What is an NFT, and does buying one still make sense?
Contents · 8 sections
In March 2022, when NFTs were everywhere, I wrote an article about what non-fungible tokens are and how to buy one. The news was full of digital pictures selling for millions, plots in the metaverse and cartoon ape collections priced like a flat in central Sofia.
Enough time has passed to look at the topic more soberly. In this updated version I explain what an NFT really is, what happened to the market after the boom, where the technology makes real sense and how to buy an NFT without falling for a scam, if you still decide to try.
What is an NFT?
An NFT (non-fungible token) is a unique record on a blockchain that proves you own a digital asset: an image, a video, a ticket, an in-game item or a document.
A simple example: if we swap two 20-euro notes, neither of us loses anything, because the notes are equal. They are fungible. The original Mona Lisa, however, is one of a kind. An NFT does the same in the digital world: it turns something that can be copied endlessly into a unique asset with an owner.
One thing many people miss: when you buy an NFT you usually buy the token itself, not the copyright to the work. You may own the token and still have no right to print the picture on T-shirts. It all depends on the project's terms.
What happened to the market?
The first NFTs appeared in 2014, but the real boom came in 2021. That year Beeple's "Everydays: The First 5000 Days" sold at Christie's for 69 million dollars, and total NFT sales reached about 25 billion dollars.
High volumes continued into early 2022, but a large part came from wash trading: traders buying from and selling to themselves to farm platform rewards. Then the crypto market crashed and interest fell sharply. In 2023 trading volume was about 16.8 billion dollars, and in 2024 it kept falling. Many collections once worth tens of thousands of dollars now barely find buyers.
Why did the bubble burst?
To be honest, most buyers in 2021 cared neither about the art nor the technology, only about a quick flip. When new buyers ran out, prices fell. There are also some specific reasons:
- Royalties are no longer guaranteed. In 2023 OpenSea, the largest marketplace, made creator fees optional for new collections, and from early 2024 for older ones.
- Big brands are pulling out. On 2 December 2024 RTFKT, the digital products studio Nike bought in 2021, announced it was winding down.
- The metaverse did not happen. Virtual plots that sold for thousands lost most of their value.
- Regulatory pressure. In August 2024 the US SEC warned OpenSea that it might treat some NFTs sold on the platform as securities.
Where does NFT technology make sense?
- Event tickets that are hard to forge and can give holders extra perks.
- Games where players truly own their items and can sell them.
- Digital identity and blockchain domains such as name.eth.
- Certificates and documents: diplomas, warranty cards, proof of origin for luxury goods.
- Tokenisation of real-world assets such as bonds, loans and real estate.
How to buy an NFT safely
- Set up a wallet. The most popular are MetaMask (Ethereum and compatible networks) and Phantom (Solana). For valuable assets use a hardware wallet.
- Buy crypto on a licensed platform and move it to your wallet. Most NFTs are priced in ETH or SOL.
- Choose a marketplace. The best known are OpenSea, Magic Eden and Blur. Always check you are on the official address.
- Research the collection: is the profile verified, who is behind it, how many real owners there are, and is there real trading or just a few deals between the same wallets.
- Never sign anything you do not understand and never share your recovery phrase.
The risks
- Low liquidity: buying is easy, but nobody may want to buy from you.
- Inflated volumes and prices.
- Phishing and fake collections.
- No protection if the project or the marketplace disappears.
Regulation and taxes
The EU's MiCA regulation, which comes into full application on 30 December 2024, generally does not cover unique NFTs. However, if a token is part of a large series, is fractionalised or in practice works like a fungible asset, it may fall within scope. Substance matters, not the name.
Bulgaria has no specific rules for NFTs. They are usually treated as crypto-assets and individuals' gains are taxed at 10%, declared in the annual tax return. For larger amounts, talk to an accountant.
My view
In 2022 I looked at NFTs with interest and a dose of scepticism. Today I think the end of the speculative frenzy is a good thing. Technology that proves ownership in a digital environment has a future in tickets, games, documents and the tokenisation of real assets.
As an investment, though, I would be very careful. If you buy an NFT, do it because you like the work or need it for a specific purpose, not because you expect a quick profit. See also my guide to investing in gold.
This article is for information only and is not investment advice.
Petar Dyaksov
Entrepreneur, investor and managing partner at SEOMAX, with more than 15 years of experience in e-commerce and digital marketing. He builds businesses in technology and e-commerce, invests in companies and supports entrepreneurs. Speaker, trainer and mentor at dozens of conferences, seminars and entrepreneurship programmes.
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