Genesis Bull

Sep 17, 2021

8 min read

The Fascinating World of NFTs

Many of you have probably heard about NFTs and how Cryptopunks and ETH Rocks have been selling for astronomical sums. But if you haven’t, here’s the rundown: tokenized digital art is a big thing now, and people are willing to spend a LOT of money on it. Millions in fact. And they come in many different flavors.

Crypto Punks, Sneaky Vampire Syndicate, Bored Apes Yacht Club, Borpacasso, Moonboyz, Artblocks

What is an NFT?

An NFT is a Non-fungible Token, meaning it is not only unique, but it also cannot be replaced with anything else. For example, a bitcoin is fungible since it can be traded for another bitcoin, both being exactly the same thing. Think of NFTs like those one-of-a-kind trading cards: trade it for another unique card, and it will not be the same. Let’s keep it as simple as that for now, because it can also get more complicated with limited supplies of a single NFT, fractionalized ownership etc.

It’s digital, so where do these NFTs live?

NFTs live on the blockchain, the most popular of which is currently Ethereum for NFTs. Unlike Bitcoin, Ethereum is not only a cryptocurrency; its blockchain also supports the ability to add specific data into its blocks, allowing the blockchain to store the information of an NFT as well as its owner for example.

This is how unique ownership is established: for every NFT you buy, the blockchain will store this data and link it to your digital wallet address. This data cannot be changed unless you transfer the asset to another wallet, which becomes the new owner.

So let’s say you own one of the famous Cryptopunks. Anyone can go and look at this punk on the blockchain and see to which wallet address this punk belongs to on the network. This cannot be tampered with, so the proof of ownership and the origin of this punk is unquestionable. You can transfer it to another address just by paying the blockchain transaction cost (which can vary greatly depending on the blockchain you use), or use one of the NFT marketplaces such as Open Sea to list them for sale.

NFTs can be anything: a drawing, a video clip, music, a piece of virtual land, an in-game asset… But most of the current craze is around using algorithms to generate digital art, just like Cryptopunks did back a few years ago.

What’s so special about algorithmically generated art?

Isn’t it interesting to see that a program can create a large number of randomized art based on some set parameters and attributes you give it? What’s more interesting is that since you can include a rarity factor to each attribute, you can make certain attributes rarer than others and this will influence the rarity of the generative art — even if the algorithm generates the art at random! The most well-known of these projects, and one of the OGs of this trend, is Cryptopunks. Just take a look at the staggering sales stats below:

Snapshot of the Cryptopunks sales statistics. Yes, you read correctly: $1.31 billion in total sales value!

And this is where things get interesting for collectors and speculators. Because let’s say you start your collection of 10'000 punks with 60 different attributes and add rarity percentages to each one; you’d end up getting very rare combinations, which due to their rarity would have a much higher implied value.

So out of your 10'000 punks, due to the attribute settings setup in the program, only 223 punks ended up having the “zombie skin” attribute, whilst 5'000 got the “common skin” attribute. This makes zombie punks much rarer of course, but that’s just the top of the iceberg: you then need to take into account all the other traits and their rarities! And this is how you get a rarity score, which determines the rank of your punk based on his rarity. Several websites such as have specialized in calculating the rarity of NFTs, so just by entering your cryptopunk number you’ll get your rarity score. Here’s an example of the Cryptopunk number 7920, ranking at 21/10000:

You can see here how each attribute has been assigned a score according to the rarity of the attribute. The combination of attributes and other data points the algorithm takes into account calculates the overall rarity score of your NFT and ranks it according to all the other NFTs in that particular collection.

Several millions for generative pixel art? Are you MAD?

You might ask yourself, “why on earth would I spend millions on a JPEG image I can just download onto my desktop?” and yes, at first glance it may sound ridiculous. That’s what I thought last year when I first heard about NFTs and how Gary Vaynerchuk was getting into this space. I thought to myself that this is just a game for rich people looking to throw their money around to prove who can spend the most on a few randomized pixels.

But I was wrong. Art, at its core, only becomes valuable if we give it value. Why does one artist succeed over another? Why is some art thoroughly undervalued or unappreciated until years later? This is the crazy thing about art: perception, hype, feelings… Everything comes into play. And when you add to that a new tech revolution to the mix, you can bet that if big names start coming in, a lot of eyes will start pouring into the space. But not necessarily for the right reasons unfortunately.

