Only a yr in the past, Washington DC’s Hirshhorn artwork museum – the capital’s preeminent up to date artwork museum – was asking whether or not non-fungible tokens (NFTs) have been “fad or the way forward for artwork”. Twelve months on, it seems to be like “tax write-off” may need been the fitting reply.

This yr was not simply the yr that cryptocurrency values have been burned by investor fears, rising rates of interest, inflation and scandals, it was the yr that crypto’s cartoonish artwork cousin the NFT – an digital identifier confirming a digital collectible is actual – collided with actuality.

In March 2021, Christie’s bought a digital collage NFT by the artist Beeple for practically $70m (£58m). In January pop star Justin Bieber paid $1.29m (£1m) for a “Bored Ape” NFT, a graphic of a, properly, bored ape. Everybody from Michael Jordan to former first woman Melania Trump was in on the sport.

Now – alongside the broader crypto market – the urge for food for NFTs is so diminished {that a} specialised market has sprung up for collectors seeking to unload their once-valuable “digital collectibles” as tax losses to offset their revenue tax payments.

A just lately launched service, Unsellable, goals to assist collectors do precisely that. Consider it as a distressed asset hearth sale.

“Whereas each funding class has its losers, lots of the NFTs we invested in weren’t solely down large; they have been now completely nugatory … illiquid … unsellable,” the service says on its web site.

Unsellable – which says it’s “constructing the world’s largest assortment of nugatory NFTs” – buys the underlying tokens for a fraction of their authentic worth and offers an official receipt for tax functions.

Launched a month in the past, Unsellable now has 5,000 NFTs, and founder Skyler Hallgren expects that to develop to fifteen,000 by the tip of the month. “They’re an fascinating artefact of a time period out there,” he mentioned. However he expects the NFTs are “prone to proceed to be nugatory”.

“We realized there was a sensible downside that was locking up a whole lot of assets and we might create a whole lot of worth for individuals by providing to purchase up their nugatory NFTs and permit them to reap the losses,” mentioned Hallgren.

“For some of us, the quantity they paid for NFTs is sort of excessive and have been shopping for them for a penny so the write-off they will take is sort of excessive.”

It’s simple to see why consumers could also be eager to promote for a fraction of their authentic funding. Demand for digital certificates of possession that underlie NFTs has evaporated. Greater than $19bn (£16bn) was spent on NFTs between January and March 2022. Since then, in keeping with blockchain evaluation agency Chainalysis, month-to-month spending has dropped by 87%.

Simply $442m (£368m) was spent in November, and the variety of energetic NFT merchants is down round two-thirds from its peak a yr in the past. Based on the Nonfungible.com market tracker, 144,000 NFTs have been bought for $142m (£118m) on 16 January 2022. This Wednesday, there have been 17,000 gross sales for $28,000 (£23,294).

Probably the most traded assortment of NFTs are photos from the Bored Ape Yacht Membership (BAYC), just like the one Bieber purchased. Every Bored Ape picture incorporates a distinctive mixture of 170 doable traits, together with expression, headwear, clothes and extra. “All apes are dope, however some are rarer than others,” the corporate says.

Yuga Labs, the corporate behind Bored Ape, was just lately hit with a class-action lawsuit claiming it had unrealistically hyped the worth of its intangible items. The lawsuit named celebrities – and former NFT evangelists – together with Bieber, Paris Hilton, Madonna, Jimmy Fallon and Kevin Hart, as co-defendants.

“Defendants’ promotional marketing campaign was wildly profitable, producing billions of {dollars} in gross sales and re-sales,” the lawsuit, filed on 8 December in a district courtroom in California, mentioned.

“The manufactured superstar endorsements and deceptive promotions relating to the launch of a complete BAYC ecosystem (the so-called Otherside metaverse) have been capable of artificially improve the curiosity in and worth of the BAYC NFTs throughout the related interval, inflicting buyers to buy these shedding investments at drastically inflated costs.”

The NFT market is a good distance from the place it sat in October 2021, when Mike Winkelmann – the digital artist generally known as Beeple – bought his work at Christie’s, making him “among the many high three most respected residing artists”.

Final week, Winkelmann remained upbeat concerning the web’s place in creating artwork, however he conceded: “The market is a bit crap proper now,” he instructed Bloomberg. “Do I believe it’s going to return to the place it was? I don’t know … I positively assume it’s going to go up from right here.”

And one former superstar, and US president, agrees. Earlier this month, Donald Trump launched a set of digital collectibles depicting him as, amongst different issues, an astronaut, a cowboy and a superhero. It bought out in lower than a day.