It’s no secret that 2020 was the year of the emergence of a financial ecosystem based entirely on blockchain.
2021, on the other hand, has been the year of NFTs and the revolution of tokenization of digital assets has inspired people to re-think collectibles.
The overall market, at its peak, saw over $2.8B being spent on digital collectibles.
And not all of these projects have been based on Ethereum, which is the go-to blockchain for tokenizing digital collectibles.
In fact, other protocols like Solana, BSC, and Matic have started offering their own NFTs. They are much cheaper than those found on Ethereum because of the reduced gas fees and quicker transaction speeds.
However, the real question is, with so many options of NFTs now available to us, how do we know which ones are genuine and which ones not?
What all should we be looking for in an NFT drop before putting our money in it? These are the questions that we’ll explore in this article.
So, let’s dive right in.
Objective of the Project
To understand the objective of the NFT project might appear counterintuitive to the larger audience of NFT collectors out there because it does not serve their immediate purpose of “quick riches”.
However, as the space grows and more artists enter it, there is a constant need for both creators and collectors to understand the purpose behind each project.
And the reason why this is important is because that is how they will distinguish themselves in the space.
And most artists who are entering the space, coming in from a non-crypto background are truly looking for ways to express themselves through their work and then earn a rewarding income for that. To understand this at a functional level, let’s look at some of the most popular NFT projects of 2021.
While the project was launched way back in 2017, it saw immense success during 2021 with some Punks selling for as much as $11M.
The market for this project too has always been quite liquid, with thousands of collectors willing to trade their Punks, either to make a profit or to buy another Punk that has caught their attention.
Now, there are a couple of reasons why this project gained so much traction.
1) The first point that comes to mind is their cultural, social, and technological significance. They are one of the first NFTs that were created on the Ethereum blockchain.
At that time, the craze around these new forms of collectibles was not as maniacal as that in 2021. However, it did catch crypto-natives’ attention who collected these Punks within weeks of their initial release.
While they did not have as much of a bull run as Cryptokitties, they still held some importance.
Between the years of 2017 and late 2020, they were largely unnoticed. However, as the NFT market rebounded in early 2021, there was a genuine desire for collectors to look for alternative NFT projects.
Why CryptoPunks worked
Once they found CryptoPunks, the craze suddenly began.
Because they were one of the first NFTs created in the space. Thus, they were a part of history of the evolution of blockchain.
2) The second reason is that they signify the evolution of a different type of community.
Just a few years ago, if you had a crypto wallet and had bought some coins off the market, then you were inevitably a part of a secretive yet growing community. NFTs push that boundary.
Now, you can use these Punks as profile pictures on various social media applications like Twitter and Discord. All those who do use the NFTs they bought as their profile pictures understand that by doing so they are signaling to be a part of a community – one that believes in blockchain technology and the revolution it entails.
And these are two of the most important reasons why the project has become popular. While the market has slowed down as we enter the last quarter of 2021, the cultural significance already established by the CryptoPunk is never going to die.
Bored Ape Yacht Club
Another project that could be considered an alternative to CryptoPunks is the Bored Ape Yacht Club collection, which is again a collection of, literally, ape characters that appear “bored.”
Bored Ape Yacht Club, View it on OpenSea
When they were first launched, they had caused a stir within the industry and people bought them almost immediately. At their peak, the total sales peaked at $164M during September.
Now, there are two main reasons for the rabid interest in these collectibles. Let’s have a look.
1) A commonly cited reason is the trend in the overall NFT market. Whenever the craze around tokenized digital collectibles increased, interesting projects that had gained some traction initially suddenly jumped into the epicenter of that frenzy and their sales increased as well.
Throughout 2021, at-least, the rising craze in the overall NFT market has become synonymous with the rising craze around individual projects as well.
However, they did an awesome job with marketing and promotion. If you have your own NFT project and are looking for tips, check out our marketing guide here.
2) The second reason is the project itself and its uniqueness. It brings a refreshing perspective to the Punks project. While the Punks were randomly generated characters, the BAYC (as it has come to be known in the Twitter-sphere) is a whole collection of ape characters.
3) The third reason is probably the same as the second reason for CryptoPunks. For the non-crypto individuals who became crypto-natives in 2021 wanted a piece of blockchain-based asset that they could truly use to signify their presence. The BAYC provides a unique, refreshing, and an interesting asset for the same.
The Loot Project
For the uninitiated, the Loot project is just a collection of random texts and numbers that have been minted as an NFT. The overall sales of these NFTs has peaked at $230M.
Now, you must be wondering – why would a collection of random texts become so hugely successful and then trade for such exorbitant amounts in the secondary market? Well, there are three main reasons:
1) When the project was first launched (founded by Dom Hoffmann who previously also co-founded Vine), it consisted of 8,000 NFTs that just comprised of words that were aimed at depicting “randomized adventurer gear”. As people claimed these NFTs, they realized that these texts consisted of items that could be used in the game, Dungeons & Dragons.
2) The second reason is that when the project was launched, anyone could claim these NFTs for free. You only needed to pay the Ethereum gas fees for that.
3) The third reason, again is that it brought a refreshing change to the NFT industry by giving the community something entirely different. This project is also considered to be community-owned, that is the community gets to decide how they interpret each of these NFTs.
Thus, the significance of the project comes from its uniqueness, rarity, and the differing perspective that it brings.
Another notable project that is worth mentioning is the World of Women NFT project, which was created by a non-crypto native French artists, Yam Karkai.
The idea with the project was to shed light on the women in the space and represent women of varying race and culture as respectfully and beautifully as possible.
While we will not go into the details of this project, it sure is worth noting.
The underlying community
Ultimately, every project’s success is driven by its ability to capture attention of people and entice them to build a community around it.
Think about Loot, for example, a community has been formed because the project can be interpreted in so many different ways. The same is true for other NFT projects discussed above.
The community is the one that understands the project’s aim, identifies with it, and then (literally) markets it to other collectors on their own social media platforms. And that is exactly what makes each project successful.
The best way to dig deeper into the community is to look around Twitter, Discord, and Telegram. You should be looking for the number of members, the type of discussions they are having, and so on. All of this will help you understand how that community feels for the project.
Identifying buzzing NFT projects
When we often talk to fellow creators and artists, everyone is concerned about having missed the bull runs of several popular projects.
And the only question that bothers them, then, is how can I not miss the next bull run? In all honesty, catching the bull run of any NFT project amongst a sea of so many projects is almost like finding a needle in a haystack. But it’s not impossible. But, let us break it down.
It is often said within the industry that crypto natives don’t sleep. They are always on the lookout for new protocols, new ICOs, new crowd sale rounds, new revolutions, and newer NFT projects.
Thus, if you are looking for the next crazy big project that you’d like to be a part of, then you’d have to start looking. And you’ll have to spend hours in this process every single day.
But how and where can you look for new projects?
- There are several websites like New Drops that can be used to look for exciting new projects that are slowly gaining traction.
- Keep an eye out on Twitter to see the kind of projects that are emerging within the space. Following some of the most famous NFT collectors would also help.
While all of these factors can help, you really have to be on the look out for exciting projects as aggressively as possible.
Connecting with new artists who are thinking of entering the space, or motivating artists you know to utilise the space to create something exciting could also be some ways that you could think about.
The Bottom Line
While all of these factors are indeed helpful, what is of utmost significance is understanding that no NFT project can ever become perfect.
This is because they are mostly art and are subjective. Each NFT’s value is as subjective as it can possibly be.
Therefore, before you think about putting your money in the next big NFT project, think about its cultural, social, and technological significance and also understand how it would perform in the secondary market.
Post published: October 4, 2021