Blue-chip NFTs have gained a significant reputation and value within the NFT (Non-Fungible Token) market, much like their counterparts in traditional finance. These tokens are considered the cream of the crop when it comes to digital collectibles, thanks to their famous creators, historical importance, rarity, and the strong communities that surround them.
In this article, we’ll delve into what blue-chip NFTs are, how to invest in them, and the safety considerations that come into play. Additionally, we’ll discuss why a surprising 90% of NFTs are unfortunately deemed to be worthless.
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What are Blue-Chip NFTs?
Blue-chip NFTs are non-fungible tokens that hold a prestigious and highly valuable position within the NFT market, similar to the way “blue-chip” is used in traditional finance to describe well-established, financially stable companies with stocks that are considered safe and reliable investments. In the context of NFTs, blue-chip tokens share characteristics of prestige and reliability. Here are some key attributes often associated with blue-chip NFTs:
- Renowned Creators: Blue-chip NFTs are often crafted by famous artists, creators, or well-known entities within the NFT space. The reputation and track record of these creators significantly contribute to the token’s prestige and value.
- Historical Significance: Some blue-chip NFTs hold historical or cultural importance. They may represent iconic moments, historical artifacts, or significant cultural references, making them highly sought after by collectors.
- Rarity and Exclusivity: Blue-chip NFTs are typically rare and exclusive. They may have limited editions, unique features, or qualities that distinguish them from other NFTs. The scarcity factor adds to their value.
- Strong Community and Demand: Blue-chip NFTs often have an active and dedicated community of collectors and traders. The demand for these tokens remains consistently high, further cementing their status.
It’s important to acknowledge that the status of a blue-chip NFT can change over time, and the NFT market can be characterized by speculation and volatility. What qualifies as a blue-chip NFT today may not hold the same status in the future. Consequently, investing in NFTs, including blue-chip ones, demands meticulous research, due diligence, and a comprehension of the inherent risks in the NFT market.
Why you should go for blue chip NFT?
Recently, the DappGambl study mentioned in the article was titled “Dead NFTs: The Evolving Landscape of the NFT Market.” According to the article, this study analyzed 73,257 NFT collections and made the following findings:
- Valueless NFTs: The study found that as many as 95% of NFTs, owned by more than 23 million investors, have no value at all. This means that a vast majority of NFTs are essentially worthless in terms of market value.
- Market Capitalization: Among the thousands of NFT collections analyzed, 69,795 of them were reported to have a market capitalization of zero Ether. This suggests that a significant number of NFT collections have no market value.
- High-Value NFT Rarity: The study also noted that less than 1% of NFTs have a price tag of over $6,000, indicating that high-value NFT assets are very rare, and those are blue-chip NFTs.
These findings suggest that the NFT market, despite generating headlines for high-value sales, may have a large number of NFTs that hold little to no value, and high-value NFTs or blue-chip NFTs are the exception rather than the rule.
Reasons behind dead NFTs or less active NFTs
A notable portion of NFTs can be considered “dead” or less active due to various factors:
- Lack of Sales or Trades: Some NFTs may go without sales or trades for extended periods, signaling declining demand or interest.
- Inactive Projects: NFT projects or collections may become dormant if the creators or developers cease their support or promotional efforts.
- Expired Licenses: NFTs tied to digital goods such as software licenses may lose value if these licenses expire or become outdated.
- Changing Trends: NFTs related to specific trends may lose value if those trends fall out of favor or become obsolete.
- Technical Issues: Smart contracts or platforms hosting NFTs can encounter technical problems or vulnerabilities that affect the functionality and value of associated NFTs.
- Low Quality or Unpopularity: NFTs lacking uniqueness, artistic value, or utility may struggle to gain traction in the market and are often labeled as “dead” due to their limited desirability.
What Are Some Characteristics of a Blue Chip Project?
Blue-chip NFTs possess distinct features that set them apart in the NFT market. These characteristics include:
- Historical Value: Blue-chip NFTs have demonstrated a consistent history of increasing in value over time, often accompanied by high sales volumes. This track record establishes their reputation and attractiveness to collectors and investors.
- Brand Power: They frequently have affiliations with prominent names or celebrities, which adds to their prestige and allure. These associations can significantly boost their perceived value.
- Team Expertise: Blue-chip NFT projects are typically backed by individuals or teams with strong reputations within the industry. Their expertise lends credibility to the project and enhances trust among participants.
- Utility and Roadmap: These NFTs offer practical benefits and have a well-defined roadmap for the future. They provide clear use cases or functionalities that make them more appealing to potential users and investors.
- Community Support: The success of blue-chip NFTs is often bolstered by a sizable and engaged community. This active following contributes to the project’s growth and resilience.
Why 90% of NFTs are Worthless?
The statement that 90% of NFTs may be considered worthless is a generalized observation, and the exact percentage can fluctuate depending on the criteria used for assessment. Several factors contribute to this perception:
- Market Saturation: The NFT market has experienced rapid expansion, leading to an oversaturation of projects and collections. This oversupply can make it challenging for every NFT to gain attention and value.
- Quality and Demand: Not all NFTs are created equal. Some lack uniqueness, cultural or artistic significance, or utility, resulting in low demand from collectors and investors. NFTs without distinctive qualities are less likely to hold value.
