As I described in the column ‘Opinion: Are cryptocurrencies still in a bubble? Yes!’ I am very skeptical about most crypto assets right now. In my opinion there is still far too much for sale that should be worth nothing or almost nothing. This is no different for NFTs (Non-Fungible Tokens).
There are reasons why Bee .’s NFTsple of Cryptopunks are selling for huge sums and why others work no whistle costs. If you have a good step-by-step plan to distinguish the pearls from the polished pebbles, then you already have a whole big lead.
Think outside the box
NFTs are not just digital painting. You can basically make an NFT for anything. The projects with the most potential have not yet been discovered by the masses. If you find a project that no one understands because it’s creative, you can benefit a lot from it.
So there are many more categories for NFTs than just digital drawings. Spotify wants to integrate them into the platform, presumably for music on the blockchain. Kings of Leon already has a limited edition album released as NFT, and hard work is underway to integrate NFTs into games. The most tangible example of a use case for NFTs is real estate – homes in both the digital and real world are increasingly found on the blockchain.
If you have ideas for creative NFT projects that may or may not fall outside the ‘digital images’ category; put it on especially Discord!
Art as NFT: become an art dealer
I think people market for Non-Fungible Tokens and cryptocurrencies in general are totally wrong. It’s actually not important at all that you NFT or any other blockchain project. Much more important is what properties a project has – apart from blockchain, in other words. Blockchain is simply the underlying technology, just like the internet is to an influencer on Instagram or YouTube. Over time, you may not even realize that you are buying a cryptocurrency. It is then simply integrated into the products and services you use.
If you stillIf you want to buy regular’ NFTs, it is important to find out what kind of market it actually is. If you do it right, then you are trading in art. That is a profession in itself. A survey found that as many as 64% of those surveyed invested in NFTs purely to make a profit – not because this group was interested in the work purchased. That really has to change if we are to assume that the worst is over.
For many people, art is such a subject that is simply put ‘boring’ in the drawer. But if you can make big bucks on it, is it still boring? For many people there will be a button, and NFTs make it relatively easy to flip this button. But it will never be easy, unfortunately. We can make it a little less difficult.
Analyzing well
In the world of the art trade there are a few very important rules. First of all, we no longer live in the eighteenth century, so it is less important nowadays whether something looks ‘visually competent’. Instead, the meaning of the work or the underlying story of, for example, the work or the artist at least as important, and perhaps even more important.
That means you need context. For example, look at the title, or at what the artist has to say about his work. After all, that is how, for example, the Cryptopunk NFTs have become so wildly popular. These were the first NFTs and thus also the first art project as an NFT series.
Of course it is also important to look at the work. You can pay attention to aspects such as the shape, color scheme, the techniques used and just what you can recognize. There may be symbolism hidden in it. Sometimes this goes a bit further than you might think, because it is not always immediately clear.
For example, the same applies to music and films and videos as NFTs. Then it is important to ask yourself what exactly you see and/or hear and what this exactly tells you about the context, about the maker and about how it fits into society. You can’t just ‘just look at’ art, you can analyze it for striking features.
Additional Features
In the Discord group from Crypto Insiders, our Premium members had the argument that many NFTs have an additional use case. This is how the Bored Ape Yacht Club NFTs a ticket to exclusive meetings, and with Tomorrowland’s NFTs you get access to hidden concerts.
Some NFTs are for more practical purposes, such as proving your home’s title. This can significantly reduce the additional costs of buying a house.
Another interesting purpose of NFTs is that you don’t need physical space to store a large amount of art, one of our Premium members emphasized. In theory you can travel the world with a huge amount of digital art in your pocket. All you need is a piece of software. It is of course best to store your private keys in a hardware wallet for security, but they weigh next to nothing.
Is much going to zero?
Art was once a very boring subject that only creative people were involved with, but now everyone is working on it. I assume that most people don’t quite understand what they are putting their money into. That probably also means that they are not very aware of buying art. in this case, in NFT form, is a little more complicated than you might think.
And lastly, I want to emphasize that you often buy NFTs with the token of the network it is on. That is often Ethereum (ETH), which in itself has quite a bit of volatility. So the price of the NFT denominated in ETH can rise and fall in value, but so can ETH.
All together, in my view, leads to the perfect cocktail to make many projects go to zero. And ‘zero’ doesn’t have to mean completely disappearing from the market, but isn’t a drop of 95% or more almost the same as ‘zero’? Of course it’s always better to buy on the bottom than on the top, but hey, we all know how hard that can be.