95% of art, baseball cards, comic books, and yes, NFTs are worthless. Is this really shocking to anyone?
Over the last week the news media has been on a feeding frenzy over new data that shows that 95% of NFTs are worthless. The moment I read this, I thought - well of course, who thought NFTs would be different from any other collectible?
Of course, with any new trend, people love to hate it. Since Bored Apes broke the $10k mark the media has been doing their best to slam the “silly ape” JPEGs every chance they get.
And I get it. But Bored Apes are in the 5% that are a lot more than worthless. When first released, people who participated in the mint were able to buy a Bored Ape for $220, today they’re selling for around $40,000 — that’s an 18,000% ROI.
If you look at other collectible markets like art, baseball cards, comic books, etc. 95% are worthless. And that’s not news. What I do think is news is actually how big the NFT market has become in just a few short years.
Currently there are a little over 108,000 NFT collections. Rewind three years ago and there were just a handful of collections out there. So now let’s do the math — if 95% of NFTs are worthless, that means that over 5,000 collections aren’t.
Let’s run these numbers again. Three years ago, roughly zero NFT collections were worth anything, now over 5,000 have value, some that are over 18,000% above what they were initially released at.
How is that not shockingly jaw-dropping growth for a nascent market? Seriously, think about it — this is a huge number, and with auction houses like Christie’s and Sotheby’s already selling NFTs for millions of dollars, acceptance in the art world came a lot faster than I would have thought personally.
The collectibles market is a funny place. The news media actually loves to cover it, but for whatever reason is just having a hard time allowing a digital entry into the space. What’s so wild is that when a VHS tape sells for five figures, the media jumps on it, and lauds it as a crowning achievement.
Some might even be holding onto the retro gadgets after seeing that a sealed, mint-condition “Star Wars” VHS tape from 1977 sold for $57,600 in New Jersey by Goldin Auctions, a collectibles auctioneer, in December 2021.
If you have a collection of a limited-edition or unopened VHS tapes, you could be in ownership of a small fortune. (Source — New York Post)
The reality here is that 99.99% of VHS tapes are worthless, yet one sells for $57,600 and suddenly the news claims VHS tape collectors could be “in the ownership of a small fortune.”
A mint condition Super Mario 64 (which I won’t argue is an amazing game) sold for $1.5M and boom — the news was all over it. No mention of the fact that, like VHS tapes, 99.99% of video game cartridges are worthless.
The reality is, people love to call things a “fad” all too often, and in doing so they miss foundational changes that are taking place.
Just like the Internet, many people will give up on NFTs. I get it, maybe they were hoping it would not behave like a collectible and see 50% or more of the collections do well.
For me and many others, I always expected NFTs to act like collectibles and tried to focus on finding a project that I thought would be in the 5% or 2% or whatever narrow range finds its sweet spot, as so happens with collectibles.
I never expected over 100,000 collections to be released in a few years, and I’m shocked that thousands are doing so well this early. For anyone rushing out to buy any collectible — whether baseball cards are your jam, physical art catches your eye, or comic books just feel like the right move, set realistic expectations.
The reality is, people who make money with collectibles do a ton of research. Just randomly buying baseball cards or art probably isn’t going to yield the results you’re looking for, and yes, you guess it - the same goes for NFTs.
So many people bought into ridiculous NFT projects without doing their homework and looking into who was running the project, who was buying into the project, what was their plan, and so many other factors that are critical to success.
At the same time, I’m not going to say there wasn’t luck involved, as there is with both collectibles and investing. There are plenty of people who bought a handful of stocks, never did much research, and boom — got lucky. The same is true with collectibles.
The fact is that today the collectibles market now includes digital assets, and those digital assets are NFTs. Thousands of collections are more valuable today than they were the day they launched, and it has only been three years. I think that’s incredibly exciting, don’t you?