Are we in an NFT bubble?

I’ve been hearing this a lot. Why? Because there are new NFT projects launching every day, trying to capture all the FOMO (Fear Of Missing Out) from buyers looking to bag the next Cryptopunks asset and make millions overnight. The problem is that most of these projects are just copies of other projects with small variations, without innovating on anything and just in it for a quick profit. Just like the crypto ICO craze back in 2017.

So I will start with a word of caution: there is stupid money being thrown around here. Hopes of overnight wealth and gains. Ridiculous expectations. And at the same time, it is a very real possibility that you CAN make incredible sums of money overnight. Some projects have gone up 1000% or more within a week from mint (when an NFT is “created”) to the floor price (i.e.: the lowest current price on the marketplace).

Cryptodads is an example, one of these overnight success stories that I wish I had been a part of. Loot is another one that launched a few weeks ago, which is just basically white text on a black background, with associated rarity. And yes, the cheapest “Loot Bag” right now is nearly $30k. For white text on a black background that anyone could have “minted” for free a few weeks ago. THAT’S how crazy this space is right now: it seems to have moved away from art and more towards mass speculation of gains and NFT future utility (of which it currently has none).

The cheapest Loot bag available currently on Open Sea is going for a whopping $28.3k!

So most people entering this space are looking to bet on a horse and hope it wins the race fast to cash in a big sum of cash. That’s also why these projects have an incredibly high trading volume as speculation continues to grow on the future value of a particular NFT asset. But let’s face it: at the end of the day, there needs to be someone that values an NFT enough to purchase it at that price, and unlike real art, it cannot go up forever. So yes, by choosing the right project, you could potentially turn your initial $300 into $30k if you’re lucky.

But bear in mind that out of the few projects that blow up big like the above-mentioned ones, many fail miserably and burn at launch, with developers running off with investors’ money. Beware of scams as those are ravaging the ecosystem right now, from fake copied projects and contract addresses to rug pulls. So do your own research FIRST before jumping headfirst into something, because you could end up losing your initial investment very quickly as well.

The projects I am particularly bullish about are projects that aspire to create a strong community of passionate art lovers — because generally, people investing in those are there for the art, not to ape in like a degenerate hoping to 10x overnight and then cash out.

I’m talking about projects like Artblocks, which has been around for a while and uses generative algorithms to create complex shapes and patterns which you could actually enjoy looking at if you had it hanging on your wall. With new collections being dropped regularly, has created its own loyal following of collectors and art lovers alike — a great way to sustainably grow in the NFT art space.

Magnificent Fidenza #612 from Artblocks’ Fidenza collection

A newcomer in the space that just launched a few days ago and caught my eye is the Borpacasso collection, a cheeky mix of Picasso-inspired fine art and the famous Borpa the Frog meme. The hand-drawn elements and the level of detail on these NFTs is really amazing and it is nice to see certain projects focusing on making art that people can truly appreciate rather than focusing on the hype around a themed JPEG. The public sale sold out in 15 minutes and looking at the stats so far, it looks like the rarer ones are already being sniped by collectors and investors on the Open Sea marketplace, with a top 10 one being sold for 8.88 ETH (around $31k at Ethereum’s current price). I’ll be keeping a close eye on this one.

“La Borpette” sold for 8.88 ETH two days ago, or around $31k.

In my opinion, these are the kind of projects which will have a long-term appeal in this NFT space. Yes, I do believe we are in a bubble — you just need to go on Twitter and see how many people have the word “NFT” in their profiles; generally not a good sign. However, NFTs are here to stay. And just like the 2017 crypto ICO craze, most bad projects failed and went to zero. But the good ones prospered, and even flourished to new highs. This is what I believe will eventually happen with NFTs: the bad eggs will be filtered out and many people will lose a lot of money. But I strongly believe that the NFT OGs like the Punks, the Eth Rocks, Artblocks and other projects with strong communities and loyal followings will continue to do very well in the future.

Just my two cents (none of this is financial advice anyway, just my personal experience): make sure you do your research. Join different projects’ Discord servers, engage with the community and the team. Don’t just follow the pump, because chances are you’ll have arrived too late to the party. Take your time and invest in what you believe in. Now, time for me track down The Next Big Thing!