The Absurd fall of NFTs and Web3: From Hype to Disillusion
Only recently, NFTs (non-fungible tokens) and Web3 were touted as the future of the internet, a decentralized, user-empowered revolution to transform finance, art, gaming, and even social media. News headlines roared with stories of million-dollar JPEGs, blockchain-based metaverses, and visions of a new digital economy unfettered by the stranglehold of centralized tech titans.
But by 2024 and into 2025, the fervor has cooled considerably. What was a thriving industry awash in venture capital and celebrity support just a few years ago has been brought low by a brutal reckoning. Let’s take a look at the collapse of NFTs and Web3 and why the digital utopia promised never quite materialized.
The Rise: Hype, Speculation, and Digital Gold Rush
NFTs had become a means of establishing digital ownership through blockchain technology, with the most frequent using Ethereum. From music and art to virtual property and profile photos (PFPs), NFTs promised to provide creators with new means of making money from their work and consumers with an interest in digital culture.
At the same time, the term “Web3” came up to refer to a blockchain-evolved web in which users, not corporations, controlled their data, identity, and digital assets.
Between 2020 and 2022, NFT marketplaces such as OpenSea burst in volume. Bored Apes, CryptoPunks, and other PFP collections were the status symbols. DAOs (decentralized autonomous organizations) and DeFi (decentralized finance) protocols drew in billions of investment. Web3 startups raised jaw-dropping funding rounds. For a while, it seemed like the internet itself was being remade.
The Fall: Cracks Beneath the Surface
The collapse wasn’t abrupt, it was a gradual unwinding, as the distance between promise and performance grew.
1. Speculation Over Substance
The majority of the NFTs were purchased not for utility or artistic value but for speculation. FOMO and the greater fool theory motivated the market, buyers believed someone else would pay a higher price in the future. When the hype died down, the demand dried up. As of 2025, more than 95% of NFT collections are valueless or illiquid.
2. Scams, Rug Pulls, and Frauds
With little regulation and low entry barriers, the Web3 and NFT space became a haven for scammers. Projects went POOF overnight with investors’ funds (“rug pulls”), and pump-and-dump operations became epidemic. The prevalence of scams undermined trust in the public.
3. Environmental and Ethical Backlash
NFTs, driven largely by energy-hungry proof-of-work blockchains (particularly Ethereum prior to its 2022 merge), were criticized for their environmental footprint. Meanwhile, the absence of content moderation in decentralized apps created concerns around hate speech, piracy, and illicit activities.
4. No Clear Use Case
Even with grandiose promises, the majority of Web3 applications did not live up to significant enhancements over what came before. Crypto wallets still confounded ordinary users. Decentralized apps (dApps) were often clunky, shaky, or vacant. More often than not, centralization leaked back in via custodial wallets or centrally operated infrastructure providers.
5. Collapse of Market and Capital Exit
When interest rates increased and the overall crypto market slid into a bear cycle, VC investment evaporated. NFT values plummeted. Heavy hitters such as Meta and Reddit retreated from their Web3 plans. By 2025, most of the previously buzzy projects had silently shut down or pivoted out of blockchain altogether.
Lessons Learned and the Path Forward
Though the collapse of Web3 and NFTs has been spectacular, not everything was for nothing. The cause revealed fundamental weaknesses in today’s internet, from monopolistic platforms to invasions of privacy and triggered mainstream curiosity toward fresh digital approaches.
There are some of the technology that will probably still have future value: blockchain-based identity, decentralized storage, and smart contracts all have real but niche applications. It wasn’t the tech that was the issue, it was execution, speculation, and trying to make money from hype.
As the dust settles, it’s evident that in order for a genuinely user-first, decentralized internet to succeed, it requires more than token airdrops and Twitter hype. It requires significant problems to solve, viable business models, and tools available to all,not merely crypto insiders.
Conclusion
The decline of NFTs and Web3 is a cautionary tale of the risks of hype-driven innovation. It’s a reminder that technology is not revolutionary in itself, it’s how it’s used, adopted, and brought into people’s lives that makes all the difference. For now, Web3’s revolution has been halted. Whether it comes back in a new incarnation or gets forgotten in history as a failed experiment that remains to be seen.