NFTs or non-fungible tokens are #trending lately. And while I’ve sold some of my own NFT’s back in 2018 and recently helped market and sell some high profile nfts, I still always dismissed NFTs as a fad – until the Bored Ape Yacht Club.
Bored Ape Yacht club was the first set of NFT collectibles that clicked for me.
This article will explain my thoughts on the NFT Landscape, why NFT Collections in particular are valuable, and where I see the future of the internet heading in regards to NFTs.
This article will also illuminate my thought process when it comes to picking an NFT investment,
HOWEVER as always, none of this is investment advice. I am simply sharing my thoughts, and explaining why I purchased a Bored Ape for over $10,000 and how I went about choosing that particular ape to invest in. Before making any investment, please do your own research.
NFTs (ERC-721) The Basics
Non-Fungible tokens are unique 1 of 1 tokens minted on a blockchain. They differ from Fungible tokens, which are a group of identical tokens . The word fungible is basically just a fancy word for interchangeable.
So, fungible tokens, like Eth or a US Dollars, are interchangeable in the sense that you don’t care which dollar bill you have. Most people have no problem trading an ETH for an ETH.
Non fungible tokens, like a Bored Ape or a deed to a house, may be part of a larger collection, but each individual token has its own unique properties.
You do mind which Bored Ape you have or which house you have, even if they are in the same housing complex.
There are 10,000 Bored Apes, meaning if you own one you are part of the Bored Ape Yacht Club Community, but each ape has it’s own characteristics, some of which are more desirable than others.
In general, NFTs and their use cases are still being figured out. Some artists mint a single piece of digital art, some people mint collections, some people give song rights or exclusive access. If you’re looking to browse NFTs, the most popular secondary marketplace is OpenSea.
Related Reading: A Long Term View on Crypto Prices
NFT collections, like the Bored Ape Yacht Club, CryptoPunks, MeeBits, CryptoKitties, and more, make more sense to me than a single piece of digital art, because they provide a unique identity (your NFT) within a larger community (the full NFT colelction).
Cryptopunks by LarvaLabs was the first set of ERC 721 collectibles. Today the lowest priced CryptoPunk (aka the “Price Floor” in the NFT collections world) is 18 ETH. Roughly ~40,000 USD.
What that means is that anyone holding a cryptopunk in their wallet either bought it for roughly $40k+ or is willing to forgo receiving $40k to keep possession of the cryptopunk.
That’s a flex, but it’s more than a status symbol. It’s access to a community – and in the case of cryptopunks a community of Crypto OGs and/or rich people.
Already dapps, sites, and chat rooms are becoming gated by the determining factor – If user wallet holds NFT X, then admit entry.
It’s capitalist, but it makes sense. The internet needs gated communities. There is too much spam and fraud out there. While holding an expensive NFT doesn’t make you a good person, it does identify you with a unique avatar as someone who is part of a community with some clout. Hence, the comical “Yacht Club” aspect of the Bored Ape Yacht Club.
Since the launch of bored apes, 100s of copycat collections have launched and continued to launch. None have quite seen the rise in price like bored apes, but some have done pretty well. If you’re curious, check out the NFT Drop Calendar I put together.
The Bored Ape Yacht Club
The Bored Ape Yacht club is a collection of 10,000 Unique Bored Apes that were launched as ERC 721 collectibles on the Ethereum Blockchain. Owning an ape serves as your passport into the Yacht Club, aka an exclusive (online) community.
It is rumored that Mark Cuban, Vitalik Buterin, and many NBA stars are now owners of Bored Apes.
There are many crypto collectibles out there but the BAYC did a few things right with their launch.
Here is what the Bored Ape Yacht Club did correctly and why it is attractive to so many people in the NFT space.
Bored Ape Yacht Club Has The “It” Factor
Being that NFTs are digital art pieces an important part of their appeal is the art itself.
Art is subjective, but the art of the Bored Ape Yacht Club resonates with people. It’s just cool. Well designed, cool traits. People like it.
The “it” factor is perhaps the hardest thing to get right for an NFT project because there is no concrete correct answer. It’s the same way some songs or celebrities just tap into the zeitgeist.
Bored Ape Yacht Club Has A Relatable Story & Roadmap
The Bored Ape Yacht Club team laid out a simple but compelling story and roadmap. These two factors contribute to the “it” factor, but also are a bit more tangible.
The story is simple enough: It’s the future, and all of us who “aped” into NFTs and blockchain are rich and bored. We want to hang out with other like minded apes.
The roadmap was also simple – no crazy long white paper. In fact, the first milestone was for the founders to pay back their moms.
Despite the tongue and cheek marketing, these simple milestones showed that the founders cared about the long term vision and sustainability of the community.
Bored Ape Yacht Club Empowers Individual Creators
When you own a bored ape you get 100% of the IP for that ape and can reap the rewards. That means you can mint other NFTs based on that ape, create an animated show featuring your ape, and really whatever you can dream. One guy has been putting up billboards of his ape around New York.
This is awesome because it puts a portion of the value of each individual NFT into the hands of the specific NFT holder.
Give your ape a famous personality and his value will go up. Print NFt-shirts with your ape and not only will you sell t-shirts, your ape’s face will become more well known.
Promote the individual. Promote the whole. What is good for one ape is good for the community. By giving everyone rights to their own ape, they are incentivized to promote their ape, which only promotes the Bored Ape Yacht Club as a whole.
Launching Into The Bored Ape Yacht Club Audience
This idea of an individual creator and the larger community is also particularly interesting for artists.
Often times, the hardest thing for an artist to create is the audience.
If you are creating content around Bored Apes, you already have a community that is interested (and financially incentivized to be interested) in your success.
