Investor Gary Vaynerchuk warns of impending 'NFT winter' doom

·Senior Writer
·3-min read

Non-fungible tokens, or NFTs, have already been all the rage in 2021 among influencers looking to monetize their fan bases, but now one well-known investor is issuing a warning about NFTs — along with an NFT collection of his own.

Serial entrepreneur and early Facebook and Coinbase investor Gary Vaynerchuk announced the launch of his VeeFriends NFT project Wednesday, featuring more than 10,000 unique digital character tokens that also give owners access to various real-life events like Vaynerchuk's future annual VeeCon business conferences and VIP access. The NFTs are set to be auctioned off to winning bidders with transactions settled in cryptocurrency ether (ETH-USD). 

The real-life utility that the tokens carry is an interesting break from other digital art NFTs that offer no such benefit, and follows the example recently set by the Golden State Warriors. The team auctioned off the NBA's first NFTs last weekend and sold a digital Championship ring NFT that was accompanied by a unique physical ring all for a price of $871,581.

But as Vaynerchuk warned in an interview with Yahoo Finance Wednesday, a rising fear of missing out and speculation when it comes to NFTs could cause some froth in the market to boil over.

Gary Vaynerchuk holds a drawing of one of the character tokens featured in his new NFT project VeeFriends. (Source: VeeFriends)
Gary Vaynerchuk holds a drawing of one of the character tokens featured in his new NFT project VeeFriends. (Source: VeeFriends)

"There is an absolute NFT winter coming," he said, harkening back to the so-called "crypto winter" of 2018 that featured an 80% drop in the price of bitcoin. "There are too many projects that are completely built with no intent other than 'I am a celebrity, I am intellectual property I want money as fast as possible.'"

At best, some NFT projects with no real-life component, like digital art pieces, might derive value from the idea of manufactured scarcity: that there is only a pre-determined and limited number of whatever is being minted to ever be put on a given platform, and thus, could be sold later at a higher price to someone else. At worst, it's an opportunity for people with large followings to get rich quick off their fans with the deepest pockets.

"Unfortunately, when there’s new things that happen the bad guys come out just as much as the good guys come out," Vaynerchuk said. "Before you buy an NFT, spend 20, 30 hours … get educated, understand what you’re doing. This fear of missing out … is driving people into silliness.”

For better or for worse, the NFT trend has showed no signs of slowing, with more athletes increasingly looking at ways to get involved. As Vaynerchuk sees it, that could be a problem if a fear of missing out continues to push people to pay beyond fair value.

In response to a broader question about which projects in the space have him worried — at a time when cryptocurrency speculation has pushed Dogecoin up more than 10,000% in just the last four months — Vaynerchuk simply replied, "most."

Zack Guzman is an anchor for Yahoo Finance Live as well as a senior writer covering entrepreneurship, crypto, cannabis, startups, and breaking news at Yahoo Finance. Follow him on Twitter @zGuz.

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