While many people hope to make heaps of real money from their non-fungible token (NFT) artwork ventures, 99% of the projects across the globe are more likely to fail and be worthless in the long-term.
This is one of the key takeaways from a presentation given by Tyrone Rubin, CEO and founder of MetaLabsAfrica, speaking yesterday at the “Creating meaning in the metaverse” hybrid summit, organised by the Red and Yellow Creative School of Business.
MetaLabsAfrica helps African brands design and explore virtual reality and augmented reality experiences in the metaverse.
During a presentation titled “Designing in the metaverse: Currency, commercials and compliance”, Rubin highlighted that South Africa’s metaverse and NFT market is expected to gain popularity this year, as more local companies dabble with immersive technologies to deliver operational and revenue improvements.
Discussing the vital interoperable relationship between NFTs and the metaverse, he explained the metaverse is a virtual universe where users in different parts of the globe can interact with each other and with virtual beings in a computer-generated environment.
NFTs, he added, are secure digital files stored on the blockchain system and validate ownership of property within the metaverse. The property can be in the form of an avatar, artwork, contract, or image, etc.
He highlighted the benefits and pitfalls of investing in NFTs, which have increasingly gained popularity over the last year.
“NFT art collections are being drafted left, right and centre, of which 99% will likely fail if you are an individual. This is because in the same way as a person releases a new YouTube video – it’s probably not going to go viral as they may expect. In the same way as a musician would put a music video out there, the chances of the video going viral are slim.”
Various NFT trading marketplaces − such as OpenSea, Momint, Magic Eden and Solana − allow artists to display sell, trade and auction their art as NFTs.
A failed NFT art project is typically a collection that declines in trade volume, as a result of various external and internal factors, noted Rubin.
“If you put an NFT collection on OpenSea and you don’t have much of a community or a following, don’t think you will automatically make money from it. Please understand you’ve got to follow a lot of steps,” he asserted.
“If you look at the long take of Spotify, 99% of the revenues on the platform are made from the top 20 artists. Taylor Swift, for example, doesn’t survive off Spotify, but she makes a ton of money off it. On the other hand, there is a bunch of South African artists who can’t survive off Spotify, so the long take is very important.”
Not a sure thing
Earlier this year, NFT expert Gary Vaynerchuk predicted that 99% of NFT ventures would fail and be worthless, due to the various challenges faced by creators and businesses venturing into the market, which is still in its infancy stages.
According to crypto and NFT research firm Nansen, one in three NFT projects have little or no trading activity, ultimately ending up as a dead collection.
According to NFT site NFTs Guru, NFT projects tend to fail due to a myriad of reasons, including:
- Launching an NFT before it has the chance to get off the ground.
- Failure to garner community growth and engagement.
- Getting caught up in NFT scams.
- An NFT project crashing shortly after having too much attention.
Despite the many pitfalls, Rubin explained there are still many reasons why people should consider owning NFTs, adding that on the upside, they can present multiple income streams.
“At some point, everyone will have an NFT. Gamers can use NFT technology to play Axie Infinity, The Sandbox and Decentraland, and earn money. NFT ticketing also has more value than art and this is a no-brainer.”
People that have cashed-in from their NFT art collections include digital artist Beeple, who sold “Everydays: The First 5 000 Days” for $69.3 million. The World of Women Collection marketplace and community sells its cheapest art work for a staggering R500 000, commented Rubin.
The events and contracting industries have also significantly benefitted from using NFTs, he added.
“The events market has benefitted immensely from using NFT tickets for events such as music concerts and sporting games. Because everything is embedded in the blockchain, it is easy to track down ownership. Benefits of NFT ticketing include combating scams and quick production.”
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