NFT Investment Guide: What Kind of JPGs Are Worth Buying and Collecting?

Written by: 0xBEW, Global Ambassador of Yunt Capital DAO
Compiled by: Perry Wang

You might think a new day would bring a new NFT project. No, that's not right; it’s actually more like ten to twenty new NFT projects popping up every day!

Right? Just log into Twitter, and you’ll see NFT influencers selling some new memes at bargain prices. Nonsense! These people must know something (that I don’t). They’re making money. Should I follow the trend and buy the copyright to this garbage image? It’s still cheap; how about remixing a few old memes? How could I not make money? Let’s insert some old memes here! That garbage image’s low price has already increased fivefold; I’m definitely going to get rich!

Does this sound familiar? If you’ve been following the NFT community over the past few months, those words should be all too familiar. Over the past few weeks, I’ve seen newcomers trading worthless garbage images. Chasing quick profits, they’ve been cut down like chives, operating recklessly without guidance.

Recently, in the vibrant Pixel Vault Discord, we had an engaging conversation about the value of investment theory in the NFT space. Inspired by this dialogue, I want to expand my own NFT investment theory, discuss some examples, and hopefully inspire ordinary investors to develop their own theories to achieve their goals.

Without further ado, I present 0xBEW’s NFT investment theory: (Novelty * Timelessness * Utility) ^ Community.

1. Novelty

Bored Ape #3817

Novelty can take many forms and is often related to being the first to appear (though it doesn’t necessarily have to be the first). A novel project attempts to do something that hasn’t been done before or builds on something that has been done in a creative way.

For me, the novelty of these projects often depends on their ambition and creativity.

In general, I believe novel projects carry high risks and high rewards. Because they haven’t been done before, or they are a completely new interpretation of existing projects, your investment can easily go to zero. Conversely, if the project succeeds, you will reap enormous rewards that cannot be matched elsewhere.

When I first learned about NFTs and their underlying technology, I immediately thought of digital licensing. Using tokens as keys to unlock access seemed like a perfect product-market fit, and I was a bit surprised I hadn’t seen more of it. When I first learned about the Bored Ape Yacht Club (BAYC), I felt I had finally found a project that completely met my expectations.

The BAYC "members-only" system was exactly the direction I had been considering from the start. BAYC is a project full of novelty. Its success or failure depends on how much people desire to join this club, which is quite exciting. This project involves more than just a personal avatar; it’s about much more.

Months later, I think it’s safe to say that BAYC’s success has far exceeded the wildest imaginations of even the most optimistic "apes." Those who participated in its NFT minting have made a fortune, and those who recently entered have easily earned tenfold returns. From merchandise airdrops to the "Bored Ape Yacht Club Bathroom" to the Metaverse clubhouse, BAYC has created something people genuinely want to be a part of.

BAYC’s bet on novelty has paid off, and if following trends is a form of flattery, the entire NFT space clearly agrees.

2. Timelessness

Tyler Hobbs: Fidenza #131

Timelessness is another principle that may relate to being the first. However, a project doesn’t have to be the first to be timeless.

Ringers were not the first product released on the Art Blocks Curated market, but I believe they are timeless. Similarly, CryptoPunks were not the first on-chain NFTs, yet they too are timeless. Investing in timeless things is a long-term bet, and there may be additional theories about what you are investing in. This is also the most challenging principle to assess whether you can succeed.

For me, the project that best embodies timelessness is ArtBlocks. As I mentioned earlier, I have another argument regarding ArtBlocks: crypto art is a legitimate art movement, and we are in the early stages of a new chapter in art history. With this in mind, I believe that ArtBlocks, adhering to on-chain generation and top-tier curation, will naturally place projects minted on the ArtBlocks platform in the upper echelon of this new art movement.

I do not expect my current argument to still hold true five years or more from now. As I said earlier, this has a long lead time. That said, I believe early signs validate my investment.

The popularity of Ringers and the Fidenza series indicates a huge demand for high-quality art within the NFT community, while the sale of 19 ArtBlocks pieces through Sotheby’s demonstrates institutional recognition of ArtBlocks in the traditional art world, acknowledging that ArtBlocks will become a defining platform of this emerging period in art history.

3. Utility

PUNKS Issue #1

Utility can be summed up as "more than just a JPEG."

Earlier this year, the criticisms from normies directed at the NFT space repeatedly focused on why someone would spend millions on a JPEG! You just right-click and save! OK, now you have that JPEG too.

Please forgive this overly simplified description, but the underlying technology of NFTs is not just for housing the metadata of an image. Focusing on projects that utilize NFTs to turn JPEGs into more than just JPEGs is a good way to seek additional value and potential income and liquidity.

This principle brings to mind Punks Comics and Pixel Vault. I’ve been following Beanie on Twitter for a while because he has been curating this comic. I’m intrigued by the idea of media companies using NFTs to build intellectual property around the early blockchain scene (which seems novel). However, when the details of the original Punks issue were released, along with the refinement of complex token economics, the potential utility of the project became its biggest attraction.

It’s really more than just a JPEG; the original issue embodies utility, combined with novel game theory and compelling token economics.

My active investment theory in Punks is that, considering the utility of each token, the value of each token is very high. After months of research on the project, my belief in Punks or Pixel Vault has never been stronger. With the significant growth of the secondary market for Punks Comics, the hard work the team has put into developing projects with this utility is beginning to pay off.

4. Community

Life Well, Parallel Alpha Masterpiece

In my investment theory, community is an amplifier. A bad community can even cripple a great project, while an excellent community can make good projects unstoppable.

Unlike the three principles we discussed earlier, if you invest early, community issues may be one of the hardest aspects to get accurate information about. In this case, you need a stronger conviction, and it’s crucial to keep a close pulse on the community as it develops. Conversely, if you enter later, the project community may be the dimension you feel most confident about.

The only way to truly feel the community is to participate: join the project’s Discord, follow the team on Twitter, and engage with them. If you give them a chance, they will reveal their true selves. Don’t be afraid to mingle with other anonymous individuals. How can you tell if a project’s community is good or bad? Like the government’s attitude toward pornography, you’ll know it when you see it.

Of course, BAYC is a great example, but ArtBlock, Pixel Vault, and Parallel further demonstrate what a great community looks like. Spend some time participating in the Discords of these projects, and you’ll understand why.

The list of projects I mentioned in this article is by no means exhaustive and is for reference only. My investment theory will be a dynamic document. I will continuously update my weights and modify my internal decision tree through ongoing learning.

The NFT space is also dynamic and ever-changing. Your investment theory should be flexible enough to adapt to changes, and most importantly, it should align with yourself.

I’m not writing this article to brag about always investing in winning projects—far from it (rest in peace, my investment in Nekos memes). Like everyone else, I’ve also invested in failed projects. The goal of writing an investment theory is not to erase the memory of failed investments (which is impossible) but to be prepared to make bigger attempts on projects you feel most confident about.

This may seem obvious, but it’s hard not to be swept up by the emotions of "fear of missing out" (FOMO) and pysop. To make investment theory programming successful, it must be based on an honest description of your limitations and goals. Maybe this seems difficult; that’s because it is.

That said, if you can put theory into practice, I truly believe better results will emerge over time. You might miss the airdrop of a garbage image, but missing one or two winning projects in a pile of junk isn’t a big deal; however, missing out on investing in projects you’ve truly thought through is a different story.

Friends, until next time…

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