There has been plenty of hype around NFTs in the last year—enough for ‘NFT’ to become Collins Dictionary’s word of the year for 2021. Despite the hype, it is worth remembering that the market is still young and immature.
This was highlighted when the NFT of Jack Dorsey’s first tweet struggled to sell in early April 2022. Sina Estavi, the Malaysia-based CEO of the crypto exchange Bridge Oracle, bought the NFT of the Twitter founder’s first tweet in March 2021 for $2.9 million. However, when Estavi tried to resell the Tweet on OpenSea at a listing price of $48 million, he received a top bid of just 0.09 ETH, equivalent to under $280 at the time.
Art is often underappreciated when created
Even with news of Elon Musk purchasing Twitter, 2022 will not be the year for Estavi to profit from the NFT of the world’s first-ever Tweet. It is possible that in two, 20, or 200 years, Dorsey’s first Tweet will be worth a fortune and worthy of a place in the Louvre—like a fine painting that was undervalued when created. But as proven when Estavi placed the unique artifact on the leading NFT marketplace, OpenSea, it is unlikely that anyone today would pay more than the $2.9 million initially paid for Dorsey’s throwaway thought.
The Pokémon of Gen Z?
NFTs that are part of wider collections and have a trading card or collectible feel—like the Bored Ape Yacht Club NFTs—generate more hype and are easier to trade than those representing individual digital assets. This kind of hype for limited-edition collectibles is nothing new; the Pikachu Illustrator Pokémon card was already incredibly rare when released in 1997 (only 24 have been certified to date) and one sold at Goldin Auctions in February 2022 for $900,000, while a near-mint one was bought by Youtuber-turned-boxer Logan Paul for $5 million in 2021.
Collections can facilitate entry into exclusive virtual communities. For example, owners of Bored Ape NFTs include the high-profile celebrities Eminem, Madonna, Neymar, and the Adidas corporate brand (all currently parading their Bored Ape NFTs as their Twitter profile picture). Having launched in April 2021 for 0.08 ETH (around $190 at the time), owners (who automatically become members of the Bored Ape Yacht Club, or BAYC) now possess something that people are willing to pay a minimum entry fee of 94 ether for, or around $288,000. NFTs of tweets, however iconic, do not appear as yet to possess the same impact or social kudos.
Will social media take NFTs mainstream?
Social media has played an important role in propagating the hype around NFT communities by offering a platform for members to flaunt their expensive digital assets. For example, Twitter introduced a feature allowing owners to connect their crypto wallets and display their purchase as a hexagonal profile picture on the app. Features like this have started to make NFTs a more mainstream and desirable concept, and Meta also announced that NFTs were coming to Instagram.
However, the jury is still out on whether this has renewed the excitement and injected longevity into the concept of NFTs or has just made them incredibly uncool. On Twitter, a distinctive NFT hexagon is often an object of ridicule.
Practical NFT use cases
As NFT use cases mature and become embedded in Web3 (the next iteration of the internet), non-NFT-fanatics will realize their potential as a next-generation QR code that does not suffer from the laughably easy duplication that plagues QR codes. There are also exclusive benefits. Bored Ape NFTs have secured entry for BAYC members into meetups in Hong Kong, the UK, and the US—including a concert and an actual yacht party.
As the Internet of Everything evolves as an extension of the Internet of Things, practical use cases for NFTs may well include simultaneous receipts and entry for hotel bookings and concert tickets, for example. But due to these benefits, selling your Bored Ape NFT is not the same as just selling a JPEG; it is selling your entry pass into an exclusive, well-connected, and influential community.