The crypto industry is buzzing with quiet optimism these days, and for good reason. Bitcoin’s price has doubled since the beginning of the year, and last week’s conviction of Sam Bankman-Fried has given a much-needed sense of closure to the devastating events of 2022. But in one corner of the cryptocurrency industry, winter seems colder than ever.

I’m referring to the once thriving NFT sector, which fell off a cliff last year and continues to fall. Just how bad is it? On Friday, OpenSea used the hype surrounding the Bankman-Fried lawsuit to announce the unpleasant news that it was laying off 50 per cent of its staff. Recall that OpenSea is the flagship brand in the NFT world and early last year raised $300 million in a Series C at a valuation of $13.3 billion. It would be a miracle if its valuation today was even half that.

OpenSea’s problems have partly been its fault. These include the decision to stop charging royalties that guarantee artists a share when their work is sold on the platform. This decision was taken in response to the rise of competitors such as Blur, whose platform is designed to trade NFT consignments and now accounts for 70 per cent of all volume. However, the decision to join Blur and others in reneging on royalty promises has poisoned OpenSea’s relationship with many leading artists who have chosen not to sell their work on the platform.

As a result, OpenSea is now strategically adrift, as traders and artists alike have turned away from the platform, and plans for a token, long anticipated by cryptocurrency enthusiasts, are clearly on hold. The company’s CEO is making a brave face, tweeting that the layoffs are part of a new and improved “OpenSea 2.0,” but offering no specifics on plans to turn things around. It doesn’t help that there have long been rumours of a dysfunctional corporate culture at OpenSea, as evidenced by the recent conviction of a former senior manager for insider trading.

Many of OpenSea’s problems relate not just to OpenSea itself, but to the wider problems facing the NFT market as a whole. The most obvious of these is that the idea of spending hundreds or even millions of dollars on a digital monkey (or anything else) doesn’t appeal to most people, who would rather spend their money on anything else. And while some NFT collections like Bored Apes or Cryptopunks have become the blue chip equivalent of the sector, they too continue to fall in value. It doesn’t help that the NFT market is becoming increasingly diluted, as companies hungry for a quick buck continue to dump new and unwanted collections on a weekly basis.

Despite all this, NFT should not be discounted. The ability to mint and transfer a unique asset on the blockchain has promising applications, especially when it comes to things like coupons, ID cards, and fan clubs. Even as the NFT art market crumbles, companies like Starbucks continue to embrace the technology. In one form or another, NFTs will remain, but it will be a long time, perhaps never, before we see people throwing away millions of dollars for digital monkey possessions again.