Are NFTs like Emperors New Clothes – Real or House of Cards?

Every day, thousands of new people are entering the NFT space. Some of long term investment, and some for get rich quick flips trading NFTs almost daily.

There though is a thought though that NFTs could be the emperor’s new clothing.

What do we mean by this?

Well, it means that there is a demand and excitement in something that isn’t there and is worthless.

NFTs are digital items such as a cartoon graphic of an Ape. It hasn’t been drawn by a famous artist, has only existed a few months and yet are selling between $300,000 and $3million each!

It’s no wonder there is a question mark over the whole NFT industry.

In order to find out whether NFTs are real, here to say and worthy assets for investment, it’s important to understand the reason NFTs are selling for the sums they are.

The answer to this question, and reason people are flocking to own NFTs such as Bored Ape Yacht Club, can be traced back for thousands of years and something in-built in to humans for as long as recorded history shows.

Are NFTs Real?

Asking whether NFTs are real is like asking whether a photograph taken on your cell phone is real, whether the Amazon website is real, whether Google search and Alexa are real.

We all live in a digital world, and own digital assets in some form or another.

NFTs are as real as those.

An NFT (Non-Fungible Token) means it’s unique. A registered digital asset on the blockchain, that can take many forms and cause investors to invest for different reasons.

Some buy NFTs because of the artist, some because of status reasons, some because they see hype and believe they can make a quick buck and others because they believe in the long-term roadmap and goal of the NFT project.

NFTs are so relatively new there just isn’t enough long-term data to understand clearly how people will react long term to the industry.

Two things are very clear:

  • NFTs are here to stay
  • 98% of NFTs that launch today will be worthless within 12-24 months

The reason NFTs are here to say is because of the authentication, audit history and undeniability proof of ownership and originality the blockchain provides.

This concept goes far beyond cartoon apes.

In January 2022 the first home in the US sold as an NFT on the blockchain. Of course, the buyers aren’t packing their bags to exist in a virtual world, but the ownership of the home is stored on the blockchain.

Is the NFT Industry Built on a House of Cards

House of Cards

The term ‘house of cards’ refers to something built on a flimsy unsecure structure that could fall as easily as house of cards.

If the NFT was simply built for cartoon apes, and other graphical delights and monstrosities, then it would seem a strong possibility that the hype will fizzle out in the next year or so, leaving holders a in the position from protecting a million-dollar asset to trying to sell it to any would be buyer for $1,000.

Trends come and go, and almost always disappear in favor of the next shiny object.

NFTs though have huge sums invested into them. Not only from investors, but entrepreneurs, sports stars, and celebrities.

Some of the NFT launches are capital funding crowdfunding initiatives to build a goal. Whether the goal is to build a game where the NFTs are the characters, real estate in the metaverse or ethical projects.

Many of the founder’s visions for NFT projects are still in development and will take a while to see how many of them are realized – and how many rug pulls there are where the founders disappear with all the money raised through the NFT sales.

NFTs, as they are right now, are risky.

80% of buyers are looking to turn a profit quickly. With NFTs launching by their hundreds of thousands every day, there are more NFTs than buyers.

This creates a problem of over-supply vs demand so only the good NFT projects will last and survive.

Although the NFT industry is not built on a house of cards, but a solid secure blockchain, the current NFT real estate using the blockchain may not be as secure as future real estate that will eventually take over from cartoon Apes and dominate the space.

The Difference Between Good NFTs and Bad

Just like you can’t judge a book by its cover, you can’t judge an NFT by its picture alone.

If you did, you would make all the wrong investments.

Take a look at the NFT below

VeeFriends NFT

Would you believe this is worth at least $36,000!

It shows how the quality of the graphic does not always mean as much as the popularity and influencer behind it.

These are Vee Friends by widely recognized entrepreneur Gary Vaynerchuk (also affectionately known as Gary Vee).

He has an influence reach of millions of people, and as a result the hype around his Vee Friends NFT release was huge. Hence the price.

It’s plausible the vanity reasons of holding a Bored Ape Yacht Club NFT may fade away, but there are many more NFTs with good reasons to invest for longer term opportunities, benefits and hopefully a decent return on investment.

Will the NFT Industry Disappear

The chances of the NFT industry completely disappearing are incredibly remote at best.

It would be comparable to cryptocurrency disappearing overnight, or stocks and shares.

We may find that certain NFTs disappear over time, just like we may find certain meme cryptocurrencies and business listing on the stock market disappearing, but this doesn’t mean the entire industry will collapse.

It will change, grow, and mould into different opportunities and different ways for people to require authentication and safe ownership in the blockchain.

The NFT logic and concept offers so many options and possibilities.

Imagine not only being able to 100% authenticate an asset but know its full audit history and owners over its life cycle. The blockchain offers this.

The NFT industry is comparable to the start of cell phones, or the start of the internet.

People do not use the same cell phones they did in the late 90s, and very few of the most popular websites of that time no longer exist.

Both of these industries developed over time, and so will NFTs.

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