Subscriber Survey

‘Short-term fad’ or promising investment? Subscribers torn on value of NFTs

An Ethereum-based edition of the Nyan Cat meme sold for nearly US$600,000 in February. Nyan Cat/The Logic
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Despite non-fungible tokens (NFTs) like the Nyan Cat meme and Jack Dorsey’s first tweet selling for hefty sums, The Logic‘s subscribers are torn over whether the assets will remain valuable in the long term, a recent survey has found.

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Forty-five per cent of respondents disagreed that NFTs represent a long-term store of value; 26 per cent strongly disagreed, and 19 per cent somewhat disagreed. Thirty-eight per cent were confident in the long-term value of NFTs; nine per cent agreed strongly and 28 per cent agreed somewhat.

“Given the percentage of them that are literally a crypto-encoded URL pointing to a server, this doesn’t feel much more durable than any other short-term fad. But with larger players (like the NBA) involved, there’s some implied durability,” one subscriber wrote.

NFTs, one-of-a-kind digital assets stored and protected on blockchain technology, have exploded in popularity in recent months. A digital artwork by an artist known as Beeple sold for US$69 million at Christie’s. Jack Dorsey’s first tweet—“just setting up my twttr”—sold for US$2.9 million. The Associated Press was the first news organization to sell an NFT: an image of the electoral college map taken from space when the U.S. election was first called on the blockchain. Quartz and The New York Times have since followed suit, putting articles up for sale announcing their own sales.

Methodology

The Logic emailed subscribers a private link to an online survey on March 24, and the survey closed March 26. Respondents’ identities were kept anonymous and duplicates were removed as needed. Subscribers were asked whether they agree or disagree with the following statement: “Non-fungible tokens represent a long-term store of value.” Their choices were: “Strongly disagree,” “Somewhat disagree,” “Neither disagree nor agree,” “Somewhat agree,” “Strongly agree,” “I don’t know.” They were also asked, “Are you more likely to invest in digital currencies and tokens than you were a year ago?” Their choices were: “Yes,” “No,” “Neither yes nor no,” “I don’t know.”

For many subscribers, the long-term viability of the digital assets depends on what’s actually being sold. As one subscriber wrote, “Depends on what it is, what chain it is on and who is behind it.” For example, specific to artwork, several subscribers noted that value depends on its ability to be admired, which could be difficult to translate in the digital world. 

One subscriber wrote that since art is subjective, its value comes from “being able to show it off and the resulting status that confers.” However, NFT ownership might be similar, others said. As one subscriber wrote, “Digital assets have pride of ownership and if there is demand and desire to own, there is intrinsic value.” 

Other subscribers were more confident that the central premise behind NFTs—their authenticated uniqueness—creates demand. “Scarcity gives value. There is only one first tweet,” another said.

However, some respondents raised concerns about the risk of fraud eroding value. “Do not believe that non-fungible tokens can remain secure. History has shown that all electronic mediums are prone to hacking and this will be no exception,” one wrote.

While some subscribers see NFTs as a passing trend “like a baseball card or a Cabbage Patch doll,” or as a manifestation of “current market mania,” others suspect that early headline-grabbing iterations are more likely testing the technology and paving the way for widespread use in years to come.

“Eventually NFTs will be applied in ways, and to ideas and creations, that do hold value,” one wrote.

Meanwhile, a narrow majority of The Logic’s subscribers are warming to the idea of investing in digital currencies or tokens. Fifty-one per cent of survey respondents said they were more likely to invest than they were one year ago, while 28 per cent said they were not. 

“I’ve gone from ‘hard no’ to ‘I may dabble if interested in the specific subject matter,’ one wrote.

Several subscribers wrote that they had picked up digital assets in recent months, including one who said their “first foray” was the purchase of an NBA Top Shot pack. Another said that investments will become safer as cryptocurrencies become more accessible through traditional financial instruments like ETFs. Canadian companies recently began trading Bitcoin ETFs on the Toronto Stock Exchange, and have filed to trade Ethereum ETFs, as well.

“Every day that passes and [Bitcoin] and [Ethereum] and other digital currencies do not fall down to zero adds strength to the argument that the project will survive,” another subscriber wrote, adding that they separate the rise of NFTs from “other cases to be bullish on crypto.”

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Some subscribers who have held out said they’re concerned about regulatory and governance issues. Last week, an investigation by The Logic revealed that unregulated cryptocurrency exchanges are proliferating in Canada. Of more than 600 trading platforms identified, only one—Wealthsimple—was registered with securities regulators. The Ontario Securities Commission has since announced a regulatory crackdown on the industry.

Other indicators suggest subscribers are viewing blockchain-based companies more favourably. Dapper Labs, the Vancouver-based firm behind NBA Top Shot, saw a 15-point rise in subscriber sentiment this month, scoring 19 out of a possible 100 points, above an average score of 15 among all Canadian private tech companies.