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Well, unleast you were practicing yoga in a desert during the last few months, you may have already heard of the term
How did it start? It began with some cool Play 2 Earn projects, then started to gain the interest of the mainstream public. Then some guy decided to change the name of its company into "Meta" and then ... boom! Every coin and token that was slightly related to P2E or NFT soared to the moon.
So far, so good.
The question that everyone of us is asking to herself, while staring in religious silence in front of all those green candles is: am I watching a ? I have bags of xxxCoolNFTProject and xxxShitRPGWhichFarmsCoins. What do I hold? The new Pets.com? Or the new Microsoft?
The reference to the Dot.com bubble is not casual. If you are too young and in 1999 you were just an Axie egg waiting to hatch, you must be informed that there was a situation really similar to the crypto market of today. It was related to stocks dealing with internet and e-commerce. There were some strong projects which defined the fundamentals, and a galaxy of copycats which tried to scalp little slices of the market. Sounds familiar? Well, because it is.
That galaxy to inifnite and then collapsed, destroying fortunes. But, as history teached us, the remained valid and it changed the world in which we live. In 1999 WWW was there to stay. Are cryptocurrencies too?
Well, some months ago you could have answered this question also with a: "No". Think honestly: there was a bear market, blood on every graphic, margin calls. The party seemed over. Then, someone started talking about NFTs. Those billionaire JPEG divided the influencers' opinion, but then everyone understood that it could be the right idea to restart the music and give the wheel another spin
If this may seem cynical, we can sit and do some philosophy about the evolution of the videogame industry, or the need of a form of value investing alternative to the classic art market.
Fact is: the effect was immediate. The idea of NFT become mainstream and now everyone knows what is happened.
So, we come back to the core problem: the bubble.
How can one distinguish valid projects from a potential rug pulls?
Well, first of all I think that you have to like the project. Watch Axie: nice graphics, cute character design, direction, strong tokenomics, community. Does the amazing new project you just discovered on Coinmarketcap have these features? If the answer is yes you may have stumbled on a rare gem. If the graphic of the game resembles your father's Atari 2600, well, maybe they need some more time to develop the idea.
Second criteria may be to look for solid backup: who is the software house actually working on the project? Is it backed by Funds or Exchanges? Nothing against small teams working in garages (all the best things came from there), but usually before appealing the mainstream some angel has to support them.
Third criteria is the community. How behave the people following the project? If you subscribe to their Discord just to find continuos waves of spam, maybe it's not the right place to be. Solid projects tend to build very soon a solid community around them. Look for people who make constructive criticism, enaged feedback, and most of all that are having fun in interacting with the project, not only for giveaways.
But, most important of all, in my opinion is: try the project. Use their service. Try to mint an NFT on their portal. How was your experience? A hell of fees and denied transactions? Or it was fun and entertaining? Because every other person will have that experience and will decide the future of that project judging on that.
Take in account also that the whole NFT market, being an artistic place, is subject to an emotional bias. So keep open minded when you value a project.
This is not financial advising. The author is invested in many projects related to NFT, P2E and Metaverse.
