Charlie Lee, the creator of major cryptocurrency Litecoin (LTC), believes that the ongoing spike in popularity of the nonfungible token, or NFT, industry has much in common with the 2017 initial coin offering, or ICO, mania.
Lee provided at least five similarities between 2021’s NFT popularity and 2017’s ICO mania, also comparing both to the altcoin craze in 2013 in a tweet on Tuesday.
According to the Litecoin creator, all three cryptocurrency phenomena look very similar, as they are easy to create “with no barriers” and simple to understand and explain. Lee noted that NFTs, ICOs and 2013’s altcoins also have a big similarity in terms of adoption — as all of them bring, or used to bring, “tons of new people into crypto.”
Similar to the high prices and pumps of altcoins in 2013, ICOs and NFTs are associated with massive hype and fear of missing out. However, “Few will hold and have value,” and most people did not or will not own them, Lee concluded.
Lee previously expressed some bold criticism over the NFT industry, claiming in February that NFTs have “zero cost” of creation. “Because of the near zero cost to create another NFT, the market will eventually be flooded with NFTs from artists trying to cash in on this craze. Supply will overwhelm demand and the prices will eventually crash,” the creator of Litecoin predicted.
Lee is not alone in thinking that NFTs are the new ICOs, as many crypto enthusiasts have drawn parallels between the two major concepts in the crypto industry recently. Michael Goldstein, president of the Satoshi Nakamoto Institute, also tweeted Monday that “NFTs are the ICOs of 2021.”
Andrew Kang, a crypto investor and co-founder of Mechanism Capital, also took to Twitter Tuesday to pinpoint that NFTs have become increasingly popular among celebrities who may "rug all their fans," implying they are purely looking for profits.
Representing a new method for digitally buying and selling art and other media, NFTs have indeed gotten attention from popular celebrities recently, including Canadian musician Grimes and Linkin Park rapper Mike Shinoda. Celebrity endorsements apparently make up another solid parallel between NFTs and ICOs, as a number of ICOs in 2017 were largely supported by celebrities, including American music producer DJ Khaled and American actor Steven Seagal.