How are NFT projects sold ? NFT Marketing + Community Examples
I wrote a blog post about why people buy NFTs before. In this blog post, I want to talk about how prices are determined for NFT projects and how they are sold from A to Z!
What is an NFT?
I know we repeatedly spoke about this, but I will say it again to set the foundation here. The word NFT is the short form for Non-Fungible Token. NFTs are tokens that we can use to claim ownership of a unique digital asset. These assets can be music, digital arts, and even virtual real estate space. These digital assets can only have one owner at a time and are secured by the Ethereum blockchain. This is possible because of the technical capability of blockchain.
We all have heard of people making millions of dollars selling their NFTs. But how are the prices decided on these digital tokens?
How is the price decided on an NFT project?
One interesting thing about NFTs is that it is a digital asset without a tangible, physical product.
So the price of NFTs purely depends on the relationship between demand and supply. What this means is that the price of NFT is driven by how many people want to own this one unique piece of art. This can depend on peoples’ emotional attachment to the project, or to the creator. Others may also look at this from a transactional perspective like investing in an art project that one believes will go up in value to flip in the future. But even then, this investment decision will come from the investor's emotional bet. So in short, what drives the price of NFTs is the amount of “hype” it can create around them.
What does it take to create such a powerful hype?
One good example is Twitter's founder Jack Dorsey’s first-ever Tweet NFT being sold for 2.9M dollars. The story behind this NFT was a perfect one. Today, everybody knows Twitter, and the fact that it is the first-ever tweet from its founder as an NFT is a piece of digital asset many would find interesting therefore it ended up with the price it did.
But not everybody is a co-founder of a billion-dollar company. So how would someone know if a digital asset will rise in its value or at least hold its value in the long term?
Many NFT projects today try to keep the momentum around their arts by building community and social media following and partnering with celebrities & influencers.
Bored Ape Yacht Club is one great NFT project example of this. This NFT project successfully created the massive “hype” initially from launching the project at the right timing (in the middle of the NFT buzz peak) with the right kind of attention-grabbing “cool” looking ape character that can be easily turned into a subculture; then the project started gaining more traction and incentive since many celebrities started owning the piece of Bored Ape Yacht Club art project.
Other celebrities who own the Bored Ape Yacht Club NFT project include but are not limited to Jimmy Fallon, Madonna, Tom Brady, Ben Simmons, and more.
This phenomenon created another very big incentive for many NFT buyers to pay attention to this token and see it as a way to join the celeb club.
This is a very interesting human psychological factor for any NFT sale. Let’s look at the very first concept of the Bored Ape Yacht Club.
The idea of Bored Ape Yacht Club came from a congregation place for bored billionaire “apes” (slang in Crypto Twitter) to hang out, make memes and talk numbers.
The backstory of BAYC goes: “The year is 2031. BTC and ETH have taken over the world. Everyone who aped into crypto is rich beyond their wildest dreams. But now they are all bored and want to hang out with other like-minded apes. To do that, you need to go somewhere special.” - Chain Debrief
Owning the right to the same NFT project, just like buying branded clothing from a specific brand creates a sense of belonging. Just like how people choose which Fraternity/Sorority they want to join. NFT in this way provides a new way for crypto people to connect through art and culture directly.
Speaking of NFTs providing values beyond the arts themselves, this is called Utility NFTs.
What happens if there is no continuous emotional interest/investment from people?
The hype dies out. Perhaps that’s what happened with Jack Dorsey’s first-ever Tweet NFT. The backstory of Jack’s first-ever Tweet NFT is interesting and yet, the setup of the art is completely different compared to Bored Ape Yacht Club (BAYC).
This NFT was also launched at a very good timing and indeed ended up being sold for 2.9 million dollars, but there was nothing more to continue the hype.
The buyer of this NFT tried to resell the project in April 2022, but the bid didn’t go any higher than $280. Even now the price is set at $22 (this is the price the public offers) on OpenSea ( June 17, 2022).
This could be because people spent some time understanding what NFTs are and noticed that there were too many NFT projects with no utility being sold for way too high prices. But now the “art” (Jack’s first-ever Tweet NFT) certainly gained more history from being a super rare piece of art with an awesome background story being sold for 2.9 million dollars turning into a project that is priced at $22 (by the market), who knows what the future holds for this art! It may come back as a super variable piece of a digital asset in the future.
Final Thought
Just like any other “new thing” we are all slowly but surely gaining our knowledge about the true value of NFTs. History repeats and in my mind, there is no doubt that NFTs will be and are already becoming to be one of the mainstream ways for people to make money ( A new way of a job essentially). And I am very excited to witness all the evolution the industry will go through to unlock a new way of life for creators and artists.
