Why The NFT Bubble Isn’t Sustainable Without Research Tools

Cryptocurrency

NFTs are the first generation of blockchain-based digital collectibles that change how the world thinks about art, investing, and ownership. But the sheer number of NFT projects and collections combined with the complexities of analyzing their value, have made it difficult for investors to make decisions based on anything more than hype.

The first NFTs were launched in 2013 though NFTs first came around in 2012. The hype around them was intense, but it took a few years for the market to reach its current size and maturity. Despite being around since 2012, non-fungible tokens—better known as NFTs—became a household name for most people only in the last year.

For many, non-fungible tokens (NFTs) came out of nowhere. They went from being completely unheard of to major brand investments, thanks to celebrities like Justin Bieber posting images of their NFT purchases on social media and companies like JP Morgan and Facebook (now Meta), solidifying their position in the metaverse. The market has since entered a boom, with a valuation of billions of dollars as a standalone ecosystem.

Understanding Intricacies of NFTs

New users have a difficult time understanding how NFTs work because they’re different from traditional (or physical) assets. Many still think of them as “crypto-collectibles” or “non-fungible tokens.” We need more tools that make it easier for developers and investors to enter the crypto space.

With more money being invested in this market, spurring continuous buying behavior, many prospective investors have begun asking: “What’s the harm in joining in on the meteoric rise?” The answer is that some pretty big risks are involved with NFTs and blockchain-based assets. 

For starters, there’s no guarantee that a company or person will make good on their promises. No regulatory bodies protect you if something goes wrong with a specific token or project. And unlike traditional stocks, there’s no way to cash out your investment if you don’t like what you see.

To make matters worse, most investors don’t understand how tokens work — many people still don’t know what an ERC-20 token even is! This lack of knowledge leads to irrational exuberance and unrealistic expectations for those who blindly pour money into projects without knowing what they’re getting into.

NFTs are similar to other types of investments in that investing based on hype alone can be dangerous. Consider the parallels drawn from the dot-com bubble, which resulted in the overhyped valuation of several web-oriented companies. Investors are often tempted to make rash decisions when they see an opportunity for quick, easy money. 

This has led to burst bubbles and widespread losses among investors who bought in too late. This is why it’s important to invest carefully and wait until a project has proven itself before investing.

However, we should not be scared off entirely by the ups and downs of investing in NFTs. Instead, we should aim to improve our thinking and strategy behind investing. Think of the NFT as a new way to invest. A fresh method that allows people to buy into industries they’re passionate about and not just another investment vehicle to be left alone while it grows. 

The possibilities of what NFTs could mean for the general consumer are endless: from video game power-ups that work to allow people to invest in their favorite sports teams or the hottest new rock band. The next huge development in NFT technology could be something altogether different—something we can’t even think of yet.

Investors should thoroughly research a topic before buying into it, considering the current rate at which non-fungible tokens are growing. However, many believe that this trend will not continue indefinitely. For this reason, purchasing projects with some understanding of their value beyond hype alone becomes crucial. Investing in crypto can make it difficult to know what to look for. There are so many projects out there with varying degrees of quality that it can be challenging to differentiate between them.

Investors should look for a clear understanding of what makes a project valuable beyond the hype. This means going beyond simple research into the team and product itself and investigating how those factors fit into the broader market trends. For example, the current growth rate in NFTs is not sustainable indefinitely and many projects will fail when this trend reverses. For this reason, purchasing projects with some understanding of their value beyond hype alone becomes crucial.

Providing More Power through Research

Most people know better than to buy something just because everybody else is talking about it. Therefore, it would be wrong to say that people make emotional decisions when they are not knowledgeable about a subject. Instead, they don’t have the tools to make an informed decision.

Regarding NFTs, the underlying value is assessed based on different factors than traditional investments. For one, ownership is a key factor—utility, rarity, and social proof. To complicate matters further, NFTs exist as part of a collection or group of assets that hold similarities while also being different enough to make some more scarce than others.

Bored Ape Yacht Club is a set of nearly 10,000 non-fungible tokens (NFTs), with the most expensive one sold for over $3 million and others being a fraction of an Ethereum (ETH) token. While many investors will gravitate to specific collections based on news, celebrity endorsements, or Twitter since it is easier to value similar assets, it can be difficult to pinpoint a project itself as hundreds of thousands of assets may be at play.

As a result, learning about a new NFT or a collection of NFTs requires considerable research, starting with a tip from Twitter, Discord, or news platforms. You must do more research if the project is lesser-known. Start with in-depth research into the project’s creator, technology, and utility, as demonstrated by the whitepaper. Then, check rarity tools to see what sets that NFT apart from other collections.

Steering the NFT Market

Purchasing, storing, and managing digital assets are already steep learning curves. To make matters worse, many NFT investors are overwhelmed by the activity on social media when new projects are launched. For this reason, analysts agree that a simple-to-use system is crucial for helping NFT investors discover promising new projects for their benefit and follow other NFT investors.

A recent report by blockchain research firm Diar indicates that more than half of all of Ethereum’s decentralized exchange (DEX) transactions are made using social media as a discovery mechanism. In addition, the report shows that over $6 million worth of crypto was transacted per day through various social media platforms such as Telegram and Discord. With a growing number of platforms offering NFT services, it is becoming increasingly difficult for investors to discover them across multiple platforms simultaneously.

Final Words

Investing in cryptocurrencies can be daunting, but with the help of a new app, users can track their investments and holdings using non-fungible tokens (NFTs). The Delta app allows users to create portfolios and track their assets using unique and non-repeatable tokens.

The app is said to appeal to both first-time investors and veteran collectors alike. It enables users to discover new collections based on volume or other criteria by navigating to the app’s NFTs tab on the markets page. Users can also use the Delta app’s global search function which allows them to search for specific types of crypto collectibles.

New tools like the Delta app allow more people to participate in decentralized finance by making it easier to identify projects based on volume and other criteria. Users receive a dashboard that displays all of their digital collectibles through a secure connection to an ETH wallet.

Featured Image: MegaPixl © Grejak

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