Why the NFT Craze Is a Bubble Waiting to Pop

Nonfungible tokens (NFTs) are the newest new thing in the digital world.

Born of the blockchain’s digital ledger, NFTs are cyberassets emblematic of the modern era. Their existence on a blockchain creates a historical record, and this nonfungibility is the source of an NFT’s value, as each one’s identity is unique, precluding its exchange with another. Many are produced in a limited run, just as an artist creates a set number of a particular work. In early 2021, a digital artist named Beeple sold an NFT of a 10-second video for $6.7 million.

Since early 2020, collectors have traded pieces of art, basketball hoop shots, music&#...