The biggest among the collections in the NFT space are CryptoPunks, VeeFriends, and Bored Apes Yacht Clubs. When you make an NFT purchase from these platforms, you are basically buying a key. This key is linked to a set of data that includes an image, and this metadata is unparalleled. Unfortunately, each one of these collections only possesses a limited key.
CryptoPunks and Bored Apes only hold 10,000 NFTs, and that’s all there will ever be, which gives them an element of scarcity. If you buy an NFT, you’ll get a key that will verify your ownership of a specific product. This gives you the authority to execute an action however you want—you can resell, hold, rent, or even use it as collateral for a crypto loan. Once you own an NFT, you can do whatever you want with it because, of course, it’s yours.
Is the Art Itself Valuable in NFTs?
In choosing an NFT, art is not really important. Hence, what you should be buying doesn’t necessarily have to be a professional workpiece. Instead, it should be a cultural artifact NFT that comes with a community that brings a good network, making a product much stronger and more valuable.
All of the best collections have a story behind them. Hence, by the word cultural artifact, we are not talking about social sciences, anthropology, etc., but rather an NFT symbol that holds a story. Perhaps, this includes the context of how, when, and why the NFT is created. CryptoPunks, the first NFT collection on Ethereum, is a good example of a cultural artifact NFT.
Why You Should Invest?
Investors, collectors, and crypto enthusiasts are spending millions on NFT collection, and here are the two arguments why these investments could hit big in the coming years compared to their value today.
Macro Argument
We are consuming more time in the digital world than ever before. A study of WhistleOut ascertained that people are spending an estimated average of 9 years staring at their mobile devices. A huge part of these nine years is spent on social media, where people interact with each other.
It’s almost certain that we will be using more of our time online, which gives us the direction we are heading.
Most people express themselves through the things they buy and sometimes show off whenever it’s possible. Perhaps, you could brag about a nice car, big house, high-end clothes, and shoes in the real world. However, the only way to depart from plebes in the virtual world was through the number of subscribers, followers, or something like a checkmark on Twitter. This is what would make you stand out among others.
There’s an advance in the gaming industry in the previous years where people are buying more and more character skins and accessories. Some of the examples are the skin in Fortnite and weapons in Call of Duty. The gaming space generated $50,000,000,000 on skins and accessories alone. People love these kinds of stuff and spend bucks to have them, although its only value is showing them off within the game.
The market for these gaming accessories, skins, and cosmetics is way bigger than the current NFT market, which is currently worth around $50,000,000. Gaming revenue is 10x bigger than the NFTs, and we can clearly see the massive gap between the two.
Here’s the catch
When people purchase cosmetics on video games, they know that the money they spent to own items can never be given back to them. However, in NFTs, people have the perks of owning things and still have the advantage of earning through them.
Perhaps, NFT avatars will soon be recognized more as cosmetic skin in online communities and other social media platforms.
In a nutshell, these are the macro reasons why NFT collectibles can possibly be bigger in the upcoming years:
- People are spending more time online.
- NFTs serve as a way of showing off online.
- Video games showed how high the demand could be and the direction where NFTs could be heading.
Micro Argument
NFT collections could 10x in value through gaining utility over time. And this utility is best expressed through (1) community access, (2) airdrops, and (3) street cred.
In CryptoPunks, you will be having access to a gated community on Discord where you can plan events, meet owners, interact with people, and all that. Moreover, one social token called $whale (Please insert the link of the article entitled “Is Whale Token NFT Worth Buying?” on the underlined word) is planning to buy a real estate located in Las Vegas to build up a physical hangout spot for people who possess whale coins. This shows the potential of the NFT community to serve as keys to events and physical spaces in the real world.
Airdrop is when someone sends you a token through your wallet for free. The most popular example of an airdrop was done by Larva Labs, the creator of CryptoPunks.
Larva Labs created a new NFT collection called Meebits and airdropped one Meebit on every CryptoPunk wallet. These Meebit NFTs cost thousands to millions of dollars, depending on what you receive. This is essentially a passive income of your investment. There is also RTFKT, creator of virtual sneakers, which is sending free limited-edition sneakers to every Cryptopunk owner.
More brands would want to work with the NFT community in the coming years because of their network and high level of skill in promoting.
The cost of CryptoPunks is about $50,000, which is almost the same price as a new BMW Sedan. Thus, owning one is now a form to flaunt wealth and show you are an OG in the NFT space.
As the community works together, they establish a reputation, and as this reputation grows, every part of the value stack becomes more valuable. More people would want to be part of the community, more brands would give off airdrops and exclusives, and these things will boost the street cred of showing and holding off your CryptoPunk. This will increase the demand for community, and there will be a feedback loop that will continue growing as NFTs gain utility.
If you’ve seen how one tweet from Elon Musk increased the dogecoin market, you will realize how CryptoPunks’ value could increase once a famous personality show attention to them.
All information mentioned does not guarantee that every NFT collection will hit big in the long run. Actually, most of the NFTs would fail.
In this article, we are dealing with communities and sentiments and not the objective metrics like revenue and cash flow. Hence, you should expect more market volatility if you’re familiar with the stock market.
However, once you begin thinking of the community aspect and stories behind the collection and the reputation, ambition, and standing of the creators of the NFTs, you can start generating a strategy to filter good investments from the bad. This will increase your chance of picking a winning NFT.
