Investing in NFTs is a worldwide phenomenon guaranteed to grow. In Part 1 and 2 of this series, I explained cryptocurrencies and NFTs, or Non Fungible Tokens. So now, let’s talk turkey and discuss actually investing in NFTs. And again, let’s use photographic NFTs as an example.
Investing in NFTs: What is a Series of NFTs?
The NFT market is very gamified. So let’s say, as a seller you own a photograph, or as a buyer you want to “own” that photograph, and both want to determine the value of a 1 of 1 owner on that photograph and a 1 of 1000 owners on that photograph. Think again about a painting and lithograph copies. The painting itself is obviously the most valuable, followed by “artist’s proofs,” followed by the numbered edition, but they’re really the same picture. There is just different value attached to them, even in the numbered lithos, with 1 of 1000 more desirable than 456 of 1000.
So with a photograph, you can “mint” the NFT (token) with two different series. One series has only one iteration or token of that photograph and another series would have 1000 of those tokens in it. Technically they will both point to the same digital signature of that photograph, but the difference is in the scarcity of the 1 of 1 compared to the 1 of 1000. So, taking the 1 of 1 for example, you might think of it as an artist’s proof that is unique, even though it’s the same photograph. It will have an inherent value because it is a 1 of 1 minting of that particular token, and nobody else can own it.
Let’s try another example to illustrate the value proposition. Let’s take the White House. Only one family gets to live in the White House at a time and there’s only one real White House in the entire United States, confirming its uniqueness. Now, you could build 1000 exact copies of the White House anywhere in the country, and even though they’re the same as the White House, they have a different inherent value.
Another example is the Peace Dollar. They were minted somewhere in the early 1920s and the government minted millions of them. However, depending on where and when it was minted, some of those coins are more valuable because of their scarcity. Some years they made 1 million and some years they made only 100,000. So if you have a coin from the 100,000 minting year, that’s going to be worth more than a coin from the year they printed 1 million. It’s the same exact coin but from a different year.
Is A Photographic NFT Devalued Because It Has Been Published
Actually no it’s just the opposite. In my opinion, it increases the value of the photograph if it’s been published or can be seen on different web-based platforms. For example if there is a photo that appeared on the cover of Sports Illustrated and a collector has a chance to own all or a piece of said photo, doesn’t that make it more valuable because it was published? The more popular a photo is, the more valuable it is to own.
Investing In NFTS: Photographic Collections
Purchasing images in a collection are the best way to get your toe in the water when investing in NFTs. If your level of exposure is limited by a budget less than $500, you can invest in an image that is owned by dozens of collectors similar to yourself.
Let’s say there is a collection of images of a sport like basketball with multiple players or a multiple shots of a specific player like Michael Jordan. You can purchase one NFT of the 1 of 1000 series of each of the 10 images. A collector may also purchase one of the 1 of 100 shares of the entire collection of 10. All assets having the ability to gain value and be bought sold and traded.
Just like limited edition art and photographic lithographs are valued, the value of an NFT within a collection can also be determined by which numbered piece you purchase. For example: The number #1, #2 and #3 piece out of 100 are more valuable than the number #97, #98 and #99 piece out of 100. This valuation comes into play when selling and trading NFTs.
Since collections are also differentiated by scarcity, minted collections will never be decimated. Sellers own them as well; in fact, they own many more than you do, and sellers will never tank the value of our their own assets by re-minting them. Once minted, a photo will never be minted again.
Sample of how a collectable series might be offered.
Series ZERO – 1 of 1 price 100K
Series ONE – 1 of 10 price $10,000 each
Series TWO – 1 of 100 price $1000 each
Series THREE – 1 of 1000 price $100 each
Series FOUR – 1 of 10,000 price $10 each
Series FIVE – 1 of 100,000 price $1 each
Ownership Categories with NFTS
In the next few articles, I will discuss the concept of ownership. In other words, when you buy a photographic NFT, what exactly do you own? Can you license it? Can you distribute it? Can you print and sell copies? Do you own the copyright?
Stay tuned. Check out the Manopod podcast with me and nonstockagency.com co-founder Christopher Unger. Or visit nonstockagency.com for more information and to see actual photographic NFTs for sale!