One of the frequently asked questions in the NFT space revolves around the valuation technique commonly used by crypto NFT collectors. There has always been a debate surrounding the factors that inform investors about the true value of an NFT offering. Does it always boil down to rarity? Or is it the artistic ingenuity that births these crypto arts? Perhaps, the amount collectors are willing to pay for an NFT solely depends on the capacity of the issuer to generate a sustainable buzz before and after the NFT launches.
While there is still no definite answer as to which of these factors carry the most weight, one thing is clear: They all contribute to the process used by NFT collectors to judge the value of the NFTs.
Hence, you will expect NFT issuers and digital art creators to strike a good balance between all three factors such that the offering can invoke high artistic merits, command a respectable level of exclusivity and generate the right amount of buzz. Unfortunately, not all NFT offerings, particularly those released as a collection, tick all the boxes. In most cases, NFT creators leave out the rarity and art part and double down on inducing unprecedented buzz.
As a result, there has been an ever-growing array of NFTs that seem to apply the same formula over and over again, just to end up with soulless offerings destined to fade away in the long run.
This is particularly true for the emerging profile picture (PFP) niche where NFT projects are looking to replicate CryptoPunk’s success. For many of these projects, the main goal is to feed into the high demand for profile PFP-based NFTs and create a short term hype to boost the value of their artificially-generated NFTs. In other words, artistry and exclusivity are not the core attributes.
Although this is fast becoming a norm, it is not the go-to strategy for every NFT project out there. Some have stayed true to the winning formula of sticking to a framework that wittingly combines ingenuity, rarity and buzz. A notable example is BitColors, an NFT project aiming to bring color to the NFT space.
What is BitColors?
BitColors is a collection of 1,000 NFTs showcasing unique and handcrafted colors. In essence, BitColors has tokenized newly invented colors so that they can be owned and traded. Before now, not many people believed that the average individual could stake a claim to colors. However, thanks to the innovative nature of BitColors, it is now very much possible. Already, over 120 unique OpenSea users have bought BitColors NFTs, even though just about 261 of the 1,0000 colors have been released so far. Each drop of Bitcolors NFTs on OpenSea has sold out in a few seconds. So, the question is: Why do investors and art collectors consider Bitcolors a promising NFT collection?
Factors that could drive the value of BitColors
It is worth mentioning that BitColors ticks the rarity box since just 1,000 NFTs make up its entire collection. In contrast, most NFT collections feature an average of 10,000 NFTs. And so, BitColors has tried to preserve the rareness of its offering by opting for a low supply. If the demand continues to rise, then the value of each NFT could potentially increase.
First and foremost, the decision to bring colors to the NFT space is in itself an ingenious move. As Crypto Professor rightly describes it, Bitcolors is “like a seed of a new movement like Cubism and Surrealism.” This submission, coupled with the decision to adopt a hands-on approach where each NFT is manually created, named and uploaded on the NFT marketplace, elevates the artistry of BitColors even further. And when an NFT establishes itself artistically, it is easier for it to command a high price.
Speaking of PR marketing, Bitcolors has not opted for the inorganic market visibility campaigns commonly used by NFT projects. Notably, many NFT projects out there encourage community members to spam their friends with annoying ad links for a chance of receiving a free NFT or to get into a whitelist, such community marketing campaigns doomed to fail at some point.
As for Bitcolors, the goal is to eliminate all distractions and focus on providing value through their NFTs. Therefore, the team has announced that they will avoid community hustle, unrealistic promises and ambiguous roadmaps. In other words, they will be focusing more on creating art.
Bearing all these factors in mind, it is interesting to see if BitColors can reach its potential and command high valuation like other impressive NFT projects before it. I myself will buy a few BitColors NFTs and will hold them for a year or so.