Mumbai: The year 2020 was unprecedented in many ways, but what was undeniably phenomenal was the rise of the crypto world, drawing new users to it. However, this dramatic escalation of the crypto world has seen another new market in the digital sphere-the NFTs, which has gathered much attention and somewhat spread like wildfire, which no one can stop. Nowadays, it can be seen that celebrities from around the world are getting into the NFT space and the press is flooded with success stories.
It may seem that investing in NFTs is the quickest way to earn money. But, just like any other thrilling experience, there will definitely be challenges involved. As per various reports, it has been analysed that 95 per cent of investors lose money since they lack proper research and, therefore, they follow short-term projects which have no value. Amidst the crypto crash this year, it appears that the bloodbath in the crypto market has affected NFT sales too. According to a report in The Guardian, NFT sales reached a 12-month low mark in June 2022.
Reasons why most NFT projects will fail
A majority of NFTs (about 96 per cent) will come crashing down hard, not just temporarily, but permanently, because the creators lack experience in implementing their roadmap in the proper way or are unable to cope with emerging issues in order to establish a long-term and sustainable business. Several NFT projects are just a quick way to grab the cash with no real value or utility backing the digital asset. The main issue with the NFT marketplace is poor marketing strategy; the supply presently outweighs demand, as does the lack of actual value and utility backing NFTs, which in turn will affect the sentiment around the project.
While large brands, companies, and innovators start exploring the NFT space and incorporating the technology themselves, they will soon begin to realise what a valuable NFT looks like when compared to all the useless NFTs presently overflowing the markets.
The reality that modern-day NFT creators and investors fail to recognise is that, with the help of NFTs (a digital technological space), one can either build a brand from the ground up or increase the trust, value, and transparency of existing brands. In contrast, NFT creators have created nothing more than just a picture, which has little to no actual value or utility at all. The creators are not even building a brand or developing a strong intellectual property, failing to deliver quality, and even providing nothing to their customers besides the NFT itself. People need to understand that just because someone is an artist doesn’t mean the person will be a successful NFT project person.
In addition to that, these days' news regarding NFTs that are making headlines are mere stories about people making huge profits by selling and purchasing NFTs. These types of news tend to create the impression that either NFTs are a get-rich-quickly scam or that any NFT can easily make you a million dollar profit, while both are just untrue to a certain degree. It requires a lot of hard work and talent to benefit from the NFT business.
There’s more to understand on NFTs!
Going by the present market scenario, it seems that rug pulls have become the go-to scam of the NFT ecosystem, and as a result, several projects are facing difficulty in gaining the community’s confidence. Moreover, projects are failing due to a poorly organised team with no experts, poor synchronicity, and also a lack of adequate financial planning. Many NFT ventures are unable to maintain an engaged and vibrant community of supporters, which is probably the numero-uno factor behind building a project. Plus, there is a lack of uniqueness when a project is simply a copy of an existing one with the same features, benefits, and processes or if it does not grab the attention of the audience; thus, they are not able to make it to the live market.
Currently, the NFT space is a perfect example of an overhyped market driven by greed. It’s not an easy task to head an NFT project, and in most cases, it is a tough grind to stand out and survive past launch. NFTs are just going to be another way of branding and marketing a business. Although most NFT projects are failing, that doesn’t imply that all of them are worthless. There are still some projects worth your attention, and you can definitely make profits if you understand the logic behind failing projects so that you can act in the opposite way.
Therefore, the next time someone is thinking about purchasing an NFT, the advice is to do the research, don’t spend more money than you can afford to lose, and only purchase NFTs that spark interest. You must have the ability to build a legit business out of social media. All you need is to be extra careful when diving into this unregulated platform.
The author of the article is JorrParivar creator, founder, and operator Digital Pratik.