Don’t know what an NFT is? Watch this 5-minute video for a quick rundown: https://youtu.be/UldiCsS6a1U
The surge in popularity of NFTs and cryptocurrencies this year has made everyone want to get involved, including celebrities, who are minting their own NFTs and taking sponsorships from cryptocurrency tokens. While the NFTs may remain prevalent, the token endorsements will end quickly as the market becomes more regulated.
In late 2020 and early 2021, a massive wave of interest coming from the general public hit the cryptocurrency space. The majority of this mania was directed at NFTs, which saw a huge surge in popularity and led to countless artworks, trading cards, and images being minted, and every creator hoped that their NFT would be one of the lucky few to go for millions of dollars on an NFT marketplace.
Some of the world’s biggest celebrities, including Snoop Dogg, Rob Gronkowski, and Lindsay Lohan have created their own NFTs, which have sold for hundreds of thousands of dollars each. This represents a significant movement for the cryptocurrency space, as something related to cryptocurrencies is finally becoming mainstream.
Even though many criticize the celebrity NFTs as a blatant cash grab, they are positive for cryptocurrencies and blockchain as a whole, and they will not be disappearing into obscurity anytime soon.
One of the biggest reasons that celebrities will continue to be involved with NFTs is due to the potential profits. A typical NFT on Ethereum costs a dollar or two to make, but could bring in hundreds of thousands for a celebrity or influencer. These types of profit margins are unheard of for these celebrities, who may get as much from a single NFT sale as they would from an album or movie release. As long as the profits they make are greater than the cost to mint, celebrities and their managers will continue to reap the rewards.
Furthermore, due to the newfound popularity of NFTs and NFT marketplaces, millions of users have begun flocking to crypto in order to buy their favorite celebrities’ NFTs. As part of the process, they have to buy Ethereum, set up a MetaMask account, and interact with smart contracts, all things that they would not do otherwise. Whether they realize it or not, they are now part of the DeFi ecosystem, and will eventually find their way to other decentralized applications, which will further contribute to DeFi’s proliferation throughout our society.
A final reason for the continued prevalence of celebrity NFTs is due to their simplicity, novelty, and general “cool factor” in the eyes of the public. For example, Major League Baseball player Justin Turner gave every fan who voted for him to be a player in the all star game a free NFT as a thank you. This type of incentive for fans to interact with their favorite athletes and stars is here to stay. It is simple, both for Turner and his fans, while also being a unique item that holds some significance, even if it does not hold monetary value.
Although celebrities will continue to mint NFTs and be a part of the ecosystem, there is one area of cryptocurrencies that they will not stay in for much longer: token endorsements.
Recently, many scam projects have begun hiring popular celebrities to promote their cryptocurrencies on Twitter. Whether or not the celebrities know that they are promoting scam is unknown, but this type of activity is highly malicious and typically results in a celebrity’s fans losing their money to these projects.
For example, Kim Kardashian and boxer Floyd Mayweather were recently hired to promote a coin called Ethereum Max, which has a supply of 2 quadrillion tokens and uses the Ethereum name in order to dupe unknowing investors into thinking that they are buying Ethereum. The coin is down over 80% since these celebrities got involved.
Not only are these endorsements unethical, but they are also potentially illegal. In most jurisdictions, giving financial advice without the proper licensing is illegal, and it could be argued that these celebrities are giving financial advice to their fans. In fact, Floyd Mayweather was sued for fraud after promoting the scamcoin Stox during the last bullrun. Although the case was dismissed, it sends the important message that even though cryptocurrencies are unregulated does not mean that scamming is legal. There is a reason that celebrities are not advertising traditional stocks, so it is likely that advertising cryptocurrencies will end as soon as regulation is created for the market.
At first glance, it may seem like celebrity NFTs contribute nothing to the overall cryptocurrency market, but this is not the case. They offer benefits to celebrities as a cheap way to make money or reward their fans, and offer fans the opportunity to own a unique item. And, most importantly, it furthers the proliferation and use of blockchain technology, which will foster growth and innovation throughout the ecosystem.
By Lincoln Murr