Are NFTs a Scam? Yes, but…
Shit happens in the crypto space.
Last week, a highly-anticipated project called Hoppers went live.
All 10,000 NFTs sold out in minutes. If you’re curious, each one initially cost 1.7 $AVAX, which is the equivalent of about $125.
That’s pretty cheap given the potential upside. But very expensive when you consider I paid more than 100 bucks for a picture of a frog.
Which brings me to my point here:
This week, I wanted to teach you how to play crypto games using Hoppers as an example. But the game is down for maintenance. Like I said: shit happens in crypto.
This is a good time to step back and lay out what the frick NFTs even are and why most people are completely WRONG about NFTs.
“NFTs Are a Scam”
I’ve been trading these MFers for months, and I still have a hard time explaining what an NFT is.
As I understand it, an NFT is like a one-of-a-kind trading card that exists on a blockchain. In the case of my portfolio, my NFTs exist on the Avalanche blockchain. That means I buy and sell them using the $AVAX cryptocurrency.
Most of my normie friends say NFTs are bullshit. “The only value they have is that they increase in value,” they say.
Can’t even argue against them. Except the fact that half the time they don’t even increase in value LOL
Here’s my take:
The current state of NFTs is like the .com bubble in the late 90s, early 2000s.
There are a bunch of players entering the arena. 99% of them aren’t gonna make it to Q2 2022, let alone next year.
There will be a few big hitters from these early days that survive.
The Amazons. eBays. Pets.com…just kidding. In fact, most of these NFT projects on the market now will go the way of Pets.com:
Funny examples of a bloated market that eventually burst.
But like the .com bubble, something more important is happening behind the scenes here. The actual NFT projects that come and go won’t matter in a few years. What will matter are the use cases they’re laying the foundation for.
Sure, Pets.com is dead. But websites aren’t dead.
The problem with the .com bubble was that people put the website cart before the business horse:
Not every website is automatically a business…
BUT every business needs a website.
The same thing will happen with NFTs.
Right now we’re treating NFTs like they’re “the valuable thing” the same way we treated websites as “the valuable thing.”
NFTs will be a supplement to projects, not the project itself. They’ll be a means to an end.
What will those ends be?
NFTs as Tickets
Rather than using a QR code to get into a concert or on an airplane, you’ll use an NFT.
Certain events are already doing this. Coachella is one example.
Switching to NFTs might help circumvent parasitic companies, like Ticketmaster, and their bullshit fees.
You’ll also use an NFT boarding pass for planes, trains, and buses.
Why is it better to use an NFT as a ticket instead of a QR code? I’m still trying to figure that out, exactly.
Trust me. I’m learning.
Crypto games right now are lucrative (sometimes) but rudimentary. You buy an NFT (basically a JPEG), you “stake” it (or deposit it), and earn rewards.
Then the liquidity pool for the game runs out, the coin runs to zero, and you move onto the next one, hopefully taking some profits along the way.
In 2 years, this framework will look as outdated as Pong does compared to current video games.
“If you lose this next game, Timmy, I’m gonna turn your ass into an NFT and sell you on the open market.”
The next step is gonna be high quality games that you actually like playing and earn you money. Potential heavy hitters in the near future:
Music + Books + Fine Art
Wu Tang Clan only released 36 copies of their latest book as limited edition NFTs.
This is the future of creative distribution:
Creators will own their products, own their production, and own the distribution by turning their art into NFTs.
Now, you could say that anyone could copy an artist’s music or book and distribute it for free.
You’re absolutely right. People have been doing that forever.
But people’s ability to replicate doesn’t change people’s desire to have The Real Thing.
Think about it like this:
People can make replicas of any artwork. For example, a perfect replica of the Mona Lisa sold for $300,000 in 2021. Sound impressive? Not when you consider the real thing is worth almost $1 billion.
Another example: anyone could copy a valuable trading card and sell it, but it would never be as valuable as the original.
Because people want The Real Thing. It’s why collectors get their coins and comic books graded.
Why people get their sports memorabilia authenticated.
Why selling forged pieces of art is a criminal offense.
Why Pawn Stars has all those goofy experts verifying items’ authenticity.
Because having The Real Thing is valuable.
Most people in the NFT space miss this most important part. They think quality, scarcity, and verification is what makes NFTs and other collectables valuable.
Think about it. The Mona Lisa isn’t the best piece of art in the world. It’s a stale portrait of a sitting figure. Yet people travel from around the world to see it.
Because of the story:
+The Mona Lisa has been stolen multiple times.
+Nobody knows who exactly the Mona Lisa is.
+It was in Da Vinci’s studio when he died.
+The painting was evacuated to the French countryside in WWII.
That’s the story behind the real Mona Lisa painting.
A replica, no matter how perfect, doesn’t have that story.
That’s difference between The Real Thing and a replica. That’s the difference between an NFT and a JPEG:
People don’t buy NFTs. They buy stories.
When you add the story to the possible use cases I mentioned above, you have a powerful and valuable asset.
So are NFTs a scam?
At the moment, most of them are.
But not for long…
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Thanks for reading!
Greg “The Crypto Kid” Larson