For the vast majority of people, blue chip means something that is consistently excellent. Blue chip is a term the NFT space has inherited from equity investing. A blue chip stock is often considered a stock that is financially sound and a reliable investment (e.g. McDonald’s).
Before we dive in, let the team introduce ourselves.
NFTexplained.info is a team of long term crypto investors who are well versed in the NFT space. We have the goal of providing the best educational content pertaining to NFTs.
Blue chip NFTs enjoy the general consensus that they will retain value well into the future. These NFTs are generally less volatile and are often established as premium investments; these NFTs are likely to maintain a stable floor price, even during a bear market.
Blue chip NFTs, such as CryptoPunks (one of the first NFT collections, created back in June of 2017 by Larva Labs) and Bored Ape Yacht Club (a well established NFT line that has created a successful brand and proven that the founders – Yuga Labs – are trustworthy).
These two NFT widely known lines in the NFT space have established the overall consensus that they will remain at the top. Both collections also have an astounding floor price of over 70 ETH, or roughly US $200,000.
If you are interested in learning more about floor price, NFTexplained.info has linked that article here.
Since these investments are widely known and many people aspire to purchase them, they become less risky. These investments have historically been more stable than the overall NFT market, which is quite volatile.
As NFTexplained.info previously mentioned, these NFT lines have maintained their price during the bear market (times when a market experiences a decline).
This shows sales from the BAYC collection; the graph shows BAYC was able to maintain a healthy trend upward without any extreme price declines for an extended period of time.
How Do You Identify A Blue Chip NFT Project?
Blue chip NFT projects can be identified by examining reputations; if the project is known for reliability and can survive a bear market, it can be considered a blue chip. Only projects where the overall NFT market agrees that the collection or artist is high quality can be considered a blue chip.
Only by understanding the overall NFT market first can a blue chip NFT project be identified. Projects that are new and are increasing in value likely can’t be considered a blue chip as they need to develop a backbone ensuring they are a more secure asset.
Blue chip is more of a subjective term however – the vast majority of people agree that a blue chip needs to be able to sustain value even during hard times or a bear market.
Since blue chip NFT projects need an overall consensus from the market, these projects are often recognized by people who may not be well versed in the NFT market.
For example, we have seen celebrities like Odell Beckham Jr, Jay-Z, Steve Aoki, and Snoop Dogg show off their CryptoPunks. These are people who are perhaps not that well versed in the NFT space however understand the overall consensus that they own a valuable digital asset.
The same can be said about holders of BAYC – Steph Curry, Jimmy Fallon, Justin Beiber, and Serena Williams are holders of this NFT line. As NFTexplained.info previously mentioned, these people are likely not trailblazers in the NFT space however understand these digital assets will retain value in the long haul.
That kind of overall consensus from the general population, including celebrities not on the bleeding edge of adoption in the space, results in an NFT project to be elevated to blue chip status.
Some blue chip NFTs attain instant notoriety because they are sourced from world famous artists or performers. An example of a blue chip artist would be Beeple as he is generally the first to come to mind when people think of NFT artists owing to the success of Everydays: the First 5000 Days which sold for US $69 million. He is a widely known artist and currently has over 2.5 million followers on Instagram.
What Makes An NFT A Blue Chip?
As a general statement, there are numerous aspects that can make an NFT be considered a blue chip. Some of these aspects include historicality, wide recognition from a large consensus, the artwork itself, and the power of brand recognition.
The archeology or the historical aspects behind some NFTs are what makes them blue chips. Since CryptoPunks were considered by many to be one of the first, they received enormous regonotion.
If you are looking to purchase a blue chip NFT but don’t have the necessary capital, we would recommend using fractional.art – a site that allows you to purchase fractions of an NFT.
History making blue chips is also true of the NFT line known as Ether Rocks which are simply JPG of rocks. However, since they were launched in early 2017, shortly after CryptoPunks, they are extremely valuable. At this point in time they have a floor price of 300 ETH or roughly US $800,000.
If you are interested in learning about the earliest NFTs, NFTExplained.info has linked that article here.
Moving on, artwork is another aspect that can make an NFT be considered a blue chip. The team previously mentioned Beeple because he is often considered the prototypical example.
Another artist that is much lesser known however still highly regarded in the NFT space is the artist FEWOCiOUS. He has had his work featured by large auction houses like Sotheby’s. Some people consider him a blue chip artist in the NFT space.
If you are interested in learning more about FEWOCiOUS and his powerful story, that article is linked here.
The last point the team at NFTexplained.info has made is the establishment of a brand that can make an NFT be considered a blue chip. When considering this, Bored Ape Yacht Club is the NFT project that comes to mind for many. The NFT line has partnered with Adidas which shows the brand recognition enjoyed by BAYC.
At the end of the day blue chip is a subjective statement and it’s not possible to pinpoint exactly which artist and NFT lines are blue chip because of how fast the NFT space moves.
One final note of caution: established blue chips are not a permanent status. In the equity market, Kodak (NYSE:KODK) was once a blue chip stock and Olympic sponsor famed for their “Kodak moment” slogan. Simply because a project is highly regarded at this point in time does not always mean it will be held in that regard forever.
The last section of our article is how to purchase a blue chip NFT.
How To Buy A Blue Chip NFT
If you are looking to purchase a blue chip NFT, you can do so through a simple process. NFTexplained.info has broken down the steps in a way that is easy to understand. Blue chip NFTs can only be purchased via the secondary market like OpenSea.
Buying a blue chip NFT involves three simple steps; firstly, users must establish a digital wallet that interacts with the blockchain. Secondly, users need ETH in their wallet to fund the transaction. Thirdly, buyers need to purchase the item and pay the transaction fee.
The first step in the process is establishing a digital wallet that is able to interact with the Ethereum blockchain. The most commonly used digital wallet is MetaMask because of its simple user interface. This process is quite simple and the NFTexplained.info team has already published an article explaining precisely what the MetaMask wallet is, how it works, and a step by step guide for users. That article can be found here.
For the purchasing of a blue chip NFT, Ethereum is required in order to complete the transaction. On MetaMask users have the option to directly purchase ETH using a debit card or can exchange a variety of cryptocurrencies for ETH. It is important to note that a ‘gas fee’ must be paid or this transaction won’t complete – a miner needs to verify the transaction and needs to be rewarded for their work.
Once the MataMask wallet is connected and enough ETH is in the wallet to purchase and pay for the gas fee of the NFT, users have the option to purchase and bid.
The procedure of purchasing an NFT is done through the use of smart contracts; this is computer programming and is what makes the NFT process possible. Smart contracts allow the wallet to interact with the blockchain. Happily, the NFTexplained.info team has created a smart contract article to help you understand exactly how it works and to provide you with some examples.
We hope you are just as excited as we are about NFTs and continue to stay informed at NFTexplained.info. To get the latest news in this rapidly evolving space, follow our team on Instagram & Twitter!