October 31, 2022

What is a blue chip NFT?

A blue chip NFT is a liberally used term that refers to a well-known, established, and long term NFT investment. Compared to most NFTs, blue chips are considered more stable and lower risk. There are a number of things to consider when determining whether an NFT is a ‘blue chip’ or not. Some of these include the community, the artist/brand, the developers, the floor price, trading volume, celebrity endorsement, and the art itself. In the world of NFTs ‘blue chip’ assets are slightly different from the ‘blue-chip stocks’ from traditional investing. Here’s how.

Blue chip investments in traditional finance

In the world of traditional investing a ‘blue chip’ refers to a company that has proven itself over a long time period and is considered to be a reliable investment. The original etymology of the term goes back to the classic 3-color poker chip set where the blue chips hold the highest value.Generally speaking, blue chip stocks or companies are seen as safe, long-term bets that generate steady returns. Examples include Coca-Cola, Walmart, IBM, Disney, and General Motors.

Blue chips in the NFT space

Given how recently the NFT space was established, ‘blue chip’ NFTs have a slightly different meaning when it comes to NFTs. Given that even the OG NFT projects like CryptoPunks have only been around for a few years, the term ‘blue chip’ is used instead to describe any promising NFT that is likely to stick around and hold its value for a long time. 

In the NFT world, the term ‘blue chip’ is used quite liberally, so it is important to acknowledge that the nascent nature of the space means that it will take some time for projects to have confirmed ‘blue chip’ status. Still, traders and investors naturally speculate about which NFT projects are likely to stick around, and determining whether or not an NFT is a potential ‘blue chip’ has become a very lucrative business.

What makes an NFT a ‘blue chip’?

Good question. There are a number of factors that can contribute to an up and coming NFT project being regarded as a reliable blue chip investment. These include: The artist & the brandNFTs are all about rarity and prestige, so a project’s value is often tied to whether or not it has a reputable artist or brand behind it. Artists that have a rep or significant social capital before entering the NFT space are much more likely to have a project that’s considered valuable by the wider community. Additionally, in the world of NFTs, branding is equally as important as the artist. For example, GaryVee built a social media empire before he got into NFTs and that has led to a lot of hype and a high valuation for his project VeeFriends. With the saturation of new NFT projects, having a reputable name attached to the collection is often the easiest way to stand out from the pack. Floor price and sales volume

Floor price and sales volume are clear indicators of whether or not an NFT deserves blue chip status. These figures reveal how many people are trading the NFT and what they are currently willing to pay for it. The higher an NFT’s floor price, the more valuable it is, and when a high floor price is coupled with significant trading activity, it shows there is high demand and sentiment behind the price of the NFT. Examples of blue chip NFTs with high floor prices and no shortage of trading activity include the Bored Ape Yacht Club and CryptoPunks.

Utility, use-case, and perks

NFTs are much more than rare pictures that you can own on the blockchain. Many projects have added use cases and utility to their NFTs, which can greatly increase an NFTs value, allure, and longevity. NFTs often come with special perks to be enjoyed by holders, such as special airdrops, access to an exclusive community, limited edition merch, early access to new NFT releases, invitations to real-life events, and much more. Community The size and dedication of the community behind the project is a clear indicator of a project’s long term potential. Since the dawn of time humans have bonded over shared interests and affinities and NFTs are no different. People want to be part of something and NFTs have provided a new way for people to come together and bond over a shared affinity. Similar to crypto investing, if a project is legit, it will likely have a group of people it serves and appeals to, and thus a solid community around it. As communities grow larger and more people contribute value to the group, the benefits of being a part of that community or club can increase exponentially, rewarding early adopters and those who invested their time and energy during the early stages. Celebrity or investor endorsements

In a similar way that the artist, influencer or brand behind a project is important, celebrity endorsement can be huge in the early stages of an NFTs journey. Hype drives NFT sales and when a notable celebrity puts their name behind a project this can definitely supercharge a project’s launch. In the past, celebrities like Snoop Dogg, Steph Curry, Reese Witherspoon, and Jimmy Fallon have endorsed NFTs, and we are likely to see this trend continue into the future. Development team Having a solid dev team is another indispensable element of establishing a blue chip NFT project. The devs are responsible for coding the smart contract that creates the NFT and its utility features, so it is crucial that they are reliable and know what they are doing.Having devs with a successful track record is a good sign, and although some legit NFT projects have anonymous devs, it is a great sign if the devs come out and put their real identities and reputations behind the project.

We hope this has been helpful! Keep an eye out for potential blue chip NFTs and stay tuned for more!