The BAYC phenomena shows us another side of NFTs
Are you familiar with the Bored Ape Yacht Club? I am sure most of you are. For those uninformed, it is a collection of 10,000 monkey NFTs that are now selling like hotcakes. In fact, this article reports that sales of these NFTs have crossed $1bn. Buyers include Jimmy Fallon and Eminem.
In fact, the article above is quite informative and explains what made BAYC a success story. Not only do buyers of these NFTs get a unique digital hipster monkey, but they also get a membership to an exclusive club. I am not rich enough to know what kind of exclusive benefits do purchasers of art enjoy but this surely seems obvious. BAYC's success surely lies not only in the uniqueness of the art but also in the exclusive club access that it provides. This benefit of NFTs, while obvious, seemed novel to me - an opportunity that by itself can bring billions of dollars into this market.
I am sure that buyers of vintage watches, rare alcohol, and fine art, all get to network a lot post an expensive purchase. Wealth Managers probably scout such events or even sponsor them to win business. Will banks and wealth managers now move to discord and start owning NFTs? BAYC's success should be enough for banks to take notice of the NFT space. However, the problem is how does one identify a true piece of art and which NFT will be a hit with investors. After all, all NFTs should be unique and it is not tough to have a billion unique NFTs. Well, this is a problem for wealth managers to figure out, not me.
The other key aspect is the indexation of funds holding NFTs. Bitwise has a fund for institutional investors that invests in and tracks the top 10 NFT projects. This investment opportunity can easily be extended to 401-Ks. Maybe not now, but at a later stage when this market is a bit more mature. Many of us cannot go and buy fine art. Moreover, we need to trust a 3rd party to verify the originality of that artwork and even the price discovery does not happen in real-time. Not with NFTs. Verified over a blockchain, tradable anytime, price discovery happening 24x7! Pile a few pieces of art together and list them on a market exchange for everyone to buy and trade. Voila! This is an unexplored space today but won't be for long.
After reading about BAYC, I am certain that I am truly not capable or informed enough to understand the entire capability of the NFT space. All I know is that even though it is possible that prices right now are all over the place, one has to have exposure in this space in some shape or form. Either become an artist and if not, then learn to judge NFTs being launched in the marketplace. Stay responsible but having a foot in the door here is incredibly important if you do not want to miss this bus. There won't be another one coming.
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