Izzy Pollak is one of the people who bought into the NFT trend earlier than others. Before the massive peak in price and popularity, Izzy bought two Bored Ape NFTs.
As the unique owner of those digital assets, Izzy has the commercial right to do with the image as he sees fit. Although others can technically use the same image, the underlying ownership remains exclusively his. The proof of ownership is written down with a distinct serial number in the blockchain.
Many people don’t buy NFTs to have their unique proof of ownership written somewhere in the depths of transaction history in the blockchain. They use them as a profile picture for their social media accounts and as a way to form their digital identity.
Buying an NFT has many benefits that indirectly come with the possession of the non-fungible token. To many, it is a way for social recognition, especially if you have digital assets from a popular collection. For others, it is a way to access private communities and exclusive shows and events designed specifically for the community around some collections.
For some, investing early, even in seemingly silly-looking pictures of apes, can be a substantial financial benefit. Take the case of Mr. Pollar, who’s 29 and works at Genies, a tech start-up in Los Angeles. He’s far from rich, living in a four-bedroom house with three others. His family’s financial troubles started during the 2008 financial crisis, and they never fully recovered until NFTs came along.
Mr. Pollak had heard about NFTs by conversations on the Clubhouse. His follow up the phrase as I’m about to spend hundreds of dollars on a picture of a monkey,’
Three NFTs out of 10 000 were both, and in the following days, their value skyrocketed, going from 14 Ether to 70, which is a change from $40 000 to 231 000 on the day they were sold. Mr. Pallet managed to put down a payment for a three-bedroom house and decided to call it the “Chimp Chalet” in tribute to the reason that made him able to afford it.
For many, thriving in the NFT market comes down to carefully following the trends in the popularity of collections or sheer luck when it comes to timing. Many can receive “life-changing money” that they use to pay off debt, student loans, their mortgages, to buy the home they wanted, or just to quit the job they despised.
Mr. Pollak mentions, “I’ve heard horror stories of people spending their rent money on NFTs. It’s heartbreaking to see people risk their money when it doesn’t usually work out.”
Claire Silver is just another success story. As an artist in her early 30s, she has dedicated her artistic career to interact with artificial intelligence. In 2017 she was given 3 out of the unique 10 000 CryptoPunks generated by an algorithm.
“I was in a chat room about cryptocurrency, and I met this guy who was interested in art” The guy on Slack mentioned that he had 730 CryptoPunks in his collection and offered her three. One can only wonder how rich that person is, considering that the current price of one CryptoPunk is around $175, 000.
Ms. Silver sold one of hers in July 2021 for $60 000 and has also created her collections. Like many NFT artists, she earns money from the original sale and a percentage of every following sell, and her record was one piece selling for $63 000.
“This amount of money is a big deal to me because I come from poverty. We had to accept church donations for food growing up,” She exclaims, finally feeling financially secure enough even to buy the “good coffee.”
NFTs, much like cryptocurrencies, are highly volatile. The risk related to them isn’t necessarily harmful as it is essentially a trade-off that people in the market recognize. Higher risks mean a higher chance for profit.
The problem comes when many people make irrational bets with little to no knowledge of the conditions of the NFT market and end up wasting their savings or the money they have taken as a loan. At this point, trading with NFTs becomes a dangerous addiction, much like gambling.
Unfortunately, the structure of many NFT marketplaces does not favor consumers, and governmental protection is either lacking altogether or heavily discouraged by many. This means that laws and guarantees for consumer protection and compensation just don’t exist or are insufficient.
Will NFTs Survive In The Long-Term
Alex Lugo has an interesting take on NFTs, according to him, they should be treated like baseball cards.
“For generations, our society has accepted that rare baseball cards have value,” He goes on to explain, “There is a rare Mickey Mantle card that probably costs 5 cents to make that sold for $5.2 million last year. And why? It’s not about the physical piece of card stock. It’s the history, the rarity, the scarcity, the cultural relevance.”
Some claim that over the long-term, the NFT market will collapse and most non-fungible tokens will become worthless, but a much more realistic take is to perceive the market as one that will become more stable over the long term, which means some collections will lose their value, but others will retain it.
Take the example of The Bored Apes, which could be minted for around $200 just last spring but are now worth almost a quarter of a million. Even though some may say that their price is full of speculation and will eventually dip, this is unlikely to be the case as the trading volume is low, which suggests that the price is here to stay or rise.
Their name is already established into the mainstream, stories, and communities surrounding them have been established. Even celebrities like Snoop Dogg and Eminem have bought into the hype and have become part of the exclusive club. Such popular collections will survive and thrive even if other collections fade into obscurity.
