Why Are So Many People Buying NFTs?

After learning about what NFTs are in our previous blog post here, you may still be left wondering what all the fuss is about with NFTs. Despite many non-crypto media outlets predicting an eventual crash of NFTs, crypto players are still heavily investing in and buying NFTs. Let’s take a look at a few common reasons why!

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Investment Opportunities

This is by far the most commonly cited reason as to why people buy NFTs. Investment opportunities! Yes, you may have spent 0.15ETH minting this cool new NFT that you frankly don’t really like, so why would you have spent so much good money doing it? Well, maybe a year later you can sell that same NFT for 1-2ETH, which has already flipped your investment 10 times!

Another way to put it simply is by considering this example. You buy 10 NFTs, each minted slightly above market price at 0.25ETH, spending a total of 2.5ETH minting those NFTs. Of your 10 investment NFTs, only two increase in value to 1ETH and 1.5ETH. Congratulations! You’ve already broken even on your investments with 8 NFTs left. Even if you never sell those remaining 8 NFTs, you technically didn’t lose anything. Let’s then say that those remaining NFTs never mature in value and you sell them at a slight loss of 0.2ETH. You’ve still profited 1.6ETH from your investment, which may not be a lot to some, but hey it’s still a profit!

FOMO

Everyone has an NFT nowadays in my crypto group and I’m the only loser that doesn’t have one. How could I call myself a crypto player without an NFT? 

While this may be seen as a naive reason to be an NFT owner, it’s still a reason nonetheless. Hey, we don’t judge here in the TripCandy team, if you buy NFTs because you feel left out, feel free to! In fact, you should never let your friends or the general public make you feel bad for any decisions you make, unless, of course, you make a decision in the heat of passion knowing you’re going to regret that decision. In that case, please slow down and think before you spend hundreds or thousands of dollars!

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Chasing The Market

Some traders call you a baboon if you chase the market, other traders swear by only chasing the market. We’re not saying either side is necessarily wrong as every trader has their own strategy and behavior. Here, we take a look at the latter strategy of chasing the market.

Chasing the market refers to the act of trading based on current market movement, such as opening a long position(buy) when you see a stock’s price breaking out in a huge bullish(increasing) pattern. In the case of NFTs, we all know that there was a huge explosion of interest in NFTs in 2021. This has led to some traders buying NFTs with one target; quickly flipping the NFT back on the market at a profit. While you can’t short an NFT the way you can with stocks or cryptocurrencies, you still can chase a bullish market by filling in the supply and demand gap, buying NFTs at a low and selling them slightly higher. A small profit is still a profit nonetheless, and that small profit quickly adds up if you play your cards right and flip enough NFTs

Interest In Design

Most NFTs are of artwork. Whether it’s pixel art, a very well animated little bit, or a digitalised form of existing physical art, there’s no denying that most NFTs are showcasing artworks. Most friend groups discussing NFTs talk about their lucrative investments or how they were able to flip an NFT to 5 times their value. However, we believe that most people forget that art in itself can carry value. Not everyone buying NFTs is looking to make money(although most are). It’s perfectly okay to buy NFTs solely because you like how it looks, and while it may be more expensive than the generic art pieces and decorations, it’s good money spent on something you enjoy. Just think of NFT collecting as any other form of collectible hobby, like poker card or stamp collecting! 

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Gaming

Buying NFTs for in-game uses have really taken off in recent months since the explosion in popularity of NFTs. Gamers can now buy NFTs that give them in-game perks, or to watch their NFT character’s in game gameplay. Owning an in-game NFT is a visual treat and usually comes with perks and benefits such as stronger attacks or money earning multiplier. Axie Infinity is arguably the pioneer of NFT gaming and, really, is the project that brought NFT gaming into mainstream media. Axie Infinity’s concept is actually quite simple, with many comparing it to the classic Pokémon series, but with a twist. Axie Infinity has changed their model from a paid game to a free-to-play, pay-to-win model where anyone can play Axie for free, but their Axies will face limited development, and you can buy NFTs to ease your gameplay.

However, you should know that NFT game rug pulls are unfortunately becoming increasingly common. One story that we keep coming back to over and over again is the Squid Game Token(SGT) rug, but we’ve only covered the technical aspects of the rugpull so far. The gaming side of the story is that you would require SGT to enter each round of Squid Game, 456SGT to be specific. However, selling the token was reportedly troublesome and downright nearly impossible as you needed 456SGT to even be able to sell, which means that at their all-time high value of about $2800, it would cost a whopping $1.27m to be able to buy enough SGT just to cash out, which was clearly out of reach for just about every SGT holder. SGT then saw a huge plummet in price to less than a cent, rendering their investment close to worthless.

Another recent “rugged”(in inverted commas as not technically a rug) NFT game is Pixelmon, which sold a whopping $71.4m worth of NFTs at the start of the project. As the name suggests, Pixelmon promised to have gameplay similar to Pokémon, but in an open world system similar to Grand Theft Auto or Minecraft. This promise, in addition to additional hype-generating marketing such as their team’s working experience, had led to all of Pixelmon’s NFTs being sold out within the first hour of the mint’s launch, with most players spending 3ETH buying their NFT before the artwork was even released. However, concerns began to surface as the team remains undoxxed, and questions began to be raised in regards to their roadmap. Eventually, the art behind Pixelmon’s NFTs were finally released, and to say that it was underwhelming was a vast understatement. Instead of stunningly-rendered NFT creatures teased on Pixelmon’s Twitter, holders were instead rewarded with a substandard and repetitive NFT that was greatly different to what was teased. Pixelmon NFT values then plummeted, with most holders left regretting shelling out thousands of dollars for a poor quality repetitive NFT. We would go into more details but this story has gone on long enough, so instead, do check out this great article by Crypto Briefing which covers the Pixelmon story in greater depth.

These stories aren’t meant to shame project teams or investors, but rather we hope to shed light to the risks that follow hype, and to prevent you from feeling that impending sense of dread for an investment-gone-wrong. Always remember to do your own research, and check out more of our blogs here!



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