Just over a year ago I wrote a couple of posts about my first forays into the world of NFTs, via PFP projects (like this one: The gold rush – NFT PFPs). This wasn’t exactly my first rodeo as I’d already been on Sorare for about a year at that point, but it did feel like we were on the cusp of something exciting.
I’ve not written much on this topic since so I thought it was time to take a look back at what’s happened and why I’ve not been motivated to put pen to paper before.
Highest highs and lowest lows
The world of NFTs can be an extreme place to inhabit. Whether you consider it gambling, investing or something else, when you hit on a project and it really flies, it can be life-changing. At the same time, the lows can be devastating.
I didn’t really go into this with particularly high expectations, nor did I really do a huge amount of research but, for much of last year, you could buy pretty much anything and make a profit. I saw all the comparisons to tulip mania and I mostly laughed and scrolled past, although in the back of my mind I had a nagging feeling there might be some truth in it. But I was (and still am) happy with the purchases I made and the projects I invested in.
What I did find difficult was the constant feeling that other people were making a fortune and I was missing a big opportunity to do that same. The truth is, the people that bought CryptoPunks and Bored Apes were mostly just lucky. The NFT space was functioning like a lottery at that point and some people just happened to have the winning tickets.
That’s only the partial truth of course. In any cultural zeitgeist movement, there is an opportunity to profit if you put the time, energy and money in. I didn’t have much in the way of any of those and also made some bad decisions, such as thinking the Cool Cats floor wouldn’t go much above £1,500 and selling way too early… missing out on nearly £40,000 in the process. That hurt… like really hurt, and I struggled to shake that off.
Still, at least I didn’t get scammed. The number of bad actors in this space is a real concern and I can’t see mass adoption taking place until something changes – like making the technology we use to interact with the blockchain more user-friendly and safer for people to interact with.
Time > Money
Money – or the lack of it – is an obvious barrier to getting involved in this world but a lack of time can be even more of an issue. NFT projects are founded on strong communities and if you don’t have the time to invest in them, you never really feel the full benefits of being involved.
I found myself stretched too thinly pretty quickly, having got myself involved in more projects than I could really manage. At one stage, my Discord notifications were getting more backed up than my emails (which is saying something) and I felt like I was giving things a cursory glance (at best) rather than taking my time to get to know the projects and people properly. My aim for the rest of this year is to double-down on a handful of communities and let go of the rest.
NFT communities are really small and it’s common to see the same faces in more than one project so taking the time to be properly involved is a great way to get yourself known and to keep your ear to the ground about new projects that are worth investing in. Otherwise, you’re just holding the artwork and nothing else.
Two thoughts on this – firstly how the heck do people with jobs and/or families juggle all of this? I suspect they don’t – and that this influences the types of people that become the ‘leaders’ in these spaces (and means the blockchain is destined to look much like the real world in terms of distribution of power). Even for those with the time, burnout seems to be a real issue in this space.
Secondly, a lot of the communities are very US-centric, which is understandable but can be a bit of a turn-off if you’re based in the UK (or elsewhere). It’s always nice to see events taking place in the UK like NFTUK and successful projects with British founders, like Purrnelope’s Country Club.
What next for NFTs?
We’ve really been in a bear market since the back end of last year, even if we didn’t notice it, but that intensified in May when the ETH price fell through the floor. Once upon a time, that would’ve caused me some serious anxiety but I feel pretty battle-hardened to stuff like this now and also sensible enough not to have any money I need for real-life expenses tied up in crypto (this is very important!).
ETH has had a bit of a spike in the last couple of days and things like the positive demo of Otherside and progress on the Ethereum Merge have no doubt helped to increase confidence. We’re still facing some pretty serious macroeconomic headwinds – high inflation, high interest rates, a war in Europe, impacts of COVID and climate change and unstable governments… so I’m not sure we’ll see ETH going back to the heady heights of last autumn any time soon.
It’s a cliché for sure but it does feel like now is the time for building. The pressure to ‘make the number go up’ has reduced (because no one expects any numbers to be going up) so that should give people the breathing space to take time to make stuff that actually matters, like using the blockchain to enhance people’s lives and provide solutions to problems. Art is just the beginning.
‘It’s all about utility’ is another cliché I guess but I think ‘utility’ has a pretty broad meaning in this case. A strong community is utility and, starting from that base, a project can co-create other things with the community – like games and entertainment, utility involving IP licensing or royalties for artists, or opportunities to learn and earn.
If anything, I actually feel relieved that the hype cycle is over and we’re now into a slower, more serious stage of NFT development. I’m more optimistic now about the space than I was at the start of the year and I’m looking forward to seeing what the next 12 months hold for the projects I’m involved in.