Is There Any Value in Holding a Bored Ape?

Collectible NFTs, like Bored Apes and CryptoPunks, are widely criticized for their complete lack of value and seemingly irrational valuations. Even though their true value is likely much lower than what they sell at, there is some merit to the argument that these NFTs have value. Let’s take a look at the idea of a collectible artwork NFT, why it has value, and what the future of these NFTs could look like.

NFTs initially exploded in popularity in 2017 with the release of two projects: Crypto Punks and Crypto Kitties. The Punks collection, which is still popular to this day, consists of 10,000 pixelated images of people, or Punks, and was the inspiration for ERC721 tokens which paved the way for future NFT projects. Crypto Kitties, created by the same team that would later create the Flow blockchain, was the first large-scale NFT project and allowed users to trade, breed, and interact with digital kittens. The Crypto Kitties project took the entire Ethereum ecosystem by storm and caused one of the first mass-blockchain congestion events that saw transaction fees reach absurd highs. 

These two projects paved the way for future NFT collections to be created. In the next couple of years, the infrastructure would be created on Ethereum to facilitate a mass market of NFT activity. This included the release of OpenSea in 2018, which is still the world’s largest NFT marketplace.

In 2020 and 2021, NFT projects reached a new level of mainstream popularity. Projects like Bored Ape Yacht Club and NBA Top Shot received lots of attention from traditional media outlets and celebrities, and copycat projects were selling at ridiculously high valuations. 

For many people, the idea of a random picture on the internet having any sort of value makes no sense, and they believe that the entire market is in a massive bubble. While it is definitely true that NFTs are overvalued, they do bring some value to their holders. Let’s take a look at the Bored Ape Yacht Club as a case study.

The Bored Ape collection consists of 10,000 randomly generated ape NFTs, each with a unique look and design. Holding an ape grants three main benefits. The first is access to members-only events like ApeFest, a multi-day event that took place in New York this past weekend. There, ape holders got free food, merchandise, and performances from artists like Snoop Dogg and Lil Baby. 

The second perk of holding an ape is the community of like-minded individuals that you join. Those that hold apes are automatically accepted into a community of people that can be used for networking and other opportunities. With celebrities like Post Malone, Jimmy Fallon, and Justin Bieber all being a part of the Bored Ape community, the ability for someone to be a part of that community carries some level of social value.

The final perk of owning a Bored Ape is the commercial licensing rights granted to the owner. With the popularity of Bored Apes, holders can sell the rights to use their image in all sorts of different media, like TV shows, music videos, and even merchandise. This makes the ape a generator of passive income, assuming people actually want to use it in their media. 

With all of these factors considered, it is easy to see why some people truly believe in the potential of NFTs to be a massive asset class. At the same time, the market is clearly overvalued, and the benefit of holding an ape today is nowhere near the $100,000 floor price. As the market continues to correct, it is likely that these NFTs will fall to a more fair valuation that properly reflects the benefits of owning one.

By Lincoln Murr

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