There’s been a lot of talk and a lot of uncertainty out there around NFTs lately. I see the comments, the DMs, the tweets from people saying, “see, NFTs are dead,” or the articles claiming that NFTs have “gone the way of Beanie Babies.” The truth is, if you’ve been paying attention, you know what’s really happening here – and if you’re like me, you’re not surprised.
Everyone’s looking at the scoreboard six minutes and nine seconds into the first quarter and trying to decide who won the NFT game, but let there be no confusion… What’s happening now is exactly what I’ve been saying would happen since I first began publicly talking about the NFT world.
Today’s blog is not about proving that I was right or convincing anyone about the long game of NFTs – because after 25 years of being in the game, I’ve had tons of wins and some losses, and I know how that goes. New technologies always allow for lots of differing opinions along the way, and I know the results will judge in the end.
Instead, I’m writing this blog post just to give a little extra context for those who really want to understand what’s going on with NFTs now, in 2023, and beyond.
I hope it helps.
WHY I SAID 97-99% OF NFTS WOULD GO TO ZERO
I believe in having conviction over convincing, but I also believe in letting the record show. That being said, I have been extremely vocal about the very real likelihood of an “NFT winter” long before today.
Any online talk about how “GaryVee was wrong about NFTs” is coming from people who saw my enthusiasm for the NFT space mixed with my aggressive communication style, and ran with it. What they’re missing is the much bigger context I’ve been mentioning from the start.
Check out the video below to see what I mean:
Now, let’s recap the biggest reasons why I said that most early NFT projects would go to zero.
#1: Too much supply
There are simply too many projects.
In April 2021, I said that there would be a huge supply and demand issue over the next 24 months. Think about it. We’ve seen countless celebrities, influencers, sports leagues, big brands and individual artists launch projects in the last year. Some have been amazing projects led by true operators who are focused on delivering value to their communities – most are not.
The demand has not and will not be able to keep up with that extraordinary level of supply, and any time that happens, there’s a bubble waiting to burst.
Still, just like when the dotcom bubble burst, the winners will remain standing. Just like Amazon and eBay were the giants that survived, there will be key NFT projects that will stand the test of time.
For further context, let’s take a look at the Yahoo! Finance chart shown above. As you can see, if you had invested $1K in Amazon when it first went public in 1997, your initial investment would have grown to almost $2.5 million by July 2021. Even though the dotcom bubble burst and many internet giants of the time crashed – like Pets.com – Amazon survived. I believe the same will be true for a select few NFT projects.
Due to a ridiculous amount of supply, many projects will crash and go to zero like Pets.com, but there will be some – that 1-3% of projects – that will become the Amazons and the eBays. The key is… how many of you are willing to do the homework it takes to make smart investments? How many are backing projects that will still be standing once the dust settles?
This is no different than what happened with internet stock in March/April of 2000. When a revolutionary new technology comes along, people get excited and rush into day trading without having their fundamentals down. Why? It’s because too many people are in it just to make a quick bag.
Everyone’s way too selfish, way too fast, and lacking thoughtfulness. This is a marathon, but everyone’s treating it like a micro sprint and a gold rush, and that’s why most will lose.
Short-term greed is bad for the NFT industry, but more importantly, it’s bad for humans. Many fell for scams and lost money because of that. Others had their projects fail because of that, and they hurt their reputations in the process.
In my opinion, greed is the biggest weakness in the NFT space right now. For more on this, see my Yahoo Finance interview from November of last year:
Finally, one of the biggest pros of NFTs is also one of the biggest cons – anyone can start an NFT project. This means that there’s now a huge number of people with no real knowledge of things like business, long-term community building, culture, day-to-day operating of a staff, and creating demand that are entering the space and inflating the market with countless projects that won’t last 5, 10, or 20 years, let alone a lifetime .. heck, most won’t last a year.
This is why it’s so important to look at not only the project, but the person behind the project. Are they a true operator? Do they have entrepreneurial DNA, or at least the self-awareness to partner themselves with someone who does? Do they understand what it takes to build a community around their project, or will they bail on all the people who dumped money into their project once it goes to zero?
More people need to understand… When it comes to investing in NFTs – or anything else, for that matter – it’s about betting on the person, not just the project or the art… the jockey, not the horse.
Unlike other “collectibles” and ”art,” the founders/creators of NFT projects have an incredible opportunity and responsibility to use the technology known as the blockchain to continue to build and add value to their holders.
Watch the video below for a more nuanced look at how I think of my own NFT project:
Too many are starting projects to make a quick buck – not enough operators building their own Sesame Street, Pokémon, or Hello Kitty. I’m committed to building VeeFriends IP for the rest of my life.
