Hint: is not community

Why pay so much for a photo when anyone can take a screenshot and have it just like you? Why buy an expensive profile picture and not even use it on your social media? Were you high when you bought them?

The most expensive NFT I bought and hardly used it as my pfp

These are just a few of the questions that arise when I talk to my friends and family about what I work on or what I’m involved in. And I understand them because these are the same questions I had when I first entered this space. Just to clarify, I wasn’t high when I bought my NFTs.

You can imagine the confusion only grows when I tell them that the space is broken, manipulated, and yet there are people making a fortune flipping JPEGs.

Did you just say that the space is broken?

Yes! It’s broken because we’re all chasing the next hype. We live in the “Attention Economy,” where anything that gets attention automatically gains value, but that’s not always the case. That’s why influencers who have no idea about investing are giving financial advice promising to make you a millionaire by playing a game. *cough* Logan Paul.

It’s also broken because scammers release projects with roadmaps that are completely impossible to achieve, simply to generate more hype and attract more attention to what they’re “building.” Then they pull the rug out from under everyone and walk away with the eth (the infamous rug pull).

This results in the good actors in the market being more incentivized to generate hype and FOMO rather than building a good product.

Seems like a downer, right? Well, sometimes it is, but the important thing is to understand the purpose of NFTs! Believe me, it’s much more than a tool for scammers. And that word is…

Utility

You might be disappointed because let’s face it, is the most commonly used word in the space and for many, it’s almost cringe to talk about utilities. It’s like when you repeat a word so many times that it becomes meaningless and sounds weird weird weird weird. But that doesn’t make it any less important.

In economics, utility means happiness. It englobes much more than just money, like whether you like it, if you feel comfortable, if you learn something new, if it makes you happy, basically. You’ll realize it’s very subjective.

Although sometimes I’m one of those that feels cringy when talking about utility, I believe it’s important to reclaim it. Let’s not forget that NFTs gained a lot of traction initially with PFPs. The utility was more about being part of a group of people that everyone was talking about, rather than what they were actually building.

The logic of the Attention Economy still remains, but since 99% of the projects that seemed ready to change the world in 2021 are now dead, more and more of us are focusing on the technology itself. On the product or service they are building rather than just being part of something.

CryptoKitties. The first NFT project that almost broke Ethereum. All based on FOMO.

It’s the most important word in the space because it sums up everything that can be done with NFTs as technology. It’s much more than authenticating a digital piece.

NFT as a technology

This is why I’m all-in to this space because I firmly believe that NFTs as a technology will impact our daily lives.

The key to NFTs lies in their utility, and the projects with the highest holder retention are the ones that provide the best utility. What matters is not how much their floor price varies but rather what the team, in conjunction with the community, is building.

These 5 use cases (utility) are just some examples where this technology can be applied. As you can see, these are different giant industries that are not realated to one another. So what’s the limit? Human creativity.

At the same time, this brings a problem: how can we differentiate what is possible and what is not?

The dilemma of “future” utility

Being such a disruptive and new technology, it is still difficult to understand its real potential.

We must not confuse future utility with real utility. In simpler terms, we shouldn’t mistake smoke for fire.

This is a delicate balance that the NFT space has had to deal with since its inception. Because how much can we trust the team? How do we know we’re not being sold a bill of goods?

Analyzing NFT projects based on future promises is a complicated and risky process. It is crucial to research the team and interact with the community on Discord and Twitter to see how you feel about them. In the end they are the ones that you are going to spend more time with.

Let’s not forget that this is an unregulated and free market. This makes everything much riskier because small investors are more vulnerable to manipulation by whales. In other words, it’s easier and cheaper to manipulate the market.

The only thing left to do is the famous DYOR and thoroughly investigate all the actors involved. The team, the mods, the community — join Discord and ask questions, enter Twitter spaces and see how they communicate. There are several ways to DYOR, but it’s something that must be done!

Protip: When analyzing an NFT project, consider it as a technological start-up. In other words, what is its business model? If it relies solely on minting and the secondary market, then we know it’s very difficult for it to be sustainable.

Let’s take a look at NFT Venues. It’s a project with two collections, both still minting, yet they have already opened one of the trendiest bars of Buenos Aires. That makes it sustainable because it doesn’t depend solely on the crypto market but also on how well the bar performs. It has the external revenue stream solved since day 1.

Photo of some holders at the Rouge’s opening. They traveled exclusively for this event.

To wrap up

Beyond what is real and what is hype, what’s important is that you understand why you’re buying an NFT.

Never let anyone tell you how utility should look like.

As a fan of River Plate, I’m willing to pay for an NFT that gives me access to the lives of my idols or even the opportunity to learn from them. But maybe for you, reading this, it seems like the stupidest thing you’ve read in a long time. And the best part is, we are both right. Simply because we are different.

In my opinion, NFTs should not be seen as an investment but rather as a means to an end that brings you happiness.

This is Harold, one of my favorite NFTs and my 1st and only 1/1 from Rouge