How to filter NFT projects? How to avoid risks?

If you don’t understand the deep value logic of NFT, you cannot understand OpenSea’s increasing turnover, and even more can’t understand the sale of Beeple’s NFT for 69 million US dollars, and the floor price of CryptoPunks is as high as 129 ETH (400,000 US dollars). So, what supports the value attribute of NFT? Which crypto artworks are currently in value depressions? What investment risks should we avoid? At 7 pm on September 2nd, the European Information Bureau invited Shorts Howard, a North American NFT art collector, and aow, the founder of Wall Gray, to explore the roots of NFT value together.

Why can a picture be so valuable?

Recently, the collection area NFT product is still alive, repeatedly beat a variety of NFT works price, as of September 8, silly simian (BAYC) of the total turnover of US $ 484,751,992, while encryption punk (CryptoPunks) has reached $ 1,155,184,853. More and more young people and large organizations are starting to flood into this market. NFT has become the hottest trend at the moment, which makes outsiders have to ask why these NFT works based on JPG images or based on pixels Will it be worthless?

How to filter NFT projects? How to avoid risks?

Recent performance of the head NFT project Source: opensea 2021.9.8

For NFT participants, no one would just treat it as a JPG picture.

Aow believes that an NFT is a piece of history, because it is recorded on the blockchain with a timestamp. It represents what happened to the blockchain or the Internet at that time. It is a milestone, and only NFT works have this. value. Especially early NFTs like CryptoPunks and EtherRock are more historically significant. Therefore, many people in the NFT field have been committed to “archaeology”, digging out those NFT projects that have been issued in 2017 but have not appeared in the public eye, just like people in the real world collecting coins from the Song Dynasty and stone monuments from the Ming Dynasty. Same.

Secondly, he talked about the unstoppable trend of comprehensive digitalization of human society, and NFT is just a link in the process of asset chaining. It is a highly popular application on the blockchain. It is a digital asset that everyone can understand. It is easier to understand than the various passes and tokens, so the number of participants is also more, and it can even attract Here are some people who are completely outside the circle. With more people, prices will naturally rise.

In addition, for many people, NFT is a pass for a community or a symbol of digital citizenship . Just like having a WeChat account to communicate with others on WeChat, in the NFT community, only if you have certain NFTs can you be accepted by the community and gain a sense of presence in the community.

Of course, there are still many people who are crypto rich. Their purchase of NFTs is mixed with the mentality of showing off their wealth and showing their status, which is equivalent to the rich people in the real world buying luxury cars and famous watches. There are also some old-school rich people who want to quickly enter this circle. They buy a very expensive NFT and act as an advertisement, using this fastest and most efficient way to announce their arrival.

Is the current boom in the NFT market just a bubble?

Many people now dismiss NFT encryption art and arbitrarily think it is a bubble. Aow believes that such a situation is normal. When everyone can understand NFT, there will be no investment opportunities in this field. But it must be realized that the first group of people who enter the market also bear the greatest risk. Therefore, aow believes that a smarter approach should be to analyze the success logic of these new things and the trends it reflects.

He believes that bubbles must exist, but for high-quality projects, the existence of bubbles will not have much negative impact. Aow said that in the context of currency proliferation, it is now difficult to find a bubble-free area. However, after some bubbles burst, nothing will remain, and some bubbles burst for better growth. Aow believes that both Bitcoin and NFT belong to the latter.

Shorts Howard and Aow hold the same point of view. He reminds us that the NFT market is very large. Digital collectibles, games, etc. are just a few components of this market. Therefore, the entire field cannot be judged in general and should be analyzed in detail. Some projects have risen wildly, which can be hundreds of times in just a few months, but 99% of them may not be able to preserve their value. These projects can bring short-term benefits, but they cannot be held for a long time. There must be bubbles in this part of the market, but the remaining 1% has long-term value.

How to view the current market trend?

Aow has observed the changes in recent market hotspots. For a long time, avatar-type NFTs and socially valuable NFTs are the most popular. More and more attention. It can be said that the main form of NFT will shift from static pictures to interactive and more complex directions. In addition, there are some projects with more complicated gameplay that are also attracting people’s attention, such as Loot, which has exploded in recent days. The explosion of Loot allows us to see the paradigm shift that the current market is experiencing: the flow of funds is evolving from the stage of “buying with no brain” or “buying with the trend” to a stage where investors need to understand the deep meaning behind the project more deeply. .

Recently, Opensea’s transaction volume has repeatedly hit record highs. Major companies such as Visa and Budweiser have become members of the Punks buying army. Curry’s Twitter profile has recently been replaced by the BAYC Monkey Monkey, which was purchased for $180,000. From the current situation. Look, the brand effect of large companies and celebrities has brought a lot of attention and traffic to NFT, and further introduces NFT to more people in a very intuitive form.

