Forbes India 15th Anniversary Special

Has the NFT bubble already burst?

Non-fungible tokens shot to popularity earlier this year with headline-grabbing, multi-million-dollar sales of digital-only artworks. Globally, sales and token values have since fallen, while in India, NFT usage is slowly catching up. How much of it is hype and how much is here to stay?

Varsha Meghani
Infographics By Sameer Pawar
Published: Aug 10, 2021 01:55:26 PM IST
Updated: Sep 9, 2021 01:43:49 PM IST

Artist Anantha Krishna Nadamel and his digital art available as NFT. Clockwise: Spaceman Meme, Dogs Out, and Space Bistro.

A day before the record-breaking $69 million sale of his digital-only artwork by Christie’s auction house in March 2021, Beeple—the artist whose real name is Mike Winkelmann—reportedly said: "I actually do think there will be a bubble, to be quite honest. And I think we could be in that bubble right now.”

Multiple headline-grabbing sales of unique digital tokens, known as non-fungible tokens or NFTs, soon followed: A blue-hued pixelated face of an alien sporting a headband—one of 10,000 unique 'CryptoPunks' released by creator Larva Labs in 2017—sold for $7.6 million; an NBA video highlight featuring LeBron James dunking a basketball in the late Kobe Bryant’s signature reverse windmill style sold for a $400,000; and even Twitter founder Jack Dorsey’s first-ever tweet, dated 2006 and promoted as an NFT, sold for a cool $2.9 million.

And so it goes that just about anything can be packaged and sold as an NFT: A jpeg image, an MP3 file, a meme, a tweet or a video clip. But buyers don’t own anything physical or tangible as they would if they were buying a painting or sculpture in the traditional sense. Instead, they own a string of code on the blockchain that represents ownership and authenticity of the work, but not the work itself. In the Beeple case, for example, the artwork, titled Everydays: The First 5000 Days, a mosaic of all the images the artist has been posting online each day since 2007 was collaged into a jpeg file and 'minted' into an NFT to create digital certificate of ownership that can be bought and sold. So Vignesh Sundaresan, a Singapore-based blockchain entrepreneur and the winning bidder doesn’t possess the original jpeg of the collage. That remains with the artist and can continue to be seen and shared online. Sundaresan merely owns a digital “token” that proves he owns the original artwork. Ownership is recorded on the blockchain, a shared ledger maintained by thousands of computers around the world.

Google Trends, a rough but indicative metric, shows that global interest in the term NFT shot up in February, peaked in March and has since fallen dramatically. In India too, interest in the term started climbing in mid-February, peaked in May and declined precipitously in June. By July, interest had plateaued to February levels.

“The NFT bubble has burst already. We are seeing investors moving back to traditional crypto token investing. The frenzy, over-fuelled by the media, is now over,” says Sanjay Mehta, founder of venture capital firm 100X.VC and a long-time cryptocurrency investor. Data confirms this: Daily NFT sale volumes have fallen from $100-plus million in March to around $10 million today, according to data tracker

In a Clubhouse chatroom, Anantha Krishna Nadamel talks with childlike exuberance about how he made around Rs 2 lakh in a matter of days from selling NFTs. “If I can do it, anybody can,” says the 23-year-old digital artist. He works for TCS as a visual designer by day, earning Rs25,000 a month, and moonlights as an NFT advocate by night. He set up NFT Malayali along with his mentor, San Francisco-based artist Melvin Thambi, in March 2021, to help fellow Kerala-based artists become NFT-savvy. “I made so much money from it. I can now do a masters [degree] abroad without taking on any debt,” he says, almost in disbelief. “I wanted my friends also to benefit from it.” What started out as a WhatsApp group with 4-5 artists, quickly snowballed into a 100-person collective that includes artists from across India and some from overseas. “It’s been a crazy few months,” he says, with the same incredulity, referring to the time since March 2021 when he began experimenting with NFTs.  

A quick glance at Nadamel’s Instagram page shows a series of science-fiction digital drawings: Spacemen exploring an “alternate earth” of rocky terrain and flowing waterfalls, a “space bistro” depicting spacemen “chilling” amid the chaos around them, and giant mechanised creatures or “future soldiers” rescuing civilians. “I’ve imagined a story in which there’s been an apocalypse on earth and soldiers and spacemen from another planet--alternate earth--come to save our planet. Each work depicts a part of that story,” says Nadamel. And each work was sold for 1 ethereum (ETH), the second-largest cryptocurrency after Bitcoin, or around Rs2.30 lakh in today’s prices. In all, he’s sold 26 NFTs so far and made roughly Rs30 lakh.