- Speculation and Hype: Certain NFTs have seen value appreciation primarily due to speculative buying and market hype, rather than inherent worth. When speculative interest diminishes or the market cools, the value of such NFTs can plummet.
- Lack of Utility: Some NFTs do not offer tangible benefits or experiences to their owners. NFTs that lack clear utility may struggle to maintain their value over time.
- Fluctuating Trends: NFT trends can change rapidly, and what is valuable today may not be in the future. NFTs tied to specific trends or themes may lose value if those trends fall out of favor.
- Market Dynamics: NFT prices are influenced by supply and demand dynamics. Oversupply of certain NFT types or a lack of interest from buyers can lead to price declines.
It’s important to note that not all NFTs fit into this category, as there are many valuable and meaningful NFTs in existence. The perception of value in the NFT space varies greatly, and potential investors should thoroughly research and evaluate individual NFTs before making purchases.
Top 5 Use Cases of NFTs
NFTs are being utilized in various industries for different purposes. Here are the top 5 current use cases for Non-Fungible Tokens (NFTs):
- Digital Art and Collectibles: Artists tokenize their digital creations as NFTs to prove ownership, rarity, and provenance. Collectors can buy and trade these unique digital collectibles.
- Gaming and Virtual Assets: NFTs represent in-game assets like characters, skins, weapons, and virtual real estate. Players can trade these assets within and outside of the game environment.
- Virtual Real Estate and Metaverse: NFTs establish ownership of virtual land and properties within virtual worlds and metaverse platforms. Owners can develop, customize, and monetize these virtual properties.
- Music and Entertainment: Musicians and content creators release limited edition or exclusive content as NFTs, including music albums, concert tickets, and merchandise. This offers new avenues to engage with fans and monetize their work.
- Authentication and Provenance: NFTs are used to verify the authenticity and provenance of physical assets such as luxury goods, artwork, and collectibles. Linking physical items to NFTs on the blockchain provides buyers with confidence in the authenticity of their purchases.
These use cases demonstrate the versatility of NFTs across various industries, with new applications continually emerging as the technology evolves and more sectors explore its potential.
How to Invest in Blue-Chip NFTs?
Investing in blue-chip NFTs, which have the potential for significant value growth, requires a strategic approach. Here’s a step-by-step guide:
Step 1: Learn About NFTs: Start by understanding the NFT market trends and dynamics.
Step 2: Research Platforms: Identify reputable NFT platforms known for blue-chip NFTs.
Step 3: Set a Budget: Establish a clear budget based on your risk tolerance.
Step 4: Choose a Wallet: Select a secure NFT-compatible wallet like MetaMask or Trust Wallet.
Step 5: Create an Account: Sign up on your chosen NFT platform and explore its features.
Step 6: Due Diligence: Thoroughly research blue-chip NFTs to find promising options.
Step 7: Make a Purchase: Follow the platform’s instructions to buy your chosen NFTs.
Step 8: Store Securely: Transfer and securely store your NFTs in your wallet.
Step 9: Stay Informed: Stay updated on NFT market trends and news for potential growth
By following these steps and staying informed, you can increase your chances of successfully investing in blue-chip NFTs. Remember that the NFT market can be highly speculative, so do your due diligence and invest responsibly.
Is Investing in Blue-Chip NFTs Safe?
While investing in blue-chip NFTs can be relatively safer than riskier NFTs, it’s essential to acknowledge that no investment is entirely risk-free. Your level of safety depends on your knowledge, diligence, and risk tolerance as an investor. Approach NFT investments with caution and awareness of potential risks.
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Pros and Cons of NFTs
NFTs offer several advantages, including:
- Ownership and Provenance: NFTs provide a secure way to prove ownership and provenance of digital or physical assets.
- Monetization for Creators: Creators can directly monetize their work, cutting out intermediaries.
- Digital Collectibles: NFTs revolutionize digital collectibles, enhancing ownership and scarcity.
- Interoperability: NFT standards like ERC-721 and ERC-1155 increase utility and flexibility.
- Gaming and Virtual Worlds: Gamers can truly own in-game assets, fostering a virtual economy.
However, NFTs also have their drawbacks:
- Environmental Concerns: Some NFTs are on energy-intensive blockchains, raising environmental concerns.
- Speculation and Hype: Speculative bubbles and inflated prices can lead to market volatility.
- Copyright and IP Issues: NFTs don’t inherently address copyright infringement issues.
- High Entry Costs: Gas fees can be a barrier for creators and buyers.
- Regulatory Uncertainty: The regulatory landscape for NFTs is evolving, creating uncertainty.
Blue-Chip NFTs are like the masterpieces of the NFT realm, loved for their connection to famous creators, historical importance, and exclusivity. They represent the hubs of art, technology, and investment, offering both cultural significance and the promise of financial gains. Yet, while these Blue-Chip gems shine brilliantly, investors must step carefully in this ever-changing market, doing their research and keeping a close eye on the dynamic nature of NFTs.
On the other hand, 90% of NFTs are considered worthless, which highlights the challenges and saturation within the NFT market. Factors such as an oversaturated market, varying quality, speculative frenzy, and a lack of practical use all contribute to this sobering reality.