I know I have plans to utilize the BAYC community for both Peer Through and my musical project – New Mark.
Bored Ape Yacht Club Fosters An Exclusive Community
They nailed it when they say “your Bored Ape doubles as your passport to the Bored Ape Yacht Club.”
You have to think of these as keys as much as you think of them as pictures of apes.
To start, having a Bored Ape NFT in your wallet only gives you access to the private “club bathroom” and some gated discord channels.
The BAYC bathroom is a pixel drawing board where members can change a pixel color every 15 minutes.
Not that exciting, but I can see that gated concept extended to so many practical things. Particularly to prevent spam.
If you look at every big crypto youtuber, there are imposters in the comment section that use the same name and picture and respond to people being like – “DM me”.
I’m sure those imposters are then just trying to get private keys / hack you /spam viewers in some way.
In the future I envision platforms similar to twitter, YouTube, Clubhouse etc. but you can only interact if you have an applicable NFT. This isn’t a fail safe solution but it will keep out a lot of scammers, particularly in the pricier communities due to the barrier to entry. Oh, capitalism…
The general idea behind both those projects is that you can buy a piece of land and then build games and experiences on that land. You can monetize those experiences and games how you see fit.
NFTs will are beginning to serve as portable avatars within these universes.
As the concept of the metaverse becomes more popular, so will the concept of actually owning your avatar.
It isn’t much different in theory than building up your World of War Craft character and then selling them. The BIG difference though, is that the playing field is now the full decentralized internet, rather than one gated game controlled by one company and their servers.
NFT Metrics To Watch For
So you want to buy an NFT? You can follow your heart and buy what you like – that works for some people.
But if you want to take a more analytical approach here are some metrics to watch for.
Note: These metrics primarily apply to collections. The combined works of any artist though, even if released as disjointed works, is technically a collection of NFTs.
Perhaps the most obvious metric to look out for is the average price. It’s simply the average price of all the items in the collection.
Items / Owners – Community Metrics
Another statistic to look at is how many items are in the collection and how many different owners there are within the collection.
Generally, the higher the ratio of owners/items the better, as it signifies there are more people holding a piece of the art, rather than a few big speculators.
You’re only as strong as your weakest link. The price floor is the lowest priced item in the collection.
You can also have price floor stats for individual traits. For instance, the BAYC hat on my ape is rare and the price floor for buying an ape that has that hat is higher than the price floor for apes in general.
This is a metric that indicates how liquid the market is. How often * prices are things trading hands.
Classic Web 2 Community
It’s all about the community. It’s a loose feel metric, but it can’t be understated. Go into the main channels the project promotes (Discord, Telegram, Twitter etc.) watch videos on YouTube, how excited are people?
Does it seem like the project is a fad with a bunch of people trying to pump and dump or does it appear there is genuine excitement and plans for people to create and build into the future.
The incredible community of developers and artists that seem to have latched on to bored apes for reasons beyond money is the main reason I wanted my key into the Yacht Club.
How I Chose My Bored Ape Yacht Club NFT
So you look at an NFT collection and decide you want in. There’s no right answers on what specific item to buy. It’s a mixture of gut feeling, preference and then some basic tools and stats.
Buy what you like the look of and odds are others will too. Easy enough.
If you want to try to quantify other’s preferences you can look at the view count and likes of an individual piece on OpenSea to try and gauge how it’s vibing within the community.
Since everything is transparently minted on the blockchain and images are stored on IPFS it’s easy to tell how rare a certain trait in the collection is.
Open sea will list the # of items in the collection with that trait and also give you a % on how often it appears.
There are even tools popping up that go deeper than the basic Open Sea metrics. My favorite is rarity.tools. It shows you the price floor for each trait and tries to quantify a “rarity” score for each item in the collection.
Bored Ape Auctions
I tried to buy a cool rare ape via an auction pricing (rather than buy it now) method. It was exciting sorting the collection by auctions ending soon and trying to swoop in at the last minute. This can be a great strategy, but I found that each time a bid is placed the auction extends it’s timer. In the end, I put in 3 bids, but each time I was out bid and didn’t end up getting the ape I desired.
After the adrenaline of the auction, I needed an ape.
Combining Feel and Analytics to Invest in NFTs
When buying my ape I went onto rarity.tools. Filtered for “buy now” and sorted from low to high.
I then looked for anomylys (rare rankings in the low price ranges). From there I picked an ape that I liked.
Currently, my ape #270 is ranked 4981 in rarity out of 10000. So it’s in the upper half of rarity. That was on the rare end for what I could afford, but I didn’t go off numbers alone. There were probably 10 or so more rare apes around that price range. But I didn’t like their look. I also wanted an ape with the BAYC hat. That is a rare trait and I think it’s winding up to be the signature piece of the apes, so I prioritized apes with that trait. Only 2% of apes have that hat and right now the price floor for that particular trait is at 5.29 ETH. (I bought my ape for 4.54 ETH)
Am I right in my purchase decision? Not sure. But I like the look of my ape and glad I have my passport to the bored ape community.
Bored Ape Yacht Club NFT Conclusion
The bored ape yacht club struck a chord with the crypto community. It found that special magic that NFTs need to succeed. Beyond that, BAYC formulated a novel way to build community and redefined the way we’re looking at NFTs. They are passports. Or keys to this new internet. And they’re also just hilarious pictures of apes.
As a former sceptic of NFTs I’m now all in. Investing in these art tokens, is a good mixture of art and analytical science. I’m excited to grow my collection on Open Sea.
If you want to sign up and begin perusing apes and other NFT/NFT collections you can do so here.
If you want a calendar of upcoming NFT releases, I made a list.
Thanks for reading, and perhaps I’ll see you in the private ape chat rooms. ????