This what the process involves: Registering with a crypto exchange by linking a bank account, buying ETH from the exchange, and transferring it into a crypto wallet. After creating the artwork on his iPad, Nadamel minted it into an NFT by paying a “gas fee” to the blockchain, using the ETH in his wallet. The artwork can then be uploaded to a peer-to-peer marketplace like OpenSea, the world’s largest, or Foundation, an invite-only platform. On being sold, the platform takes a 2-3 percent commission. Moreover, if the works further trade hands, smart contracts tied into NFTs enable the original artists to earn a royalty, usually around 10 percent.

“For the first work I minted I had to pay gas fees of around Rs 12,000. You can imagine for someone earning Rs25,000 a month, how big a gamble that is,” says Nadamel. Luckily, he managed to sell the work in a few days. He now helps upcoming artists, new to the NFT fray, by paying their gas fees.  

“Through NFT Malayali we help artists learn about NFTs, how to create and sell them, how to market and brand themselves on marketplaces, and how to approach collectors. We also have IIT-Delhi graduates who are blockchain experts to help with technical issues. We do this all for free,” explains Thambi.

The duo has been hosting weekly Clubhouse sessions since April. Initially 200-300 people would join in, but now just 50-60 people attend, indicative of slowing interest. Nadamel explains, “Besides the growing curiosity around NFTs, there was a Clubhouse boom that we benefited from early on.”  


An NFT is a one-of-a-kind asset in the digital world. A fungible asset, for the sake of comparison, is something that can be interchanged, like money. A Rs100 note can be exchanged for two Rs50 notes and it will still have the same value. Whereas a non-fungible asset cannot be interchanged because it has unique properties. Vincent van Gogh’s Sunflowers, for example, can be copied and reprinted multiple times but there will be only one original painting.

This explains the stratospheric prices of NFTs at the height of the so-called bubble.

Artist Amrit Pal Singh and his digital art series titled 'Toy Face'.

“There’s the pride associated with owning something original. It’s like owning the original Mona Lisa versus one of the tens of thousands of copies and reprints floating around,” says Amrit Pal Singh, an artist. He has sold NFTs of his Toy Face and other digital art creations for over $200,000 on global NFT marketplaces since February 2021.

Second, there’s the novelty of it. “It’s a new and exciting place and people want to catch in on the frenzy,” says one Delhi-based collector.

Third, crypto investors have seen their wealth appreciate considerably over the last year. The value of a single bitcoin surged from around $5,400 in mid-March 2020 to a peak of $64,000 in mid-April this year, before dipping to $45,000 at the time of writing this article. Similarly, ETH, the cryptocurrency by which most NFTs are bought and sold, traded at $240 in May 2020. A year later it had increased to $4,300, and it now stands at around $3,000. These crypto millionaires need somewhere to park their money and NFTs provide an avenue. “At present, collectors are mostly crypto investors and artists who’ve made money through NFTs,” says artist Santanu Hazarika.

“There is a method to the madness,” says Hitesh Malviya who has been investing in cryptocurrencies since 2016. Over the last three months he’s spent $30,000 to buy 20 NFTs.

Among his spoils is an NFT of the domain name India.Crypto which he bought for around $8,500 in an auction on OpenSea, a three-year-old, US-based NFT marketplace that raised $100 million in funding led by Andreessen Horowitz in July 2021 at a valuation of $1.5 billion. “In the real world there’s a huge opportunity in buying and selling popular domain names. A similar opportunity will arise in the virtual world too. As India becomes more entrenched in cryptocurrencies over the next 3-4 years, India.Crypto will become a domain name that everyone will want. At that time, it might even fetch me $100,000, who knows?” says Malviya.

Before making an investment, Malviya runs through a checklist: He checks out the top-selling NFTs on data tracking website; he surfs the internet to gather information about each of those top-selling works and their creators; he makes note of the sentiment on social media towards that artist, especially reading through Twitter threads, where most crypto investors—and therefore NFT buyers—are active. “I then make a shortlist and invest in what I think will be a good long-term bet,” he says.  

