“Expect to lose everything”: Blockchain expert Christian Ng speaks on how to think about NFTs

“I think NFTs in the way now are a great way to just bootstrap communities,” said Ng, adding that “people are participating in tokens because they want to be part of a community as well.”

What are NFTs, again?

• Non Fungible Tokens, or NFTs, are typically used to describe pieces of art traded using the same kind of blockchain technology that cryptocurrencies use.

• But, the difference between an NFT and a traditional cryptocurrency is that the price of one unit of cryptocurrency is equal to any other single unit of that currency. So, for example, If a Bitcoin is US$40,000, then regardless of who owns it, it’ll all be worth the same amount.

• But an NFT is a single unit meaning that its price goes up and down by itself and isn’t tied to anything else. It’s also entirely unique, so what that means is that one NFT can’t be replaced with anything else.

How exactly are cryptocurrencies and NFTs related?

• From a technical perspective, cryptocurrencies and NFTs are related because they use the same blockchain technology when they’re bought and sold.

• But according to Christian Ng, the principal at GBV Capital, a blockchain-focused investment company in Hong Kong, there’s another big thing they have in common.

• “I think NFTs in the way now are a great way to just bootstrap communities,” said Ng, adding that “people are participating in tokens because they want to be part of a community as well.”

• “If you think about it, Bitcoin can be thought as the first NFT because there’s 21 million of it, and then as long as you one hold one Bitcoin, I guess people would be like, ‘Oh, you know, I’m part of this Bitcoin NFT community.’”

• But Ng also added that there are some notable differences between the two.

• “The difference is, I guess [NFT’s] liquidity issue,” he said. “It’s more of a closed off like community. So people feel more part of it. Where the token, like a cryptocurrency token, I think it’s just more of a wider range.”

What do we know about how the NFT industry works?

• According to Ng, there are really three main components of the industry, all of which fuel it.

• “First is traditional art,” said Ng, “artists exploring the idea of digital art so they can make a physical copy or just to make a digital copy.”

• Leaders in this part of the industry are artists such as Beeple, who sold a digital piece of art earlier this year for nearly US$70 million.

• “Second, is being able to create like, grassroots communities out of a limited collection of 10,000.” This category tends to be more the realm of collectors’ items than artwork.

• “And third is through like, the metaverse and the video game aspect,” he said.

• “The Metaverse, and games actually triggered another narrative for NFTs as well to think, ‘Oh, how do we use digital assets in a digital economy such as video games?’ I think it’s the easiest adoption, in terms of the digital economy.”

What should you approach investing in NFTs?

• According to Ng, “whenever you put money into NFTs, expect to lose everything.”

• “I would say, to think of it as just buying a piece of art. Worst case scenario that is not worth anything, at least have a piece of art, right?”

• Ng told a story of his own experience with investing in NFTs. “I bought two NFTs for like 200 bucks for my birthday in April, and then people thought I was crazy. Like, ‘Why would you spend like $400 US on a JPEG?’”

• “And then slowly when I was part of this Discord and participating in all these conversations, [and] the community is now becoming larger.”

• Ng explained that he bought NFTs for the fun of it, explaining that he also liked the artwork, and watching the community grow from its grassroots stage.

• But the investment still paid off for Ng, who sold one of the two NFTs for US$100,000.

What to watch for next?

• The first big thing Ng talked about was the “blue chips” in NFTs. These are some of the bigger NFT lines like Cryptopunks, Art Blocks and Bored Apes, which tend to be a little more stable.

• “The reason why I say this is because there’s so much capital deployed in these few assets, that let’s say the market crashes, we’re gonna see a correction. But every time when things crash [and] that price corrects, I believe that there’s a stronger validation that these things might be potential stores of value.”

• “On the other hand,” he said, “you have all these community-driven tokens. I think it’s gonna be validated because you can identify these people are actually passionate and actively engaged in making this a success.”

• Ng also admitted that some of it is unpredictable at this point. “You never know what’s gonna happen in the future too. Maybe some new token comes out and it’s decided to be adopted for a lot of other different things.”

• This unpredictability goes in line with Ng’s main investing advice when it comes to NFTs, which is to just try things and see what works for you.

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