With the prices of digital currencies and NFTs plummeting, BSV developer and thought leader Joshua Henslee shared his thoughts on the current situation, the supply and demand dynamics of the market, utility NFTs, and more.
NFTs in a high inflation economic environment
Henslee begins by pointing out the obvious; prices of just about everything in the ‘real world’ are rising rapidly, and people’s economic calculations have changed. He says it costs $40 to fill his car with gas these days, whereas it previously cost $25.
Obviously, in this situation, people have less disposable income to waste on worthless NFTs like Bored Apes. Inflationary pressures undoubtedly contribute to the cratering prices of digital currencies and art-based NFTs we’ve seen in recent months.
Supply, demand, and utility in the NFT market
Henslee compares NFTs to trading cards but points out that in most cases, there’s one fundamental difference—trading cards have inherent utility because they can always be used to play a game. He underscores that utility will be essential going forward and that NFTs that don’t provide it will likely become worthless.
Commenting on the supply and demand dynamics of NFT markets, Henslee reminds us that demand is reduced if the supply is too big or the price is too high. This can be fixed by reducing demand via burns, issuing fewer NFTs, or lowering prices to make them more attractive.
“People will buy them when the price is low enough,” Henslee says. He points to a price of 0.01 BSV or less to make NFTs truly attractive in the sense that most will buy them without a second thought because that’s such a small amount of money. The balance, he tells us, is making sure everyone has access, rewarding the buyers of the NFTs with a little something extra, and getting the supply right. He points to his own failure to get the supply right and how he has learned a lot from that experience.
“If you’re going to do this in an inflationary environment, both price and supply need to be lower,” he tells us.
Delighting NFT buyers and providing extra value
It seems that providing actual value is something the majority in the digital currency industry have a hard time grasping. Yet, Henslee rightly points out that it’s the key to success in the NFT space as much as anywhere else.
“When expectations are low and are exceeded, people get happy,” he tells us, noting that when holding NFTs gets you something extra such as special access or makes you part of something, it creates real value and utility. He sees the trend slowly changing as people wake up to the inherent worthlessness of many overpriced JPEGs and discover the true potential of NFTs.
Wrapping up, he tells us that providing value and letting the market determine prices is really all there is to it. He highlights the irony of minting NFTs just to benefit from a price pump. Doing so makes the project more likely to fail, whereas providing real value makes it more likely that the prices will actually appreciate.
Key takeaway: Utility is everything
It’s a message that both Joshua Henslee and others in the BSV ecosystem have been shouting from the rooftops for years, and now it’s finally starting to sink in; utility is the key and is the only thing that will survive in the long run.
Whereas the industry is full of schemers, scammers, and price pumpers, those who provide real value to buyers of any kind of token will succeed over a longer timeframe. With the astonishingly low transaction prices and on-chain storage on Bitcoin SV, we’re witnessing a wave of utility NFTs arrive on the scene. This will unlock the true potential of non-fungible tokens over the next few years.
Watch: The BSV Global Blockchain Convention presentation, Fabriik: Powering Markets for BSV, NFTs & Other Digital Assets
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