Celebrities have recently hopped right into non-fungible tokens. This has led many to speculate that this could indicate the top of NFTs. In this case, they might actually be right, but that does not mean NFTs are dead forever. Remember, cryptocurrency has a tendency to see “all-time highs” get shattered 3 years later.
Anyway, this article will explain why celebrities getting into NFTs probably signals a top while not meaning that the entire industry is dead.
Why are celebrities getting into NFTs?
Basically, celebrities and big businesses like the NBA are getting into NFTs because they see an opportunity to easily cash in on their fame and make a lot of money.
However, it does indicate some level of mainstream acceptance for NFTs when the NBA is selling them. A similar sentiment also applies to cryptocurrency in general.
The next section will fully explain why this likely indicates a local top.
Does this mean a top for NFTs?
Yes, this almost certainly means a local top for NFTs. Big money will flow into these celebrity NFTs, but it will eventually run out.
There is simply not enough big money to constantly keep going into NFTs and run the price up. It will eventually crash when that limited amount of large money runs out or when too many celebrities start releasing NFTs and cause a dilution of NFTs.
In fact, NFTs have already seen a crash in price shortly after a few too many celebrities piled into them. It’s unique when a few celebrities do it, but too many doing it flooded the relatively small market.
That’s exactly what happened with NFTs.
Will NFTs stay relevant after a crash?
Yes, NFTs will still stay relevant after a crash. This is similar to the Dot Com Bubble where market exuberance led to a massive price increase in questionable companies that simply added dot com to their name. Eventually the money ran out and the market collapsed.
The companies that actually added value stuck around whereas the ones simply in it as a cash grab disappeared.
To apply this to NFTs, high quality NFTs that have actual demand will still stay valuable despite the downturn. Low quality NFTs will not recover, though. The price of those low quality NFTs was pushed up not by actual value, but by general hype surrounding the industry.
Uses For NFTs
NFTs have actual uses other than just as digital art, but the digital art aspect of NFTs will lead to their success. Here are some potential uses for NFTs that will make them more than simply another money grab.
The biggest potential use for NFTs outside of the creative space is for real estate. The current real estate is convoluted and full of middlemen that all take their cut.
This will change when real estate NFTs become a thing.
We’ll keep it simple, buying and selling a home will be as simple as selling an NFT on an exchange. The NFT itself will represent the ownership of the home – it will even be possible to take out loans with the real estate NFT as collateral just like it’s possible to take out a loan using the deed to your house as collateral.
This, in our opinion, will be what pushes NFTs from simply a weird thing that creatives like artists and musicians use to something that everyone in the world will use.
The benefit of that is it will increase the acceptance of all forms of NFTs – a rising tide raises all ships.
Ownership of Physical Goods
Real estate falls under the umbrella of ownership of physical goods, but it goes much further than that when it comes to NFTs.
Everything in the physical world can be catalogued as an NFT to prove ownership.
We’ll take a bicycle as an example as it is something that most people do not register with the government. If your bike gets stolen, then you must prove ownership to recover the bicycle, which is difficult as there is no standardized database of bike ownership.
You can change that with an NFT, though. It would be possible to create an NFT with the serial number of your bicycle, a few pictures of you riding it, and further proof that you own it.
If the bike gets stolen, then ownership of the NFT can be used to prove ownership of the bicycle. Whoever has the NFT for the bicycle would essentially own the bicycle.
That sums it up for if celebrities getting into NFTs signals a top – it does. Once the flood of celebrities start releasing NFTs faster than wealthy fans can buy the NFTs, the market will collapse.
This is normal market behavior and to be expected. Supply has a tendency to outpace demand in the beginning of money making opportunities like this.
Don’t worry, NFTs have actual uses other than simply digital art and music. Once those other uses are fully realized the demand for all forms of NFTs will rise and the market will return to the highs it saw at the most recent top.