What Makes an NFT Popular?
NFTs are taking the world by storm, and understanding the culture surrounding them is key to understanding why some NFT projects become more popular than others. In this article, we take a look at three factors that contribute to an NFT’s popularity in the community.
For those that are new to the topic, here’s a quick definition of NFTs:
NFT stands for ‘non-fungible token.’ NFTs are unique, irreplaceable assets that live on the blockchain. In-game assets, digital art, and collectible related projects are the most prominent use cases of NFTs today. For more information, check out our in-depth guide on NFTs.
Key takeaways from the article:
- Understanding the three dimensions of collectability
- The importance of a roadmap
- How to gauge an NFT collection’s community and why it matters
What is Collectability?
When assessing an NFT, the first factor to look at is its collectability. Is this something that people find interesting and can appreciate?
Collectability can be defined by rarity, style, and art.
Collectability Factor 1: Rarity
Scarcity can enhance interest
Bitcoin is a scarce asset, as the supply is finite. The same principle applies to NFTs. When looking at collections as a whole – collections like EtherRocks have a rarity factor as only 100 rocks exist, and they are one of the oldest NFT projects to date.
But the concept also applies within collections.
Some of the NFTs within a collection will be rarer than others. The NFT collections ‘The Moment of Truth,’ featuring Lebron James, and ‘Marscapes’ both contain items that are rarer than others and because of that considered more desirable.
Other example are NFT collections like ‘CryptoPunks’, ‘Loaded Lions’, or ‘Mad Hare Society,’ which are called PFP (profile picture) collections. They are all similar in set-up but possess a wide array of different traits such as backgrounds, hair colour, clothing, and accessories.
These traits repeat throughout the collection with varying rarity, creating individual NFTs that are always unique. Some of the traits are common, but others are a 1/1 in the collection. If only one trait exists in the whole NFT collection, it becomes more desirable than others in the same collection.
When looking at the ‘Loaded Lions’ collection, the floor price for a lion sits significantly lower in comparison to a unique one. The ones valued highest have provable scarcity with their unique traits.
Collectability Factor 2: Art & Style
The Pixel Style Era
When first launched a few years ago, ‘CryptoPunks’ could be claimed for free by anyone with an Ethereum wallet. Now they sell for double-digit millions. ‘EtherRocks’, when first launched, sold at $300. They now go for anywhere upwards of two million dollars.
The value rose exponentially on these older projects as they are legacy Ethereum NFTs. Blockchain records show that these were some of the first NFTs ever created on Ethereum. This makes these types of projects rare, unique in style, and symbolic of the early NFT days. Many consider NFTs the beginning of a new art movement, expecting that the earliest pieces might be priceless in the future.
NFTs as a New Medium for Art
On Crypto.com’s NFT platform, many of the NFTs’ primary value lies in the art itself: unique, enchanting, skilful, and beautiful.
While some artists are newcomers, many already claim exhibitions at renowned galleries, awards, prizes, or collaborations with celebrities. NFTs are simply a new medium of art.
A perfect example for NFTs as a new medium for fine art is one of the most cited NFT artists, Beeple. He created three of the current top 10 most expensive NFTs ever sold, including his work ‘Opus,’ auctioned through Christie’s for $69M.
Beeple was the first artist to sell through one of the world’s most prestigious auction houses that previously only sold physical items. He monopolised this unique position in the art NFT market, resulting in the value of his art skyrocketing.
NFT Utility: Beyond the Art
While some NFTs are predominantly art, many offer additional benefits. For example, some games are integrating NFTs. Even pure-art NFTs can have secondary benefits: an artist may plan a second collection and holders of the first collection may receive pieces of the second collection for free through a process called an ‘airdrop’.
These examples increase the utility of an NFT. It is typically easiest to find this information in a project’s roadmap.
The Importance of a Roadmap
For many, these added benefits are the primary motivation to buy an NFT. Knowing that the team has plans to do these exclusive events or benefits is a great way to get a sense of how serious the team behind an NFT project is. A project’s roadmap is a great way to discover these details.
Being able to see a roadmap at launch or before is a great gauge of the potential benefits of an NFT. It can show that the NFT has an actual use case.
A roadmap further shows dedication and that the team behind the project is interested in its longevity. For an example check out the ‘Loaded Lions’ Roadmap.
Use this checklist when looking at a project’s roadmap:
Behind Every Popular NFT is A Strong Community
If a project has an active community that works alongside the development team, it can significantly raise the popularity of an NFT.
If we look at the ‘Bored Ape Yacht Club’ (BAYC), many community members use the NFT as Twitter profile pictures and are highly active on social media, promoting BAYC and sharing relevant news on the project. A big part of BAYC’s success can be attributed to their community staying active.
Diving into a community before buying is a great way to determine how popular a project is. Celebrities such as Eminem, Post Malone, and Snoop Dogg have all recently purchased a Bored Ape and as a result, can drive demand for an NFT project.
Take a closer look at an NFT’s community to gauge its popularity
For another example of an active community, check out the ‘Loaded Lions’ Discord, a growing community that even has some celebrity holders. NBA Allstar Joel Embiid of the 76ers recently became an owner of a Loaded Lion.
Here are things to look out for when researching a community:
And there you have it, three questions to ask yourself when exploring NFTs: how collectable is it, determined by art, style, and rarity; does it offer extra benefits and utility outlined in a roadmap; and is the project supported by an active community?
You can find many of the examples listed above and new projects dropping soon on the Crypto.com NFT Platform.
A Word on DYOR (Do Your Own Research)
All examples listed in this article are for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained herein shall constitute a solicitation, recommendation, or offer by Crypto.com to invest, buy or sell any NFTs. Returns on the buying and selling of NFTs may be subject to tax, including capital gains tax, in your jurisdiction.
Past performance is not a guarantee or predictor of future performance. The value of NFTs can go down as well as up and you could lose all or a substantial amount of your purchase price. When assessing an NFT, it’s essential for you to do your research and due diligence to make the best possible judgement as any purchases shall be your sole responsibility.
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