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NFT STRATEGY. NFT Creator, Collector, and Investor… | by Cynthia Hickman

NFT STRATEGY

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A successful NFT strategy, whether a creator, collector and/or investor in this space, is driven by project fundamentals: brand, utility, and community. The NFT ecosystem is built on still emerging and lesser-known distributed technologies (e.g., blockchain and web 3.0) and applications enabled by digital contracts and currencies (i.e., once a commitment is made there is no going back/no refunds).

The relative newness of the space, combined with a raft of visible success stories, has resulted in rampant speculation, attempts to get-rich-quick and expectations of outsized overnight success. However, the greater the potential reward the greater the risk.

In game theory, the last one to a set table loses and settles for scraps assuming there is anything left at all. Or pays the highest price for entry thereby minimizing if not eliminating the chance to realize a return. The key is to arrive early to an attractive table for the best results. All the while avoiding the fraudsters and shills eager to exploit those without an informed strategy.

Brand

Is the seller a known brand in the physical or digital spheres? In the past, to keep their real identities secret from potential scrutiny and attention from the IRS and other regulatory and governmental bodies, anonymous teams launched projects. Today, if you cannot vet the team via real identities, then pass.

From pump and dump schemes to outright fraud, the potential for sellers to disappear with ill-gotten gains is easy. Sales are made using cryptocurrency and once payment leaves your wallet for theirs it is gone. This is also true when the sellers are known. But, at least in this instance, they have reputations to protect as once it is compromised it is difficult, if not impossible, to regain.

So, start with the brand. Who is the seller? Is the seller reputable? Know that an influencer “shilling” a project is NOT the seller. A successful NFT strategy is predicated on knowing and trusting the seller whether an individual, team or commercial brand.

Utility

What is the value and utility of an NFT beyond the engaging jpeg? There are costs and risks involved with participation in the NFT ecosystem. There is no free lunch. Even a free mint (no cost NFT) holds the potential for cost and fraud (gas fees, phishing, copyright infringement).

Sellers should clearly articulate the utility to be delivered by their project. Is it added uniqueness and scarcity? Access to exclusive and in-demand communities, events and/or additional content? Intellectual property granting the holder the right to commercialization? All of these and more?

The more the additional utility has been thought out and delivered the more potential value can be found in the NFT and the more likely the seller will remain engaged after the initial NFT drop.

That said, it is possible to be moved by a piece of digital art, unreleased song by a favorite artist, ticket to a unique restaurant experience, etc. These works and experiences are often valued and represent sufficient utility for a collector. The key is to understand exactly what utility the NFT is intended to deliver and value it accordingly.

Community

It is impossible to “flex” (impress yourself, insiders, and outsiders); evaluate a purchase price; determine a resale value; due diligence a team and project roadmap; commune with like-minded people; and experience other benefits of association without a community. The largest blue-chip NFT collections sport substantial communities on social media.

NFT project creators and sellers who plan to be involved over time and are interested in delivering additional value to their NFT holders will have an online presence. Seek them out. Visit their communities on Twitter, Discord and more. See what is being planned and discussed. If there are active collections on NFT marketplaces like OpenSea, review the level of engagement (items in the collection, number of holders, floor price and more).

Conclusion

The NFT ecosystem is here to stay. It is a high risk and potentially high reward space that is subject to significant volatility, potential costs and risks, like fraud. Sustained satisfaction and success in the space, therefore, will require a focused strategy whether you are a creator, collector, or investor. The building blocks, the fundamentals, of an optimizing strategy begins with a focused planning or vetting of a project’s brand, utility, and community.

Are you ready?

Enroll in The NFT Master Class. Today! (Receive a course completion certificate).

Have you read:

Why You Should Care About NFTs?

Getting Started with NFTs

Validating Academic Credentials and Enabling Community with NFTs

Who Owns a Non-fungible Token (NFT)?

Securing Identification Data with NFTs

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