NFTs have shaken up the digital trading space this year, however, one cryptocurrency expert is warning that 90 percent of their worth will plummet 'to little or no value over the next three to five years.'
For those unfamiliar with the concept, non-fungible tokens, described as 'digital trading cards,' are a unique digital asset encrypted with an artist's signature and which verifies its ownership and authenticity and is permanently attached to the piece.
It allows 'original' versions of popular online content - like viral memes, sports highlights and tweets - to be sold as if they were physical pieces of art.
And with big time players such as Elon Musk and the NBA getting behind the idea, there is money to be made in NFTs, with more than $10 million in NFT transactions now taking place daily, according to the website DappRadar.
Even meme-makers have gotten in on the idea, offering NFTs of their most viral offerings and making a lot of cash in the process.
Bad Luck Brian, the meme of Kyle Craven's hilariously bad yearbook photo, sold for more than $45,000.
Overly Attached Girlfriend, spawned from a YouTube video of Laina Morris satirically showing her love for Justin Bieber, has sold for $459,260.
And in March, Twitter CEO Jack Dorsey's first tweet - 'just setting up my twttr' - sold as an NFT for just over $2.9million.
But the bubble is bound to burst, according to early cryptocurrency pioneer Fred Ehrsam, with the Coinbase co-founder giving NFTs three to five years before losing most if not all of their value.
'I go so far as to say that 90% of NFTs produced, they probably will have little to no value in three to five years,' Ehrsam said in an interview with Bloomberg TV this week.
'You could say the same thing about early internet companies in the late ’90s,' he said.
Ehrsam has seen such crypto concepts crash and burn seemingly overnight, with many such projects relying more on hype than substance.
'People are going to try all sorts of things. There’ll be millions and millions of cryptocurrencies and crypto assets, just like there were millions and millions of websites. Most of them won’t work,' Ehrsam revealed.
Ehrsam got his start trading Bitcoin back in 2010 as a foreign exchange trader at Goldman Sachs before leaving the firm in 2012 to start Coinbase with Brian Armstrong, which went public in April at a whooping $100 billion valuation, according to Observer.
In the months since offering an IPO, the crypto company's market cap has dropped by half amidst ongoing pressure for regulation.
However, Ehrsam still believes that cryptocurrency is truly 'the next internet-sized opportunity for the United States.'
'The world doesn’t change overnight, but you can see the seeds of exponential growth occurring already,' he said in the Bloomberg interview.
'I do think we will live in a future where for us to coordinate, we won’t need these centralized platforms today. That’s already true of financial services, in that you can be your own bank. You don’t need a central institution to hold your money anymore.'
© Associated Newspapers Ltd.