It’s no secret that sneaker collecting has exploded over the last few years. What was once quite an underground subculture has become a worldwide phenomenon. What sneakers we wear often act as little milestones and waypoints in our lives. In a lot of ways, NFTs are making us at The Sole Supplier feel that excitement again.
Our subcultures are morphing and moving online. Recently, for the first time in history, the term “NFT” was searched more than “crypto” on search engines, and it was one of the most popular terms of 2021. Those who are familiar with gauging and buying hype, may have noticed that the digital asset class is driven by the same metrics. Sneakers are unique cultural artefacts that, whilst commercially popular, are often very personal to the buyer and they are an extension of you. This is not unlike the current trend in NFT projects.
NFTs are a game of culture creation propelled by a community of buyers not only investing money but their social capital and resources. NFT projects are driving internet culture and with-it large speculation. It’s wild and dangerous, but it’s the type of environment where lots of cultural trends are born.
The news, however, is filled with opportunist scams and generally a lack of logical understanding of the space. Everybody likes to hark at the astonishing sums of money being exchanged for the most exclusive JPEGs and go to the comments section of any article and you will see people commenting that anyone can copy and paste an NFT and therefore it is absurd and redundant. The misunderstanding often comes from those viewing the trend from the same traditional financial perspective that crypto is viewed.
It’s easy to see why people think that it certainly, is hard to understand, but we prefer to view them not as JPEGs or even profile pics, but little pieces of the internet that we can call our own. Therefore, buying an NFT is very complex and can be very dangerous. A general rule of thumb is to buy what you like, can afford and most of all don’t expect to make any profit!
What Do You Want to Buy?
This may sound like an odd question but it’s the most important. In the sneaker world, the big drops from the likes of adidas and Nike are obvious to follow, there are select lists of brands and it’s easy to chase the hype for release dates and stock levels. NFT drops are much more complex with vastly different projects and drop mechanics. There are some different categories which you should acquaint yourself with.
Celebrity or Brand collaboration drops are often the smoothest, but they are almost always oversubscribed and relatively expensive. However, the hype and popularity mean that often the resale market is easier and quicker. So, if you’re looking to flip quickly then this is usually easier based on the level of interest in the project.
Another huge part of NFTs are profile pictures. These usually consist of large amounts of animal and human heads with different features and accessories. There are websites which can tell you how rare the traits are, so you can understand how unique each picture is. The general rule of thumb should be to gravitate towards projects and things that you like, and you should never expect for your NFT to go up in value. Profile pic orientated NFT projects are everywhere so there’s much more risk involved but also much more chance of actually purchasing one.
If you are a keen gamer, then you might want to focus on in-game and metaverse items. As a gamer you might find understanding and picking a good NFT easier once you understand the game or the metaverse that you are buying the piece on. For example, buying land and items in Sandbox can be quite good if you know your way around the ecosystem.
One of the important things to understand first is that even though NFTs are designed to be interoperable, currently few NFTs are interchangeable between different platforms. This is often described as the unique selling point for NFTs but in fact there are very few NFTs that can be used in different protocols. We do expect this to change in the future, but a rule of thumb is to try and pick a platform with a high user base.
The next category is generally considered to be art. They have next to no utility and rarely any community metrics, but the creators are successful digital artists. Some of the art is amazingly complicated and intricate. If you think about NFTs as pixelated images, then have a look at marketplaces like Foundation and SuperRare. Traditionally talented digital artists worked for brands, filmmaking or in the gaming industry. However, the NFT trend has allowed them to operate and sell pieces like the traditional art market. Think of Foundation and SuperRare as galleries and the access to sell on the platform is invite only and usually reserved to approved users and members.
Before we move on, there are some other sectors worth mentioning that aren’t often included in the conversation. Photography and Music is starting to emerge and are expected to accelerate this year. So if these are more your bag, then you might want to start exploring this area.
A good NFT project will have not only a great community but some utility for owning the NFT. What do you get for owning this? Sometimes owners are granted certain perks, this can be anything from helping fund a wider project and owning a piece of it or choosing the direction of the project by voting on community proposals. You can even gain access to physical perks such as merchandise, events or even content.
Blockchain protocols are heavily reliant on active participants who ensure that the blockchain remains decentralised. Gas fees make the whole ecosystem work, and they are the biggest barrier to new entrants into the market. They can be astronomically high depending on how busy the network is. If you are buying something, make sure you not only decide how much you are willing to spend on getting the NFT but how much you are willing to pay overall.
Sometimes the gas fee can be more expensive than the NFT. There are ways in which people can gain an advantage if they are willing to pay more than you. Increasing the gas, you’re willing to pay can mean that your transaction can be processed first. This technique is commonly used by individuals to ensure that they win auctions.
What Should You Do Before You Buy?
Most projects have Discord servers, where you can gain unique information on the drop mechanics of the project. It’s important to spend as much time as possible on the server, ask as many questions as you can and generally get involved and help people. This is a good way to understand the project and understand what the community vibe is. There is no secret formula, but most good projects try to be fair and reward as many active community members as possible.
If you are early enough, you might even be able to get on the whitelist and get access to mint the NFT. Minting generally refers to the moment the project is added to the blockchain. Some early projects offer minting on their own website. Whitelisters often must complete various different tasks and it’s not always easy to get whitelisted.
These days we’re seeing more and more raffles which are designed to make the process fair. Generally oversubscribed NFT drops are not fair and just like sneaker drops they can be heavily dominated by bots.
So, we have had the frenzy, the mania and the wild west of the NFT space last year. We had the profile picture explosion; we had the emergence of the metaverse, and we had projects from big retail brands. Where do we go from here? We expect more of all this to continue in 2022. Will this become the new normal? Are we going to see more drops attached to NFTs? Is there a project that hasn’t been released yet that will eventually flip the price floor of Bored Ape Yacht Club? What projects will be funded? What music will be on the blockchain? Is this the year that the content creators will finally flood into the blockchain, utilising it to better and more fairly fund their art? One thing is for sure, in this space of ours, 2022 will be like no other.
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