If you’ve followed the crypto industry, you might have only noticed a slight buzz around non-fungible tokens unless you got locked in an NFT-safe bunker last year.
Originally developed for use in trading card games, NFTs can represent any unique asset, the scarcity and possession of which can be demonstrated on a blockchain. The advancement of technology since then has resulted in the use of NFTs for a whole range of in-game assets, digital collectibles, unique works of art, and much more.
But if your last name is not Guggenheim, you don’t understand why adult adults are so excited about Doctor Who or Star Trek, and your gaming career is to briefly download Candy Crush to your phone. Why should you care?
Well, because some of these digital assets are being sold for obscene amounts of money. And if you are reading this, it is perfectly reasonable to assume that you are probably interested in digital assets and the opportunities that arise from them.
Not everything that glitters is gold
Of course, with obscene amounts of money on the table (and apparently for something as simple as stamping an old tweet on the blockchain) every two-bit chancellor and his mothers, from Anaheim to Zanzibar, will try to jump in the action.
The subsequent gold rush saw the burgeoning NFT market compared to the first coin supply bubble of 2017. Everyone from Litecoin (LTC) creator Charlie Lee to the BBC has warned of the potential for the NFT bubble to burst immediately. Ironically, Lee created an NFT in the process, which was ultimately sold for 5 ethers (ETH) and arguably has real value given its status in the crypto industry.
As with the ICO boom, there are certainly projects of questionable value. Although this time the assessment of this value is often a bit more subjective than just doing the due diligence for the umpteenth utility token project this month.
In contrast to the ICO boom, NFTs have the potential to go well beyond a range of libertines, forward-thinking investors, and tech nerds, bringing blockchain technology, and ultimately the preferred payment method, cryptocurrency, to a far larger mainstream audience.
An emerging scene has built up around trading NFTs as the primary investment strategy. Some of the key players in this area responded to a question from Cointelegraph on “Why Should Investors Watch Out for NFTs?”
It’s the next big thing you know
Danny is an art lover and has been investing in high quality collectibles, virtual land, and art on blockchains for the past two years. He discovered Bitcoin (BTC) back in 2013 and was convinced that “NFTs would end up symbolizing everything else” after seeing how the cryptocurrency radicalized the financial world.
“Invest in something that has the potential to establish itself and at the same time support the individual [artists] and projects was a win / win scenario, ”he said. Danny believes that we are still in the early stages of NFT adoption and that “there is still a lot of opportunity and innovation in the NFT space.”
Zurab Kazhiloti heads Bitscale Capital, which supports several NFT-related projects including Flamingo DAO, a digital autonomous organization focused solely on investing in NFT assets. He believes that anyone who has ever thought about investing in art should pay attention to the NFT market:
“Collectors can get amazing works of art without leaving their homes, and artists can reach a much wider audience and further monetize their art.”
He also said that “the satisfying feeling of digital ownership is something people really love.”
But I don’t have a degree in art history
So, whether for art, fun or profit, if you want to get into the NFTs … how do you start? How can you separate the hashmasks from the trashmasks (trademark for this before anyone gets any ideas).
Andrew Steinwold, managing partner of the NFT-focused investment fund Sfermion, takes a strictly rational approach and summarizes the information in his core fundamentals. These are team (or artist), product, token economy, community, market, data and risks. He then has to check what assets are available:
“Some projects – it’s easy because they have an investable asset (virtual land has land NFTs) but for other projects it’s quite difficult because they have many different types of assets (land, items, creatures, tokens, etc.) ). “
Priyanka Desai, Vice President of Operations at Flamingo DAO, also believes investors should dig deep, but by playing around to discover the mechanics of each thing. “It all starts as a toy,” she said, telling Cointelegraph that many members dive into the mechanics to see how they would use it themselves.
Danny is happy to take into account the references, market customization and aesthetics of a potential project with a particular taste for art and collectibles with a historical or innovative meaning:
“I particularly like artwork to display on my wall as conversation starters for guests, as most of my friends in the real world are just starting to wrap their heads around crypto, let alone NFTs.”
Looking for the next big thing
So what’s next for the NFT scene and the market? What does the future hold for non-fungible tokens? Desai believes that NFTs will significantly increase crypto adoption overall, saying, “This is digestible, and media and entertainment are a part of life.”
In addition, the renowned auction house Christie’s just sold its first all-digital NFT-based artwork when Beeples “First 5000 Days” sold for over $ 69 million. Desai believes that crypto’s attachment to the art world could lead to major cryptocurrencies becoming accepted for all art.
Danny said that this road to mass adoption is already underway and influencers and artists are starting to leverage NFT revenue streams through direct community and follower engagement. He notes that “people want to support their preferred influencer, artist, actor, etc., which leads to further curiosity about the NFT space.”
However, he would like a simplified introduction, “to the point that users no longer have to worry about buying a particular cryptocurrency, installing a browser plug-in and trying to understand gas charges.”
Danny also looks with interest at the play-to-earn element of blockchain gaming, and says that this mechanic’s promise of allowing anyone in the world to make a living while participating in a social setting is very powerful is. This alone will be a major growth driver in the years to come.
Kazhiloti points out that #NFT recently flipped #DeFi on Google search trends, and he’s impressed with how quickly NFTs are getting into the sight of regular collectors. He believes that “low barriers to entry and easy access to most collections” are catalysts for such growth.
Steinwold believes NFTs are becoming one of the largest markets in the world: “We’re not even in the first inning so play long-term games with long-term people.” He believes NFTs are more human and approachable than some of the hard-to-understand concepts of the Crypto market. He also said that investors should pay attention to what NFTs enable:
“Suddenly every single digital item could become a tradable good. This means that the Internet of Goods is here now and will have a massive impact on our future. “
The cream always rises
The NFT market is sure to see the explosive growth that ICOs saw in 2017. How far this can go, only time will tell. Professional investors believe that the rise in adoption is just beginning and that potential mainstream adoption is in sight. But a cynic might argue that he could have told you that …
There is certainly no sign that it is going to stop anytime soon and that anything seems to be accelerating. Will it overstretch and burst? In this case, one could imagine that similar to the ICO boom, the more valuable assets on the other hand are still of value.
Related: The Overheated NFTs? A crypto market niche that is prone to boom or bankruptcy
Or will the market mature fast enough to naturally separate the chaff from the chaff and develop systems of assessment and support that keep pace with its growth? In both cases, blockchain technology and crypto are used much more heavily and more generally.
