What makes a NFT project historic?
In the last article, we wrote about what NFTs are and why people find value in them. Now that we have the basics down, we can dive right into dissecting existing NFT projects. What makes certain projects more popular than others? How did these projects get started? How did they become historic? There’s no better way to understand this then to analyze one of the biggest NFT projects in depth — Hashmasks.
Case Study: Hashmasks
It’s hard to believe this, but Hashmasks launched just a few months ago, in January 2021. It almost feels like one of the original projects due to its popularity and the fact that so many new NFT projects came out in the last few months, but in actuality it’s only been 3 months.
How did Hashmasks come into existence?
The Hashmasks project is a collection of 16,384 unique NFTs that each have an enigmatic portrait of a masked figure. These art pieces were drawn by 70 anonymous artists from around the world, and the project is run by a mysterious entity incorporated in Switzerland known as the Suum Cuique Labs. In just less than one week, the project sold out the entire collection for about $16 million.
And what helped Hashmasks take off was the following tweet by the popular Twitter user @CryptoCobain (who has over 250,000 followers).
On January 27, an Ethereum fan known as “Cryptopathic” sent a message to his friend and well-known crypto Twitter personality Crypto Cobain — named for his resemblance to the late songwriter Kurt Cobain — about an upcoming artwork sale. Known as Hashmasks, they would feature thousands of pieces of original digital artwork and, just maybe, they might become the next craze.
Crypto Cobain read the message, shrugged his shoulders, and figured he would spend $100,000 of his personal cash to invest in Hashmasks. Why not? “Why did I spend $100,000 on fucking hashmasks FUCK,” he tweeted, before throwing in yet another $100,000.
In less than a single week, Crypto Cobain’s reckless impulse was vindicated. Thousands of buyers poured in, snapping up the 16,384 artworks for a grand total of $16 million. They also pumped the price of the NCT token that was given out with each one — putting the value of his investment at $426,000 in addition to the value of his Hashmasks themselves. At a bare minimum, his investment grew 113% in five days.
So what made the Hashmasks project so special?
The story of Hashmasks seems so unexpected (even to the creators) that this might seem like a lucky break and not a replicable event. However, there are concrete aspects of Hashmasks’ success that can be identified and used to find the next winning NFT project.
This random factor was placed in the Hashmasks smart contract itself to ensure a fair distribution. There was no way for the buyer to know what Hashmask they purchased for the first 14 days of the sale. This added an element of suspense because all the art was generated but as the buyer you couldn’t tell which one you had just bought. While this factor doesn’t seem unique anymore, at the time of Hashmasks’ release, this lootbox style purchase experience definitely incentivized some of the more daring investors to jump in and test their luck.
Sense of Ownership (Utility)
Hashmasks introduced a new concept in NFTs — a Name Changing Token (NCT). For the first time ever, owners of Hashmasks were able to customize their art piece by changing its name.
This allowed collectors to get involved with their work and added to the sense of ownership. This name-changing behavior made owning art feel more personal and raised the price the owner was willing to accepted to part with their piece. This coupled with the time spent discovering easter eggs in the art, created utility (intrinsic value). Now, these easter eggs and the unqiue name came together to tell a story after the art. The psychology of naming a piece and telling this story was so powerful that one Hashmask sold for 420 ETH.
The creators and the artists of Hashmasks did define a few characteristics of each piece, such as the type of character, mask, eye color, etc, and it is easy to see which of the characteristics are more “rare” than others.
However, not all of the rarities were initially defined by the project. They added a ton of easter eggs in their art that were not publicized. For example, there’s a royal flush scattered across multiple pieces. Some of the pieces can even be stitched together to complete a larger picture. Hidden puzzles and messages, along with the pre-defined characteristics, created a following of Hashmasks enthusiasts that were spending hours digging through the 16,384 NFTs and trying to find patterns before others. These hidden gems inside the pieces created a whole new layer of rarity, one that was organically determined and discovered by the community.
The aforementioned rarity factors found by the community also created positive viral loops. This treasure-hunting behavior created a lot of organic community interaction and excitement, especially on crypto Twitter. The pre-existing owners of Hashmasks felt proud to be a part of such a cool project where new traits were being discovered all the time, and those on the outside wanted to buy Hashmasks just to become a part of the community. A truly successful NFT project is one with a strong community and an almost fanatic following.
How to choose winning NFTs that will appreciate in value?
Few projects are truly historic like Hashmasks, will appreciate, and preserve value over time. In the next few articles, we will include our thoughts and predictions on some of these up and coming projects. Please support us by giving us claps and following us on Medium!
NFTs are just like any investment vehicle. We do not provide any investment advice, and please do your own due diligence before purchasing them!