Will You Recognize the “Next Big Thing” in NFTs When You See It?
NFTs are trendy. So, it pays to be able to spot new ideas ahead of the crowd. Here are six ideas to help you stay ahead of the game.
Who knew that a collection of bored apes would take the NFT market by storm? Or a collection of goblins that look like they might have been drawn by a six-year-old? Or a bunch of pixilated punks?
Most of us, including myself, wouldn’t have guessed.
And yet these collections rose to fame and made fortunes for the early collectors. The studios that produced them turned into powerhouse influencers.
Was it sheer luck? Or were there some leading indicators that we could have picked up?
And in what direction is the NFT collectibles market likely to move next?
Here are some of the changes that we are likely to see. And some ideas about what to look for.
Subject Matter
Today, NFTs are all about apes, punks, cats, dogs, birds, bears, pandas, frogs, warriors, aliens, robots, dragons, goblins, unicorns, insects, and so on. With “mutant” versions of most of the above. Then there are the collections that feature various private parts of the human anatomy. And even collections based on stylized piles of poop.
It would make sense for NFTs to move back toward the traditional subject matter of fine art: real people and their surroundings.
Fine artists are discovering and adopting NFTs as a medium. As they move into the field, they will bring with them the various established types of art. These will likely include Abstract, Impressionist, Modern, Surrealist, Pointillist, and other art forms.
What to look for:
Original subject matter and artistic style.
New Techniques
Almost the only method used for making NFT collections today is the “generative” technique. This involves layering together many different “attributes” to form composite images. These attributes consist of different eyes, ears, noses, mouths, hair, clothes, and other visual items. These are randomly compiled into thousands of composite images that comprise the collection.
A lot of people have made a lot of money by creating NFT collections with this method. But, the simplicity of the technique has led to a glut of “copycat” collections with little to distinguish them.
As the market evolves, I expect to see more artists using Artificial Intelligence (AI) and Computer Generated Images (CGI). Read more about this here:
These techniques require different technical expertise than the generative method. But, they can also produce images with more diversity, complexity, and originality.
What to look for:
Keep your eyes open for projects that use innovative techniques and technology.
Artistic Quality
In many ways, the current NFT market seems to be in a race to the bottom. Teams try to outdo each other in making the crudest drawings of the most shocking subjects. The result is collections of images that look as though they were drawn by a five-year-old.
I’m not trying to be an art snob when I say this. People are paying real money for some of these crude images.
My point is that I predict the pendulum of public taste in NFTs will swing back from its current extreme. Collectors will insist on higher-quality images as the market matures.
NFT collectors should ask themselves a question when they are thinking of buying a new piece. “If I could enlarge this image to the size of a painting, would I be proud to hang it on a wall in my home?”
The answer will usually speak to the Artistic Quality of the piece.
What to look for:
Quality artwork that you wouldn’t mind displaying.
Realistic Pricing
Here we are simply talking about the law of supply and demand.
As the supply of an item approaches infinity, the price of that item tends toward zero.
There are now thousands of teams producing collections containing many thousands of images. That means that the total number of NFT collectibles is in the tens or hundreds of millions.
That is not an “infinite” supply, but it might as well be.
Without a dramatic increase in the number of NFT buyers, this leaves millions of new NFTs chasing the same dollars.
Many observers have said that the market for generative profile picture (PFP) NFTs has been in a speculative bubble. Even the earliest, most established and most expensive collections have seen their values drop. These price declines may be a sign that the bubble has burst.
As a result, some teams have chosen to allow users to mint their entire NFT collection for free. In other words, the starting price for many new NFTs is already at zero.
What to look for:
Look for NFT projects that are competing based on artistic quality, style, content, and uniqueness. Seek value, not artificially generated “rarity”.
Layer-2 Technology
This point is more technical. Feel free to skip ahead if you are not interested in NFT technology.
One of the Ethereum competitors like Solana might grow fast enough to overtake Ethereum. But, currently, Ethereum is the standard. Ethereum developed the ERC-721 and ERC-1155 smart contract code used in NFTs. And 95% of NFT projects exist on the Ethereum blockchain.
The problem is that NFTs create a lot of traffic on the Ethereum blockchain. This drives up the price of executing transactions on the Ethereum network. At times, these fees, known as “gas”, have added significantly to the price of NFT sales.
The Layer-2 blockchains such as Polygon and Immutable-X use the Ethereum smart contract code. And they reside as a separate layer on top of the Ethereum blockchain. But they run their NFT smart contracts on their respective networks. This results in much lower fees and faster transaction times.
NFTs created on Polygon or Immutable-X can be listed, priced, bought, and sold for Ethereum on a compatible marketplace such as OpenSea. That is, as long as the buyer doesn’t mind paying the higher gas fees on the Ethereum network.
So, these Layer-2 networks may continue to gain market share.
What to look for:
Don’t overlook NFT projects that use these inexpensive Layer-2 networks.
Real-world Utility
Many real-world use cases can give NFTs utility and value. These include group memberships, event tickets, gaming items, metaverse properties, merchandise authentication, and identity validation.
Of course, NFTs that tokenize fine art and music are also valid real-world uses.
Read more about these use cases in this article:
Another growing use case is domain name NFTs. For example, Unstoppable Domains is allowing users to buy crypto-related domain names as NFTs. This is in contrast to the traditional domain name system that only rents domain names for an annual fee.
The NFT collectibles market is currently the largest part of the NFT market. But, it is not the only game in town.
Other use cases are starting to gain traction.
What to look for:
The next big thing in the NFT space might not even be a collectible. It might fit better into one of the other use cases, such as tokenized fine art.
Final Thoughts
If you keep an open mind about what could be the next trend in NFTs, you stand a good chance of spotting it early.
“Generative” profile picture (PFP) NFTs are all the rage today. But that does not mean that they will continue to be in the future.
As the market matures, we will see more NFTs competing based on utility, uniqueness, and beauty.
There will almost certainly be much less hype and speculative frenzy.
But, I would say that will be a good thing for the market.
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About the Author
Richard Crites is the founder and artist at AvatArt NFT Studios. He is also CEO and Founder of OmniBazaar, Inc. He has 40+ years of entrepreneurial success and exits in four separate industries. Rick earned a Master’s degree in Aerospace Engineering from Stanford University. He has been active in cryptocurrency and blockchain since 2013. Rick’s writings are his opinions, not financial advice.
Follow Rick’s writing on Medium.
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About AvatArt NFT Studios
AvatArt creates NFTs with the help of artificial intelligence (AI). This is completely different from the “generative” process used by all the apes, punks, cats, dogs, birds, bears, pandas, frogs, warriors, aliens, robots, dragons, goblins, unicorns, and so on. It produces NFTs that are unusual, attractive, artistic, and distinctive.
AvatArt Studios is releasing its initial collections to the community for free. This allows the market complete freedom in determining their value.
Learn more about AvatArt’s “Artistic Collectibles”.
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