforms like Rare Bits (an NFT marketplace), OpenSea (which launched in late 2017), and Axie Infinity (which would later raise a $1.46 million seed round) are building infrastructure for a broader digital collectibles economy. Trading card games, virtual real estate, and in-game items represent the next frontier for tokenized digital assets.
Community Sentiment
The NFT community in mid-2018 is small but passionate. Discord channels and Twitter feeds dedicated to CryptoKitties and other NFT projects buzz with activity from collectors, developers, and artists experimenting with the concept of provable digital scarcity. The sentiment is cautiously optimistic — participants recognize they are building something new, even as the broader crypto market experiences what Ethereum founder Vitalik Buterin publicly calls “the tail end of a crypto bubble.”
Developers are particularly excited about the ERC-721 token standard, which provides a unified framework for creating non-fungible tokens on Ethereum. Prior to ERC-721, each NFT project essentially built its own standard, creating fragmentation and interoperability challenges. The formalization of ERC-721, proposed by Dieter Shirley and others from the CryptoKitties team, represents a critical step toward a more cohesive NFT ecosystem.
The art world has begun taking notice as well. Early digital artists are exploring how blockchain technology can provide provenance tracking and enable new forms of creative expression. While the explosion of crypto art is still years away, the foundational pieces are being laid in the summer of 2018.
The Next Evolution
Several trends are converging to push NFTs beyond their CryptoKitties origins. Gaming represents perhaps the largest opportunity — the concept of true ownership of in-game items resonates deeply with players who have spent billions on virtual goods they do not actually own. Projects exploring blockchain integration with gaming are attracting developer talent and early investment.
Virtual worlds like Decentraland and Cryptovoxels are tokenizing digital land, creating the first experiments in metaverse real estate. Each plot of virtual land is represented as an NFT, tradeable on secondary markets. While the user experience remains primitive, the vision of user-owned virtual economies is compelling enough to attract a dedicated following.
Interoperability between NFT platforms is another emerging theme. Developers envision a future where a sword earned in one game could be traded and used in another, or where a digital collectible from one platform could be displayed across multiple marketplaces. The ERC-721 standard is the first step toward making this vision technically feasible.
Investor Takeaway
The NFT space in July 2018 remains deeply nascent. Transaction volumes are a fraction of the broader crypto market, and most NFT projects have yet to find product-market fit beyond a small community of early adopters. However, the fundamental value proposition — provable digital scarcity and true ownership of digital assets — addresses a real and growing demand as more of human life moves online.
For those willing to look past the current bear market, the building blocks being assembled in the summer of 2018 are noteworthy. The combination of standardized token protocols, growing marketplace infrastructure, and expanding use cases beyond collectibles suggests that NFTs represent more than a passing fad. The projects and platforms being built during this quiet period may well define the next chapter of digital ownership.
Disclaimer
This article is for informational purposes only and does not constitute financial advice. NFT investments carry significant risk, including the potential for total loss. Past performance is not indicative of future results. Always conduct your own research before making investment decisions.
CryptoKitties consuming 25% of all Ethereum transactions at peak congestion was the first real stress test of the network. It exposed scaling issues that are still being debated today.
People forget CryptoKitties proved digital scarcity works. The trading volumes cooled but the concept of unique tokens on a blockchain stuck. Every NFT project since owes something to those digital cats.
bit_reaper 25% of all ETH transactions at peak congestion was insane. it literally forced the scaling conversation and gave us L2s faster than anything else could have
Total market cap dropping from $830 billion to $254 billion and CryptoKitties still had active trading. When something survives a 70% market crash you know it has actual demand behind it.
survived is generous. breeding volume dropped 98% from peak. but the concept endured and thats what mattered for ERC-721
nft_graveyard 98% volume drop but ERC-721 became the standard for every NFT after. the cats were the proof of concept. the standard was the lasting contribution
coinbase traffic dropping from 126M to 29M in 6 months and CryptoKitties still had a community. say what you want about NFTs but that was real engagement during nuclear winter