I know there are many of you out there who might be considering starting your own NFT project. If you’re one of those people, I don’t want you to be scared or discouraged, but what I do want is for you to understand the macro picture of what that means, and the responsibility you now have to be a real operator and execute for the community investing in you.
WHERE NFTS ARE HEADED IN 2023 AND BEYOND
Of course, no one knows exactly where the market will go next, but I do have some ideas. For now, my team has asked me some questions below about where I think NFTs are headed next.
What do you anticipate changing or staying the same in the NFT space in 2023?
My intuition is that we’re gonna still be in a frosty situation, so I think that’s gonna stay the same. I don’t see the macro economic landscape changing enough to make me think we’re in for another run, but I think what’s gonna change is that we’re gonna have more meaningful projects.
The people that are gonna build new projects or build on top of their current projects in 2023 are the ones who are incredibly committed to the macro technology of blockchain and consumer blockchain and NFTs – and so, I’m gonna be keeping an eye out for the projects of 2023 because I think that they’ll be grounded in more meat, more steak, more truth than the projects of 2021.
What’s your early take on regulation in this space, and do you think that’s the next step for NFTs to become practical?
My stance on regulation has stayed the same… I’m thrilled with regulation, I grew up in a regulated industry – the alcohol industry – so, I’m incredibly ready at any time for the government or governments around the world to put out the regulation. Guessing government actions is not something I’ve ever been good at or really spent a lot of time and energy on, so in closing… where regulation is concerned, I’m standing by and ready to execute against.
What brands/corporations are getting NFTs “right” right now?
In March 2021, I said that my intuition was that big corporations would leverage NFTs poorly because there’s gonna be too much supply for projects to be successful at scale just on the merit of the creative.
Today, my opinion remains the same. It’s hard for me to answer this question because the projects I’m most knowledgeable and excited about are the ones that Vayner3 is involved with, and I’m not gonna score my own homework. And to be frank, I’ve been so heads down with operating VeeFriends, I’ve not been able to pay attention to brand NFTs.. I haven’t even been able to pay attention to the overall NFT space in the last six months because I’m super focused on mine.
What advice do you have for people who have invested in NFTs over the last 2 years, who are now scared of where the market is going?
To this one, I have several responses and things to keep in mind…
A, you don’t lose money on an NFT until you actually sell it.
B, you might actually want to sell an NFT for a loss because you’re offsetting other capital gains.
C, if you are so about that life and about NFTs and the blockchain and all committed to this, you don’t bail just because of eight bad months. I’ve had eight bad seasons with the Jets, I didn’t leave.
D, if you’re looking to put more capital into play, learn from the mistakes and successes of the last 18 months, and really re-read this entire blog post one more time. Pay attention to the operator.
E, don’t leave the space even though you’re not selling or buying. Spend this next year getting obnoxiously educated on the history, the current technologies, and the attention. There are many companies that I follow for three years before I buy their stock.
WHY I’M EMPATHETIC TO NFT CRITICS
Even with all the claims about NFTs being a “fad” or a “scam,” I’m still empathetic to those who don’t believe. I’m empathetic because I understand the fear behind that perspective.
It’s what always happens with new technology – we get scared of what we didn’t grow up with.
People thought I was ridiculous for wanting to sell wine online. Then they thought it was ridiculous to find relationships through online dating. Your parents were probably terrified of entering their credit card information into a website to shop online. NFTs are triggering that same emotion in people who don’t yet see the macro picture.
Not to mention, there have also been very real developments in the last year that have caused understandable concern for many in the NFT world. Lots and lots and lots of bad actors – whether they knew they were bad actors or didn’t – entered the space, which is always going to be a turn-off to the masses.
That being said, history always shows us that any time there’s a major cultural change, there’s also a lot of skepticism and confusion. Everything is “ridiculous” until it becomes the norm – reality TV, influencers, social media, certain diets – and NFTs are no different. That’s why the current criticism doesn’t faze me.
WHY I’M NOT WORRIED ABOUT NFTS
Ultimately, despite a volatile market and a lot of naysayers, I believe that the larger utility of NFTs as collectibles and contracts will remain a permanent fixture in society. They will continue to change the way we communicate our interests, the way art is made, shared and collected, the way business and entertainment are done, and much more.
If you’ve done your 50 hours of homework to educate yourself on NFTs, if you’ve bet on the operators and not just the projects or the art, if you’ve only invested money that you can actually afford to go to zero, and most importantly, if you understand the following sentence, you have nothing to worry about…
NFTs are not a fad, certain projects in the NFT world are fads… no different than Beanie babies were a fad, but stuffed animals have been a century-long obsession.
This is a long game, and the score isn’t out just yet.
For the rest of us, we’ll just keep running marathons while everyone wants to know who won the 100 meter dash
NFTs aren’t going anywhere. I still believe they’re here to stay – forever.
Thank you so much for reading.