I know by now you must have heard how people are making millions of dollars flipping Non-fungible tokens or NFTs as it is commonly known and you are eager to get in on this. Yesterday I came across a news on Cointelegraph about a 22-year-old Indonesian boy that made $1M by selling NFT selfies on NFT-marketplace OpenSea.
Read Also: How can I invest in NFT?
Ghozali NFTs Collection
Now let’s get in on this better, Sultan Gustaf Al Ghozali, a random 22-year-old dude from Indonesia who nobody knew or has ever heard of before now, took selfies for five years and then converted these pictures to Non-fungible tokens.
Each token represents a unique JPEG and sold over 1000 selfies to NFT collectors on OpenSea for a total amount of about $1M, not 1 Million Nigerian Naira but one million United States of America Dollars which is equivalent to Five Hundred and Seventy-Five Million Naira as at time of writing. You must have already been wondering why you haven’t converted those hot selfies of yours to NFTs and listed them on OpenSea to make bank too LOL…
While I am happy people are making huge amounts of money from selling NFT but judging from my years of experience in the Crypto Industry and my research thus far and also based on the example given above I believe most NFTs are either classified as overvalued, worthless, may hold some value due to its utility, another crypto experiment people are jumping on due to fear of missing out on the NFT hype or art NFT.
Classifications of NFTs
1. Overvalued NFT: Newbies have probably seen nfts trending on social media and want in on the action. They go to NFT marketplaces find an animated ape picture listed for $150k and have probably seen their favourite celebrity use the picture of his ape NFT as his twitter AVI or profile picture, so without doing any research to know if that celebrity actually bought his NFT or if it is worth the amount it is listed for. The newbie pays $150k excluding the fees which could be relative high if it’s on the ethereum blockchain for an animated ape picture.
An example here is popular Basketball player Steph Curry who initially paid $180,000 (equivalent to 55 ETH as at time of purchase) for a Bored Ape Yatch Club series NFT in August 2021. At some point someone made a bid of $125,000 (39.5 ETH) for Curry’s Bored Ape NFT but presently no one seems to be interested in buying the NFT with no bids registered.
2. Worthless NFT: a good example for us here would be the Indonesian dude selfies NFT collection that sold for an overwhelming combined amount of $1M. What does owning this NFT offer you as the collector? Do you earn any dividends? All these points to owning a worthless JPEG you probably bought due to NFTs hype…
3. Utility NFT: Game Finance or GameFi opens another viable aspect of NFTs that brings value to collectors. You probably must have heard of Blockchain Play2Earn games like Axie Infinity, Black Eye Galaxy, Decentraland, Citizen Finance, etc.
These projects offer its users a utility NFT that enables the collector access to a Play2Earn economy. For Example, Black Eye Galaxy offer its users Asteroid Hunter NFTs called Mk1 that enable them to mine Asteroid and in return earn the native token of the ecosystem BYG over a period of time.
4. Hype NFT: over the years I have realized that every crypto experiment starts off hype that graduates into fear of missing out or FOMO for investors. I believe the first quarter of 2022 will be dominated with extreme NFT hype which would make investors pay outrageous amount for NFTs. The hype has just begun…
5. Art NFT: Non-fungible tokens are basically digital tokens that are redeemable for a digital piece of art. With the advent of NFTs, many artists have transitioned from traditional methods of offering their arts to museums, individual collectors or galleries but now offer it up for sale as digital collectibles referred to as NFT art.
Crypto and Blockchain are often seen as a get rich quick scheme by the traditional media and this still holds water for NFTs with many amateur artists flipping their NFT artworks for thousands of dollars.
Art NFT has continued to gain in popularity despite this with many established artists joining the fray, the most notable of this being British artist Damien Hirst. He launched The Currency project that consists of 10,000 NFTs corresponding to physical prints of his five-year-old artwork now stored in vaults.
Conclusion
While our main aim has been to establish if NFT is a bubble or not, from the different classifications of NFTs we have noted the following points:
- NFTs are a cryptocurrency experiment.
- 80% of NFTs valuation are purely driven by hype, while 20% of NFTs have utility.
- Game Finance or GameFi will boom in 2022.
- NFT Art will disrupt the traditional art industry.
- NFTs are new and utilities are still being worked on.
With the following points I believe NFT is not a bubble but by the second quarter of 2022 only utility based NFTs will survive the impending NFTs market crash. Most collectors will end up with either a worthless nft or an overvalued nft.
The blockchain industry has always been about utility after the hype phase fades off, recently Tesla announced popular meme coin DOGE will be accepted as payment option for its merchandise. This tells you that being a meme coin is no longer enough and this will soon apply to NFTs. I believe it’s time for collectors to begin to do some research on NFTs with utility or promised utility in future rather than collecting random token JPEGS.