With literally millions of non-fungible tokens (NFTs) on the market, it's hard to know where to start as an investor. If you're looking for NFTs to buy and hold for the long haul, blue chip NFTs are one of the most popular ways to go. Like blue chip stocks, these NFTs are considered the cream of the crop.
What are blue chip NFTs?
Blue chip NFTs come from the most well-known and successful collections. They're considered industry leaders and are more likely to grow than other NFT projects. A blue chip NFT collection will have some or all of the following characteristics:
- It's regularly seen on the NFT sales leaderboards.
- It has developed a popular brand in the NFT space.
- The company behind it has strong financial backing.
The profile of blue chip NFTs is similar to that of blue chip stocks, but there are some important differences between them. Since the NFT market isn't that old, even blue chip NFTs haven't been around long. Blue chip stocks, in comparison, have much longer track records of success. The NFT market is also much more volatile than the stock market.
Because of those differences, blue chip NFTs present a much larger risk than blue chip stocks. The best blue chip stocks are stable companies that have been around for decades. Some blue chip NFTs launched as recently as 2021, and they have a much greater risk of failure.
Blue chip NFTs explained
"Blue chip" is a term that comes from the game of poker, in which blue chips have the most value. It's now used in a variety of fields to describe what people perceive to be the most valuable options available.
As previously noted, there are blue chip stocks. There are also blue chip cryptocurrencies, with Bitcoin (BTC -0.53%) and Ethereum (ETH -1.19%) being the two that almost always make the cut. In professional sports leagues, such as the NFL and the NBA, there are blue chip athletes who are considered the most likely to succeed at the next level.
It's important to remember that a blue chip isn't a sure thing. Although some people consider blue chip stocks to be safe investments and this is normally true, there have been exceptions that have failed.
4 blue chip NFTs
Blue chip NFTs come with a caveat for prospective investors. NFTs in general are extremely high-risk investments since the market is full of speculation and volatile pricing. Blue chip NFTs can often be even riskier than the norm because some of them are extremely expensive. That means you have more to lose than you would with a cheaper NFT.
The upside with blue chip NFTs is that they have a better chance of increasing in value. Most NFTs fail to build a brand, and blue chip NFTs have already done that. Here are the best blue chip NFTs to check out:
1. Bored Ape Yacht Club
Bored Ape Yacht Club is a collection of 10,000 digital apes, and owning one gets you access to an exclusive online club. They launched in April 2021 and originally cost 0.08 ETH apiece, about $190 at that time. Within a year, they had recorded more than $1 billion in total sales, become a hit with celebrities, and regularly sold for hundreds of thousands of dollars.
The price of Bored Ape NFTs put them well out of reach for most investors, but this is arguably the biggest brand on the NFT market. The company behind Bored Ape Yacht Club, Yuga Labs, has raised $450 million in funding for a $4 billion evaluation and is aiming to build a media empire with its NFTs. It has also released more successful NFT collections, including Mutant Ape Yacht Club.
CryptoPunks was one of the earliest successful NFT projects. Larva Labs, a two-person development team, launched CryptoPunks in 2017. It contains 10,000 unique digital characters and is one of the best-selling NFT collections to date. Some of these NFTs have even been put up for auction by Christie's and Sotheby's.
This is another costly NFT collection, with many CryptoPunks fetching six-figure prices. The advantage with CryptoPunks NFTs is that they have a more established track record, even compared to other blue chips. They've been around longer than most and still regularly rank among the top collections by sales volume.
3. NBA Top Shot
NBA Top Shot is the official NFT marketplace for the NBA, one of the first sports leagues to launch its own NFT platform. It allows fans to buy and sell official digital collectibles featuring highlights from the NBA and WNBA.
Unlike most NFT marketplaces, NBA Top Shot doesn't require any knowledge of cryptocurrency; you can buy NFTs there using your credit card. These are also some of the most affordable blue chip NFTs, with prices starting at just a few dollars, although rarer highlights cost much more.
The biggest selling point for NBA Top Shot NFTs is the NBA brand. There's a massive market for sports collectibles, and digital collectibles are likely the next evolution from trading cards and memorabilia.
4. Art Blocks
Art Blocks is a unique platform that generates on-demand digital art based on an algorithm. It launched in November 2020, and several Art Blocks NFTs have sold for more than $1 million.
The way Art Blocks works is an interesting mix of traditional art and blockchain technology. Artists who work with Art Blocks create a generative script and store it on the Ethereum blockchain. When a collector purchases an NFT from an Art Blocks collection, the seed data from that token interacts with the script and determines the appearance of the NFT.
There are quite a few Art Blocks collections, and prices have ranged from less than $500 to more than $1 million. That gives investors plenty of options, no matter how much they want to spend.
Blue chip NFTs are a good starting point for investors who want to explore options or simply learn more about the market. Another option, instead of investing in NFTs directly, is to invest in the blockchains these NFTs are built on. Ethereum is the most popular for NFTs, but there are other options, including Solana (SOL -3.79%) and Polygon (MATIC 1.33%).
All crypto-related investments are risky, so what you choose depends on how much risk you're willing to take. For those who want a taste of the most highly valued NFTs, blue chip NFTs are the ones to look at.
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