- how NFT investors tick
- how much they have already spend on NFTs
- why they spend money in the space and
- how successful they have been so far.
This article will summarizes the most important findings of part 1 of my research.
In a 2nd step, I intend to deep-dive on several questions, such as for example what NFT investors look for in an NFT project, what convinces them to buy into a project or how the project team can successfully keep the holder´s motivation and commitment high.
Executive Summary
73 NFT investors have completed the survey. As part of these results, one can deduce that the average NFT investor is:
- male
- aged 18 to 40
- from the US
- has either less than 10 or more than 50 NFTs
- started his NFT journey within the last 12 months
- has spent less than 5k USD on NFTs
- regards NFTs as an investment vehicle for fun and experimentation
- uses Opensea
- has also invested into cryptocurrencies and stocks
- started investing within the last 10 years
- has either less than 5% or more than 40% of their portfolio allocated in NFTs
- has taken profits of less than 5k USD
The survey in detail
In total 103 answered the survey, whereas 73 of them have already invested in NFTs.
How many, How long, How much…?
Most NFT investors (37%) hold less than 10 NFTs, whereas the 2nd largest group (24,7%) holds more than 50 NFTs. Overall, the number of NFT that are being held is spread out quite nicely among the different groups. Of course, the value of respective NFTs is not taken into account with this question. It could be that someone has one NFT worth 1 million dollar whereas others have 100 NFTs worth almost nothing. Quality is better than quantity in that respect.
With the boom of NFTs in 2021, one can also see that the survey participants have mostly been in the NFT space for up to 9 months (53,4%). If we increase that cap to 12 months, we see that 68,5% have become active in the past 12 months in the NFT space.
One can suggest that if many survey participants have been in the NFT space for less than a year, the amount spent on NFTs also roams rather at the lower end of the spectrum. The next graph shows exactly that. 57,5% of people have spend 5k$ or less on NFTs. Interestingly, there is also rather a big group (20,5%) of people that have spent more than 20k$ on NFTs. My personal belief is that there is a small % of NFT investors that account for a large amount of the transactions and value within the NFT space (20/80 rule).
Looking forward to 2022, it looks like the survey participants intend to spend a similar amount of money on NFTs as in 2021 with a slight tendency towards increasing the investment in 2022. As a result, one could argue that these NFT investors see value in their investments, which is why they intend to up their investment a bit. Instead of 57,5% only 48% intend to spend less than 5k$ on NFTs.
Where do you buy?
The dominance of Opensea has not yet been broken according to the answers given in the survey with the vast majority using Opensea. Notable mention is that Looksrare has gained a huge momentum of popularity.
Interestingly, 21 different marketplaces where mentioned just one time, many of whom I have never heard before.
Why buy NFTs?
An overwhelming majority of people regard NFTs as an investment vehicle that brings along fun and experimentation with a new technology. 2nd tier reasons for buying NFTs is the art & social aspect of NFTs.
Investment history
The phrase “I have been down the rabbit hole” is very commonly used in the NFT space. Usually, it refers to someone spending a lot of time at once in the space. From my experience, the investment history of each person is different, but usually they start at a certain place or within a certain category before they move on to other categories. In my own example, I started with ETFs moved to stocks, to crypto and then NFTs. Hence, it is worth asking how the journey of other market participants looks like.
First, I wanted to understand better, which kind of investments a typical NFT investor has made besides NFTs. A majority of survey participants has invested in cryptocurrencies and stocks.
When asked about when people generally started investing, one can see that it seems to be that the generation 20-40 is mostly active within the NFT space, as most of them started investing in between 2013 and 2020.
The majority of people started their investment journey in stocks. Many, however, skipped this step and directly started to invest in cryptocurrencies. Only a small amount of people directly went to NFTs, real estate or other type of investment categories.
Portfolio management
Quite interesting is also the risk tolerance of people in combination with the portfolio allocated into specific investment categories. Interestingly, there are 2 groups with a completely different NFT allocation within their portfolio. First, there are 37% of people who have allocated less than 5% of their portfolio to NFTs. This seems to be a good and safe approach to NFTs. On the other hand, there is a group of 27,4% that have allocated more than 40% to NFTs. I assume there are different ways to look at this. On the one hand, they could have overleveraged themselves into NFTs or they have invested into a few very successful NFTs (e.g. BAYC) which lead to an increased exposure to NFTs.
The term “HODL” is very prominent within the NFT space. Interestingly, that does not always seem to be the case for NFTs. 65,8% of holders have already realized profits from their investments with a big majority of 42,9% having cashed out less than 5k USD, followed by 5 to 10 k USD (18.4%) and more than 30k USD (14,3%).
One product/service that the NFT space needs
We are all aware that the Crypto & NFT space is still young and certain developments still have to be made. Hence, I asked the questions “What is one product/service that the NFT space needs?” A lot of good ideas were mentioned (as visualized in the word cloud). When categorized into clusters, the following 9 topics were wished into existence most often:
Security: There are many frauds, scams in the Web3 and NFT space in particular. Users would love to use services that protect them from scam projects, scam accounts etc.
Education: Hand in hand with security goes education. The NFT space needs learning hubs that educate users not to fall victim to scams, that teach them more about how NFTs work, how NFTs become valuable and how NFTs will change different industries (amongst other topics).
Stability: No Brokensea anymore, better platforms than discord for coordination of projects. These are all wishes that would contribute to more stability within the NFT space.
Legitimate NFT use cases (real estate, gold, music, …): IMO I agree with this wish. The NFT market has not yet found the right use cases for NFTs. As a result, most NFT projects will be worth zero and only few will succeed. In the coming years, however, the wheat from the chaff will be separated and the market will collectively agree on the best use cases.
Gas fees: paying gas fees is like throwing money down the bin. I wonder if the gas fees issue will lead to increase usage of other blockchains like polygon or Solana by NFT investors.
UX (wallet): In order for web 3 to reach mass market capability, user experience has to be better. Centralized exchanges like Binance or Coinbase already are a start, but we need easy-of-use also for decentralized applications especially in the NFT market.
Comfortability: The NFT space can be a wild wild west. Typical source of information is Twitter and Discord. With the amount of projects popping up it is difficult to follow all updates. Hence, a “hootsuite” for NFT and web 3 related topics would be a wish of several users that increase the comfortability of being in the space.
No Code: Programmers are a highly demanded ressource. As with the development of Wordpress, Shopify or other modular building blocks, the estimation of some users was that Web 3 will also provide similar tools, where users can build their own applications & realize their own NFT projects.
Regulation: A well thought-through regulative approach would definitely help the NFT space. As of now, the legal status of NFTs is still undetermined in many regions, also allowing scams to blossom.
Demographics
The vast majority of participants to this survey is between 18 and 40 years old (80,6%), they are mostly male (89%) and spread equally across different regions.
Conclusion
The goal of this research was to give insights into how NFT investors tick. In summary, we learnt that average NFT investor is:
- male
- aged 18 to 40
- from the US
- has either less than 10 or more than 50 NFTs
- started his NFT journey within the last 12 months
- has spent less than 5k USD on NFTs
- regards NFTs as an investment vehicle for fun and experimentation
- uses Opensea
- has also invested into cryptocurrencies and stocks
- started investing within the last 10 years
- has either less than 5% or more than 40% of their portfolio allocated in NFTs
- has taken profits of less than 5k USD
All in all, I hope that this article gives valueable insighs into how an NFT investor in 2022 ticks.
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