We're still super early in the NFT space and many people are starting to see the lucrative opportunity before them.
However, despite all the innovation, new ideas or utilities behind these tokens, a ton of projects are miserably failing, leaving their founders in the mud after the devastating loss.
The time when stealth launches were common is far behind us, and it's important that founders understand the reality behind starting an NFT collection.
The NFT space is no longer what it used to be even a few months ago - it's an extremely fast-moving space and it requires adaptability to keep up.
You cannot put together anything and expect to make millions.
While this may have been true not long ago, you'll be punished for trying to do so today.
Projects are no longer selling out in minutes or hours, they're taking days, weeks, and sometimes even months.
In order to succeed, you need to stay ahead of the game - it's starting to become harder and harder, especially with everything going on around the world (such as in Europe), and most NFT experts and enthusiasts are suggesting against starting and marketing new collections or projects.
There are many reasons why projects are currently failing, reasons why you should not start an NFT project right now.
Let's discuss them here.
NFT Market is down
The first and most important reason why you don't want to start an NFT project right now is due to the NFT market.
Recently, the NFT market has "plunged to around $176 million. That's approximately five times less than the weekly trading value of around $924 million on January 31".
Within the space of a few months, the NFT market has shrunk drastically, leading to less and less trading volume happening.
This means that popular collections are no longer achieving insane trading volumes (aside from Bored ape Yacht Club which has reached almost $100,000,000 in the past seven days), and new collections are no longer minting out with ease.
You cannot expect to throw a few thousand dollars into scrappy marketing and achieve insane returns as high as 100x.
The NFT space is simply no longer responding the same way it used to, despite the fact that the price of Ethereum, the largest NFT blockchain, is drastically lower than what it was by the end of 2021.
There has been a ton of changes to the world of NFTs over the past few months alone, so it's important you keep an eye on these changes and try to anticipate the best time to enter.
I believe that we could start seeing some sort of turnaround over the next few weeks or months, given that Ethereum has started to climb back up, however, nothing is guaranteed or set in stone.
(Keep up to date with Ethereum prices and gas fees on our Discord server!)
For now, it's best to observe the NFT space, and learn from what is working and what is not working.
I had the chance to speak to a marketing agency a few days ago, and they told me that a popular NFT collection had released their second NFT project, yet spent around $800,000 in marketing to mint a total of $1.3 million worth of NFTs.
While this might be a special case, it's hinting at the uphill battle NFT projects are currently facing.
Heaps of competition
Competition can mean a plethora of things.
When there's a ton of competition, it means that the market is either too saturated or that there's a massive opportunity available for people to succeed.
With NFTs, it's clear that both instances might apply - while there are tons of collections, there is enough space in the market for new, innovative collections to take the lead.
Azuki, a cool collection that launched around January, was the most popular, most traded NFT collection for over a month, following its release.
Not only that but there were 10,000 NFTs all minting at 1 ETH each, meaning the Azuki team generated 10,000 ETH (around $33,725,000) after minting out.
Traditional businesses don't achieve these results after dozens of years in business, yet a simple NFT collection did so within the space of a few months.
Every month, however, there are hundreds, if not thousands, of NFT collections being launched - all looking to mimic what is already working.
Collections that are derivatives of apes, Azuki, Doodles, and more, and being created, and the majority are all failing.
The NFT community has already seen it all - there is little room left for new ideas, and so people are seeing the same thing over and over.
The most interesting thing I've seen is The Crypto Ape Club's 3-min teaser trailer which has not been done by any other collection.
To stand out from the crowd, you need to do something different, something unique, and it's much harder now than it was a few months ago.
Scams in the NFT space
Even some of the most popular NFT collectors, investors, and whales have been at the mercy of NFT scams.
No one is safe in the world of NFTs making it a dangerous place to be if you're only a small fish looking to find your way.
As the NFT market has slowed down, the volume of scams and 'rugs' happening has dramatically increased, leading to a lot of scepticism in the NFT space.
As we mentioned earlier, you cannot achieve a stealth launch anymore - it's impossible to do so as NFT collectors have become a lot more careful with who they invest in.
Teams that are not 'doxxed' have a very slim chance of succeeding, and so it's crucial that you, the founder of the project, dox yourself to build an element of trust with your community.
As a blogger and someone who has YouTube videos available on the platform, I decided to dox myself long before it became necessary to do so.
The more scams and rugs that happen in the NFT space, the more we prove the sceptics right, showing them why NFTs are just a 'fad'.
In order to grow the NFT community, we must start by ridding it of all the scams and rugs that are happening.
At the height of all the tension, it might be a smart decision to hold off on starting and launching your NFT project right now.
Instead, focus on building your community organically, developing a sense of trust with them so that they're warmed up to you once you're ready to launch your project.
Harder than you think
Starting a successful business is difficult.
There are a ton of things you need to ensure are done correctly in order to successfully build your business.
- The product needs to be great
- There needs to be a real product/market fit
- You need the right team behind the business
- You need to understand your audience
- You need distribution channels
- You need capital to invest (or investors onboard)
There's a ton more to consider, but these are some of the most important things.
However, when people start an NFT collection, they completely forget about how business works and believe that it's as simple as creating some art and listing it on a marketplace.
To build a successful NFT collection, you're going to be putting in the same amount of, if not more, work as you would to build a business.
Starting an NFT collection isn't easy, it isn't a 'get rich quick scheme'.
It takes a ton of planning and a ton of work to get it right and ensure you're in a place to launch successfully.
Marketing is crucial for NFTs - you need to ensure you have a large marketing budget, allowing you to build an active and engaged community.
People who enter your NFT Discord server are going to be expecting others, so building a small team of moderators is key.
This is something we're currently figuring out with The Crypto Apes Club NFT project.
Not only is it 'bad timing', it is also important to consider the engagement of your community.
Numbers are important, but engagement is even more so.
Your biggest barrier to entry
Finally, you're going to have to make sure you've got the budget to successfully start and launch your NFT collection.
NFT marketing is extremely different to traditional marketing - you need to move fast and get fast results.
The larger your NFT collection, the more expensive it'll be to market.
If you have an NFT collection of 10,000 pieces, your budget must be around 5x that, at least.
For an eCommerce business, it's best to find one distribution channel, and double down on it, slowly iterating, and perfecting it.
With NFTs, you're going to need to find 3 or more channels that work well, since you need an omnipresent marketing strategy, to grow as fast as possible.
- Paid ads
These are only some of the channels that effectively work for NFTs - and they're not cheap!
As Dave Ramsey says, you need to ensure you always have at least a 6-month emergency fund, and so it's very risky putting all your capital on the line, although the upside is massive, with NFTs.
Unless your NFT project is minting at a low cost, or your supply is very low, it might be a good idea to avoid starting an NFT project right now.
If you don't have a large budget, a small or cheap collection, or investors to help you fund your growth, it'll be very stressful.
Those were 5 reasons why you should not start an NFT project right now.
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Till next time,