Why Jack Dorsey’s Tweet Hit Rock Bottom
As many already know, the first tweet ever posted on Twitter by Jack Dorsey was offered a considerably lower price than expected when it was listed for auction on OpenSea. The original sale of the tweet was nearly $3 million dollars at the height of the NFT craze in 2021.
Recently, it was posted at a price of nearly $50 million dollars, yet only received offers as high as 10 Eth leading to claims that NFTs are a fraud and completely worthless. However, that couldn’t be further from the case a year later as we see so many new projects offering a host of utilities that go well beyond a tweet lacking any features.
To many critics, NFTs are an expensive waste of money for something that has no real world value. While this holds true for many NFT projects which are created and never take off, it pushes an incorrect narrative which ignores how so many projects are able to sustain such high floor prices such as Azuki and Moonbirds.
Making profits with NFTs
Many high-value projects earn their extreme floor pricing because they offer a host of utilities that are beneficial to holders. There are essentially two methods for receiving profits with NFT - short-term flipping and long-term holding.
When a user wishes to flip an NFT it is usually done so in a specific manner which requires timing and communication. The practice begins when a new NFT is announced either on Twitter, sites like NFTcalendar, or through influencers and NFT communities on Discord.
From here, prospective buyers flock to the project seeking whitelist approval spots which grant them priority to mint the NFTs at the lowest possible price thus enabling them to be sold for profit.
Flipping an NFT before the reveal
Generally, when an NFT project is announced the artwork is covered up and given a reveal date to generate excitement and hype. Buyers purchase the tokens hoping that their NFT will include rare layers which can sell for higher prices than their more common counterparts.
This is when trading is generally most active because people who were not on the original whitelist still want to be able to take part in the project before the reveal. Selling tokens before the reveal is one of the most assured ways of earning profits, but acquiring a whitespot can be difficult for certain projects and leads many towards scams.
After a reveal is when the majority of floor prices begin to drop for most projects. This is common as the buying activity dies and holders hoping for a rare token end up holding bags at a loss which has become the case for the Jack Dorsey tweet.
Utilities - Creating the value for an NFT
So, why would anyone want to hold an NFT? The simple answer is utility. The true value of an NFT is not linked to the artwork depicted by its metadata, but by the features that are built into the token itself.
When we see projects like DeGods skyrocket in value it's because the team behind the project is creating features for holders which simple flipping can’t replicate.
NFT Utilities:
Jack Dorsey’s tweet has none of these features. It’s merely a token that represents the first tweet posted on Twitter and does little else besides represent historical context to a popular social platform. There’s no real benefit to the holder and it doesn’t belong to any sort of collection with an active community.
Not to say that it’s worthless, but the lack of utilities and features are the reason that the prices offered during auction were significantly less than what the owner had expected after a year holding it. There’s simply not enough holding value created by the NFT.
The NFT market is maturing
While many critics saw this cataclysmic drop in price as verifiable proof that NFT are worthless products, it’s really a sign that the NFT market is finally beginning to mature. NFT buyers are starting to become more savvy about the collections that they are purchasing and only want to be long-term holders for projects that offer beneficial features to the community supporting it.
NFTs only drop in price when their utilities, or lack thereof, are deemed useless. Without clear roadmaps and dedicated work by a team, it’s easy to watch the floor price drop.
So, always do the proper research when investing in NFT to make sure that there is significant long-term value for the holders because if no one is willing to buy it then it is just a useless tweet.