Scarcity is also key. “I’m taking a break from minting works now as I don’t want the value of my existing NFTs to drop,” says Nadamel.  

But prices are sometimes obscenely high. Take the case of a Pakistani meme titled ‘Friendship ended with Mudasir’ which was sold for 20 ETH tokens, valued at an eye-popping $52,500 (close to Rs39 lakh) at an NFT auction. A 2015 Facebook post by a man, who goes by the name Asif, announcing the end of his rapport with his friend Mudasir, while introducing his new buddy Salman, had gone viral. Since then, memes around the trio are used to announce changes in relationships. “It’s crazy,” concedes Malviya, “but value is set by the people willing to buy it. Think of diamonds. They’re just stones, but the cartels behind them and the purveyors of luxury, fabricated the value and so it is what it is today. Similarly, gold is just a metal. We, as a society, have given it its value." 

“We screen our artists before letting them on to our platform. That’s how we ensure quality works,” says Nischal Shetty, founder and CEO of WazirX, a popular Mumbai-based cryptocurrency exchange that recently started an NFT marketplace to showcase Indian talent. So far they’ve on-boarded 222 creators who have minted a total of 2,045 NFTs. Of those, 724 have been sold. Buyers are mostly of Indian origin, he says.  

Other NFT marketplaces have also popped up in India in recent times including ZebPay NFT, Kalamint and NFTically. The latter is not just a marketplace for creators to sell their digital works but is also a software-as-a-service offering that lets creators develop their own NFT storefronts for a fee. “Think of us as the Shopify for NFT creators,” says founder Toshendra Sharma.

Funding too is flowing into the space. “Sixty to 70 fundraises have taken place in the crypto space over the last 6-7 months,” says Akshay Aggarwal of Blockchained India. NFTically closed an undisclosed seed round in July 2021. Polygon, an Indian blockchain company, was recently funded by American billionaire Mark Cuban, among others. The startup hosts the popular horse-racing game ZedRun, which allows people to buy and trade unique horses as NFTs. Chennai-based Rage.Fan, which mints NFTs that people can buy, play fantasy sports and earn money in the process, raised $1.6 million from a clutch of global investors, including Cayman Islands-based Genesis Block Ventures and London and Hamburg-based Moonrock Capital in March 2021.

While investments in Indian companies are mostly coming from foreign investors at present, Indian investors are angling around. “Indian investors, both traditional venture capitalists and angels, are interested in the space. I’ve got calls from several such people who want to better understand the space,” says Shetty, who is bootstrapping WaxirX. Says Sharma, “India is a bull-run away from matching global standards in the NFT space.”


The weekly volume of NFT sales between end-April and end-May 2021 rose from $50 million to almost $200 million--a 300 percent increase, according to’s latest quarterly report on the NFT market (April to June 2021). By the end of June 2021, however, volume had bottomed out to $27 million per week.

“The business of collectible items has always been limited as there is no standardisation in items, and hence it can't scale. Investors will continue to evaluate the space as an experiment, but we will no longer see large sums of money getting poured into NFTs,” says Mehta of 100X.VC.

While the NFT bubble might have burst, it won’t lead to a “catastrophic loss of wealth” he says, as the market size is very small. “It will not cause any direct or indirect impact on investments in cryptocurrencies. The whole opportunity in NFTs is at a nascent stage and is evolving.”

Even though collectibles like CryptoPunks remain the most popular NFTs at present, other use cases will take precedence in time to come. Media companies like OTT platforms and content creators will use NFTs to their advantage, land deeds and other important documents can be converted into NFTs and stored for posterity. KoinEarth, a Bengaluru startup, is working towards converting enterprise documents like invoices into NFTs.

Outlandish use cases will also prevail. Already, virtual plots of land, packaged as NFTs, can be bought and sold on marketplaces like DecentralLand. Amrit Pal Singh, the artist, has bought a plot of land in the “metaverse”, a parallel digital universe where he has built a cafe to showcase his 'Toy Faces'. “It’s like a museum of sorts that you can browse through virtually. It’s a way of building a brand for Toy Faces,” he says, which will eventually help him drive up their value.

“It all makes sense,” says Aggarwal. “I spend 16 hours a day in front of my laptop. So why not enjoy my virtual life by buying into the metaverse. The possibilities are endless.”