In short, yes.. But there are many subtleties and pitfalls. And to understand what can be done with collectible tokens (NFTs) now, we need to understand the success story of this technology.
Non-exchangeable tokens
NFT (non-fungible token) is a non-interchangeable token that is presented as a cryptographic certificate for a digital object, with transferability in cryptocurrency. For example, in the case of bitcoin, the blockchain confirms that you own n number of coins. And in the case of NFT, the blockchain confirms your ownership of a digital asset, a file.
Note that when we talk about ownership, we are not talking about legal constructs of ownership or copyright. There are other mechanisms at work here. NFT is primarily a technology to establish ownership or transfer of a digital asset. In theory, an infinite number of NFTs could be created around any file from the Internet, but they would hardly be of any value.
But, for example, if a file is created by a famous digital artist who placed it on a blockchain, “minting” NFTs (minting is the procedure for writing NFTs in a blockchain), then it might make sense to buy such a token. In fact, that’s how success came to NFT.. Creative projects that suddenly became popular were the key to a good investment. Tokens from CryptoPunks, Bored Ape Yacht Club (BAYC), NBA Top Shot and CryptoKitties have skyrocketed in value in 2021, even being purchased by large companies.
For example, Visa bought a CryptoPunks token for $150,000, after which it announced the creation of a program to help the creators of NFT. Even now, when the hype has subsided, the minimum price of a token from CryptoPunks is $85,000. On the other hand, it was recently revealed that the token from BAYC, which was bought by Canadian performer Justin Bieber for $1.3 million, is now worth only 60,000;
What do these examples tell us? Predicting the value of an NFT is difficult, and it can be a big money maker.. After all, we are talking about such shaky matters as trading cryptocurrencies of pictures on the Internet. In many environments (investors, crypto-enthusiasts, and even art historians) there has been much discussion about the real “value” of NFT. There were bold predictions of long-term growth, and there was skepticism, which, judging by the state of the NFT market, ultimately conditionally “won.”
And yet, after those successes and investments in 2021, the NFT market could not disappear altogether, and there is still some life there. And among the devalued and initially uninteresting tokens remain quite valuable specimens. They, by analogy with blue chips in trading, can be called NFT blue chips.
Blue chips
How do you recognize them? The value of an NFT depends on a number of factors. First of all, it is their author, that is, the one who initially transfers possession of the token. The aforementioned CryptoPunks and the like can be considered the key to competitiveness, they can give good growth. Unless, of course, they were purchased at the height of their popularity, when they were worth considerably more than their current market value;
Another good sign for NFTs is to be tied to something momentous. If you look at the most expensive NFTs, you will realize that they are not valued for their artistic content. And if the token has some kind of history, for example, it was owned or, better, someone famous has burned on it, then its value is higher.. In general, the more exclusive the better;
It’s also important to pay attention to those sites, such as OpenSea, Rarible and SuperRare, and those people who are associated with a particular NFT. So, the authors of NFT CryptoPunks, BAYC and other serious players left in the market are constantly trying to fuel interest in their tokens. Their job is to make sure that the price of their product keeps going up.
It’s also helpful to keep a finger on the pulse of traders, analysts and Influencers in the NFT market to identify blue chips. As this market swelled to astronomical proportions in 2021 precisely because of the comprehensive attention paid to it, the HYIP is still an important element of NFT’s value.
NFT trading can’t be predictable because the market is new and has had its time of upheaval, from the “bubble,” when the value of many tokens skyrocketed, to a period of attention deflation with a sharp drop in late 2022 and throughout the current year;
Profitable investments in NFT are in principle possible. If you turn to the resource Nonfungible, you can see that some tokens – usually blue chips – are increasing in value. However, it is important to understand that the NFT market is very specific and entering it without a backup plan is a risky venture.
That being said, keep in mind that NFT is first and foremost a technology, not just something you buy for a lot of money. Its use in games, meta universes, and other applications could be very promising.
This material and the information in it does not constitute individual or other investment advice. The opinions expressed herein are those of the author, research portals and experts and do not necessarily reflect the views of the publisher.