How to filter NFT projects? How to avoid risks?

Curry’s BAYC Ape Head

In addition, head studios such as Larva Labs have packaged and sold the IPs of their famous punks, meetbits and other NFT projects to Hollywood, and then these NFTs can be made into movies, and they are constantly opening up various commercialization paths. Aow believes that in the future, there will be more and more commercial operations around NFT, because NFT is a good copyright confirmation method, and there is natural commercialization soil. There are a large number of IPs in the real world. These IPs also want to enter the virtual world and occupy this huge future market in advance. Therefore, the bridging role of NFT will bring it rich application scenarios, which is also very important for blockchain in the commercial field. Good way to land.

How to filter NFT projects?

Shorts Howard divides the NFT market into three parts. The first part is Collectibles. The most common form is the NFT avatar. This part is relatively intuitive and simple. The second part is Generative Art (Generative Art, which is a product of the combination of computer technology and art. Its generation is not directly created by humans, but is generated by algorithms. The algorithm has a set of rules and can be freely played within the rules. In the end, unique works are obtained, which also represent a certain concept of the artist to a certain extent). Some NFT-generated artworks are like blind boxes, and the purchaser does not know what works they will get before the transaction is completed. The third part is “1/1 Art” (1/1 Art), each of which is unique. The current trend is that from the first part to the third part, it can represent several stages of the development of NFT art. The value of the works is getting higher and higher, and the more careful investment is required.

How to filter NFT projects? How to avoid risks?

Shorts Howard further proposed that there are five criteria for measuring the value of NFT collections. Think of the most popular NFT collections in recent days, which basically fits this logic.

1. Scarcity (scarcity). The more a certain work exists, the less its value.

2. Ownership . If the owner of a certain NFT is just hodl (holding firmly for a long time) and does not trade his collection easily, this will also affect the value of the NFT. For example, Pak’s Cube, which many people hold in large quantities for a long time, and the giant whales are also constantly buying, which makes the price of Cube soar.

3. Influence . By observing other works held or sold by the NFT seller, people will be able to roughly judge whether the person has a better investment vision, which will affect their judgment on the NFT works being sold.

4. Market hype (hype). The popularity of a certain work will attract investors madly influx for fear of falling. Such herd behavior will further raise the price of this NFT.

5, substitutability (fungibility). Digital artist Pak launched the NFT destruction platform On this platform, burning NFT can earn ASH tokens. In this way, NFT (non-homogeneous token) becomes FT (homogeneous token). Pak’s other paintings can be purchased using ASH tokens, so this forms an independent economic model. In addition, more and more artists are influenced by Pak to accept this model, so this ecology is becoming more and more perfect.

How to avoid market risks?

At present, most of the investors participating in the NFT boom are people with strong financial strength, and most small investors have not yet entered the market. Aow believes that in the future, the threshold for NFT participation should be further lowered, attracting more ordinary people to enter the market. In his view, the NFT field has great potential. NFT, like encrypted assets, is a general trend at the moment and will definitely be accepted by more and more people. In the short term, the market is indeed crazy. Some people behave irrationally. At the same time, there are many speculators and scams. Therefore, we must realize that the risk of every investment in NFT is huge. You must do your homework in advance, including understanding the author, understanding the history of the content, browsing its contract, and the most important point is that you must buy what you like. Things , after all, NFT has the attributes of works of art, and needs to rely on one’s own feelings and opinions, not just with a speculative mentality.

One thing to note is that although there is still a lot of upside in the NFT market overall, there is currently a problem of excessive bubbles in some segments. For example, aow believes that the current NFT avatar is overheated and too many copycat projects are mixed in. There are even counterfeit items that come to scams, so be sure to distinguish carefully and be cautious.

Aow believes that, in essence, NFT itself has artistic attributes, so NFT investment cannot be quantitatively analyzed in a rational way. Sometimes it may also depend on the wonderful reaction between the investor and the work. Of course, there are some generally applicable rules. For example, you can choose to invest in some works or projects that represent new trends; or choose to invest in some larger projects, which can at least guarantee that it will not return to zero; if you want to get excess returns, you can participate As many as possible and relatively cheap projects, if two or three of the 100 projects invested can skyrocket, this can also balance safety and benefits.

As far as aow is concerned, he prefers to invest in digitally native artworks, especially those real artworks from reliable artists that exist on the chain. These works can interact with smart contracts, not just real ones. The scanned copy is wound on the chain. He believes that after the market has calmed down, only the original and changeable artworks on the chain will have long-lasting vitality. The other is a project that can build a community together and stimulate the creativity of community members, such as the recently popular loot. This project can be regarded as the budding meta-universe belonging to ordinary people. In short, imaginative projects are valuable, and the stage of purely speculating concepts has passed.


Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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