Why Finding Success With NFTs Is Tough?

For people who're not aware, here is a quick explanation of NFTs.

An NFT stands for Non-fungible token. It's data stored on blockchains that facilitate the storage of data. The most popular blockchains that allow NFT transactions are Ethereum and Solana. The thing with NFTs is that it's unique; there is only one version of them in existence. It's different from fungible tokens such as cryptocurrencies, where there are many identical versions of them. If a person owns a digital asset such as a JPEG art as an NFT, they are the unique official owner of the entity.

In the last year, NFTs have taken the crypto world by storm; there has been an enormous explosion in this area. Many of the projects were art-based; they allowed the holder to own a piece of art as an NFT.

Some people became wealthy very quickly through NFTs. People who launched projects sold out their collections and made six figures. Many made millions of dollars. Investors bought NFTs and saw an increase in the value of their assets. NFTs from iconic projects such as CryptoPunks are worth millions.

Launching an art-based NFT project is easy compared to many other kinds of businesses. Unfortunately, the trouble is that the market is now saturated. Only so many people are willing to buy a JPEG as an NFT. As a result, many art-based projects fail to sell out, and those who purchase these NFTs usually find their NFT depreciating in price. It's a loss-making situation.

An NFT as a JPEG will have great value if it's by an established, well-known artist. But there are only so many renowned artists in the world.

For an NFT project to go to the moon now, art on its own is insufficient. Projects have to come up with something more substantial. A project will need to offer things such as a Play To Earn game, virtual land in the Metaverse, or tokens with real-world use. These things usually are called utilities.

A project to deliver utilities requires a great deal of work. It's no longer releasing artwork and a set and forget business model. It has become not too dissimilar to a crypto project where it's expected the coin will have some real-world use. Unfortunately, not all project owners like the idea of putting in a hard effort and bringing something to fruition. The number of solid projects is far less than the total project numbers.

From an investor's point of view, given art alone fails to have much value, it becomes harder to identify solid projects. Now, investors and people who launch NFT projects have to work a lot harder to find success.

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