Why You Should Look at NFTs as Products and Not as Investments
Is there a true NFT bubble?
Many have called it but people are still buying up NFTs. I’m not too sure why but I don’t really care.
I have explored OpenSea extensively to see if I want anything and I can’t say I do. For sure, there are a lot of great pieces there, but none of them particularly appeal to me. Perhaps, it’s because I don’t have any friends? I don’t know.
Nevertheless, this doesn’t mean I’m not supportive of NFTs or blockchain technology. Simply, I’m just not into what's being sold.
Consequently, I’ve been reflecting for a few months on why I’m not caught up with the NFT craze. I hear about it every day and write about blockchain often enough that I know the benefits of owning an NFT, yet I’m not too keen to buy one.
Here are some reasons why I think that is the case.
NFTs are products — not investments
To say that an NFT doesn’t make money is an understatement. For the maker of NFTs such as Bored Ape Club’s Yua Labs, NFTs have made them a lot of money. For example, Bored Ape has a 7-day sales volume of $182.4 million.
However, for the person who bought an NFT have they made much money yet? Sure some have, but speaking earnestly most probably haven’t, and here’s why.
An appreciation in asset value isn’t the same as cash in hand.
For instance, how did Elon Musk temporarily become the world’s richest man over Jeff Bezos? Simply, because Tesla shares rose, and probably his crypto holdings too.
I consider an investment as something that brings cash, and NFTs at the moment don’t really bring in cash for the owner.
Ultimately, this means that NFTs are products. They are meant to be something unique to own and share with others to appreciate. They’re essentially artwork. Their purpose is to delight and provide satisfaction and not really to bring in cash.
Are they truly unique and scarce?
The appeal of an NFT is that they are scarce and once you own one, you own a one of a kind. For example, there are only 10,000 Bored Ape Yacht Club NFTs out there but if you do own one — Are you actually owning a unique Ape or actually owning the label Bored Ape Yacht Club?
I’ll let you ponder over that.
Here’s another way to see it. Are you envious of Paris Hilton’s unique Bored Ape? Or, are you more rolling your eyes over that since she owns one, then what is so cool about owning a Bored Ape anymore? Weren’t NFTs supposed to be some sort of countercultural stance against the establishment anyway?
Yes, you can’t deny that each NFT is scarce, but really the ownership of an NFT is dependent on your circle of friends and acquaintances. In other words, it’s your social group that determines how unique an NFT is — not you alone. That perhaps also explains why the Jack Dorsey First Tweet NFT was bought for $48 million but only had an offer of $280.
Who would even buy your merchandise?
An argument for NFTs as good investments is that you become the owner of them and you can do whatever you want with them license-free, such as merchandising your NFT.
This is great and all but who really wants to pay for an Ape printed shirt?
Unfortunately, once you’ve seen a few Bored Apes, you have kind of seen them all.
As a slightly absurd analogy, once you have seen one race of people often enough, you can tell others apart. You intuitively know each person is unique but you’re not exactly going to be as intrigued by each new person as you would have done initially.
Really, unless you have spectacular NFT, even if you printed one on your shirt, who would buy it besides your family and friends?
There’s nothing wrong with owning an NFT. Many great artists have done the hard work to create something delightful to look at, or even listen to. The only danger is investing in one.
We’re not in a world where a piece of art has become so scarce like Van Goh’s artworks. At the moment, an NFT is desirable because it symbolizes your status in a special club, but really who cares if you’re even in that club in the first place?
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