7 Reasons Why NFTS Aren’t Ready for Prime Time
Don't believe the hype
I’ve been following and investing in the NFTs for a while now. As great as NFTs are, they’re far from ready for a mainstream audience. In fact, I even warned some friends off buying some. Here are several reasons why NFTs are still niche.
1. Scamming is rife in the NFT space
Discord is where NFT collectors can find out about a project, read the roadmap and connect with other hodlers. Join one and don’t forget to turn off direct messages unless you fancy hearing from scammers.
Many NFT Twitter links are suspect or from bots. Even figuring out what NFTs are safe to mint is a job in itself
For this reason, many collectors keep one hot wallet for mints and flips and another cold wallet, secured with a hardware device, for storage of valuable JPEGs. That’s fine for full-time Web 3.0 degens but the rest of us don’t have the time or resources to stay one step ahead of organised groups of hackers and scammers.
2. You’ll get rekt
Crypto winter kicked off early in May after the Luna débâcle. Eth plunged to below $2000.
Last year, NFT enthusiasts claimed a drop in Eth is good for NFTs. Surely, that’s a good time to dollar-cost average in and pick up some NFTs at a discount? This year, it turns out NFTs aren’t immune from a wider market correction.
Even the top collection like Bored Ape Yacht Club and Clone X are down 30% or more from their all-time highs. Mid and lower-tier NFTs are down 80 or 90%. Most investors and collectors can’t stomach that kind of volatility. Sure you might get rich with NFTs, but you’ll probably get rekt first.
3. Bluechip NFTs are crazy expensive
Bluechip NFTs like Bored Ape Yacht Club or Moonbirds are a safer bet than the latest degen mints, but most of us don’t have the Ethereum or USD to spend tens of thousands on a JPEG from Yugalabs and others. Or we didn’t get in early enough.
It’s also difficult for casual buyers to compete with organised minters who use bots and code to win dozens of whitelists spots for premium mints.
Sure you could try and outwork the grinders and bots. Or you could pick up a more affordable NFTs on Solana or Tezos. The former is full-time job and the latter is even riskier.
Unfortunately, that means the vast majority of NFT buyers and flippers are those already invested in the ecosystem and with Eth to spare. They’re not new NFT collectors entering the space with fresh money.
4. Derivatives, everywhere I see derivatives
Some NFTS provider holders with CC0. Creative Commons Zero basically describes how the holder retains full rights, commercial and otherwise, over their purchase. Goblintown is one example of a CCO NFT. WTF!
CC0 NFTs are great and all but the space is also rife with derivates and knock-offs. For every Goblintown, there are dozens of Elf Towns attempting to cash on a trend with shoddy art work.
For every ape, there are a dozen other animal-related picture-for-profile projects.
For every potential bluechip like Okay Bears, there’s a knock-off like Not Okay Bears.
Derivates are bad for the space because they are mostly unoriginal cash-grabs that will turn investors and buyers off. They’re also on the express train to zero.
5. Who has time for a dozen Discords?
Joining one NFT Discord community is fun, two Discords are fine, three not so much.
How about a dozen?
It’s impossible to keep up with what’s happening with every NFT project via Discord. If you’re not active in a Discord Community, there’s a good chance that the moderators will kick you out.
I was removed from the Boss Beauties and World of Women Discord communities even though I hold both. I missed an announcement to reverify my profile and the only way back in is to set up a second Discord account.
I still like and hodl both projects. I get that community leaders must protect their projects from bots and scammers but who has time for that?!
6. NFT Twitter is full of hopium and toxic positivity
NFT Twitter is full of undoxxed holders talking about how much money they’ve made from their JPEGs and funding their “Forever apes.” They promptly flip their forever apes at a nice profit.
Sure some NFT collectors are holding, but others are pumping their bags or waiting for a pump, and they don’t always disclose that on Twitter.
They’ll even say things like “smoking weed, buying NFTs”, float crazy predications and encourage buyers not to sell, when really they’re waiting to dump their bags on unsuspecting followers.
Whenever you read about a big flip on Twitter, don’t believe a word of it, unless you can inspect the transaction for yourself.
7. Pseudonyms are (mostly) bad for the space
Web 3.0 enables creators and holders to create a virtual pseudonym or online identity. That’s great if you’re a victim of stereotypes, stigma, racism, and bias.
More often than not, creators use these pseudonyms to release lousy projects into the market and then slow-rug them. i.e. take the Eth and then stop working on the project or selling pre-minted holders, because, you know, bad market fit.
Zagabond, the creator of Azuki, is one example of a creator who reportedly abandoned three previous NFT projects, although he at least admitted it and offered reasons why. The price of Azuki recovered after an initial dip.
Whatever you think of the Azuki allegations, web 3.0 pseudonyms enable holders to hide behind their cartoon animals or their ENS profile.
They can say whatever they want without consequence. Far more trustworthy is the self-doxxed creator, holder or project lead who isn’t afraid to stand behind their creation, project or what they’ve to say.
Unfortunately, those are few and far between.
I’m still optimising about the future of NFTs and what they mean for creators and collectors. The road before WAMGI will be a bumpy one though.