Nonfungible token (NFT) expert and blockchain investigator “OKHotshot” has highlighted 18 “uncomfortable realities” regarding the NFT business.
In a lengthy 20-part thread to his 45,000 Twitter followers on August 27, OKHotshot exposed many of the difficulties now afflicting the NFT business, such as reckless celebrity endorsements, hacking, and the types of ventures that are virtually certainly doomed to fail.
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As a full-time on-chain analyst focusing on NFT audits and Discord security under the Twitter handle @NFTheder, the analyst built his name in the sector.
The majority of NFT investors will lose money.
One of the most depressing “uncomfortable realities” stated by the NFT expert is that the majority of investors in NFTs will lose money.
OKHotshot stated that there are no steady investments in NFTs and advised investors to “run away” if they hear the words “blue chip NFT.” Additionally, he cautioned that “diamond handing” is not the greatest method to gain money; rather, investors should take profits whenever they can.
“Not everyone is going to survive. Most NFT traders trade at a loss.”
Previously, Cointelegraph reported on a survey which revealed that while 64.3% of respondents indicated they purchased NFTs to make money, 58.3% claimed to have lost money on their NFT trip.
The researcher encouraged anyone interested in non-fungible tokens to remain abreast of news since “by the time you learn about a new initiative on Twitter, it is too late.”
In addition, he cautioned that volume and liquidity are frequently more significant measures than floor price, and that time is more valuable than any asset, making forethought crucial.
“You cannot make a profit if there are no buyers,” he added.
The majority of NFT initiatives fail
The NFT analyst also warns anybody interested in investing early in a particular NFT project that tokens frequently fail to maintain a premium above the issuance price, and that “derivative NFT collections seldom beat the original NFT collections.”
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In March of this year, NFT project Pixelmon sparked controversy by unveiling the completed artwork for its highly anticipated project, the quality of which was considerably below expectations.
The initiative raised around $70 million, with each NFT being issued for three ETH. However, the OpenSea NFT marketplace’s floor price has fallen to 0.26 ETH, or around $370 at the time of writing.
Phantabear, another NFT project, was first minted for 6.36 ETH and prompted record trading volumes on OpenSea when it was introduced in January, but it has also seen a significant decline in value, with the floor price at only 0.32 ETH ($463) as of the time of writing.
According to a March report by blockchain analytics firm Nansen, the majority of non-fungible token (NFT) collections either do not generate any revenue or generate less revenue than they cost to construct.
Celebrities and influentials ignorant
A number of the “uncomfortable truths” expressed are critical of celebrities and influencers.
OKHotshot stated that despite what prominent influencers may assert or suggest via social media postings, “celebrity NFT enterprises are notoriously risky investments.”
In addition, he stated, “Web2 marketing is quite useless in the NFT industry.”
Recently, Cointelegraph revealed that a consumer watchdog agency sent warning letters to over 20 celebrities for promoting NFTs.
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OKHotshot’s concluding argument is that the vast majority of NFTs lack inherent value. The expert cautioned that NFT projects without sale terms are worthless and that downstream customers do not receive NFT advantages unless indicated in the conditions.
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“NFT projects without sale conditions will offer you a token ID with a connection to an off-chain item. Without terminology, there is no definition. You cannot possess a link, thus you probably acquired nothing.”
Nevertheless, he believes that the price of NFTs continues to be influenced by hype and market speculation, stating that astute investors may “exploit this to your advantage.”