about 2 years ago • 1 min
Non-fungible tokens (NFTs), blockchain-based certificates of ownership, are the crypto world’s breakthrough product of 2021. But a study from data firm Chainalysis finds that only insiders are likely to make money trading them.
Most new NFT projects build hype on social media or in Discord chat rooms before releasing their digital items – usually artworks – into the world. And many will reward early adopters who help build that anticipation by pre-approving purchases from their crypto wallets, often at a lower price – a process known as “whitelisting”.
The chart shows the return on investment (ROI) for NFT purchases that were then sold on to someone else in the market, with an ROI less than 1 indicating the token was sold at a loss. On average, users who made the whitelist and went on to sell their newly-minted NFTs made a profit 76% of the time, whereas non-whitelisted buyers profited just 21% of the time.
“Whitelisting provides a significant financial reward for those who play a role in an NFT project’s success by seeding its early community growth efforts,” Chainalysis wrote in the report. “However, if you’re not on the whitelist, it’s significantly harder to turn a profit after buying a newly-minted NFT.”
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