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Some few years back, one of the most awaited events in the cryptosphere was a hard fork because it meant people were to get free coins. Richard Heart is forking Ethereum and doing the biggest airdrop ever on PulseChain. You will get free copies of all your ERC-20 tokens and NFTs on a faster and cheaper chain. What effect it will have on the value of tokens and NFTs is a guess. Let’s dive into some scenarios.
What is an NFT
NFT is a non fungible token. It means that it is unique and non interchangeable or replaceable. Its most known use is that of a collectible like art, music or game items. It has a unique contract address being a certificate of authenticity. This address is nothing else than a digital proof that a certain file has been stored in a particular location of the blockchain at a specific point in time. No other NFT can have that same address. The whole NFT industry relies on the premise of verifiable authenticity. Even if someone creates tens of copies of that same NFT you know only yours is the true one because no other NFT can get created at that specific block height in time.
Richard Heart is forking Ethereum
What if someone forked Ethereum and created an exact copy of your multimillion CryptoPunk or of a Bored Ape? What if someone else could prove the ownership of a CryptoPunk with the same address? Would your NFT maintain its value or would it drop because now there are two exact copies?
Some of these questions are to be asked because PulseChain is doing just that. PulsChain, the Ethereum hard fork, will give you a copy of your CryptoPunk with the same address you had on Ethereum. The difference is that now your NFT runs on a chain with 3 seconds block time instead of 15 like on Ethereum and that it uses PoSA consensus making PulseChain a faster and cheaper chain. You will no longer have to pay $1500 for selling an NFT, and you will no longer have pending transactions clogging your account. You will be able to trade your NFT for next to nothing in a matter of seconds.
But now, you can sell that PulseChain version NFT while still keeping the Ethereum version NFT. What? Is it possible to sell your CryptoPunk twice? Yes, it will be possible. Question is what value that CryptoPunk will have on PulseChain and if it will really be the same CryptoPunk.
What happens to NFTs after PulseChain mainnet release
When PulseChain launches all tokens will be worth zero but, as soon as trading starts, these tokens will start gaining value. It’s difficult to say if a PulseChain version of a CryptoPunk #”5822” will arrive at its Ethereum value of $23.58M. It is doubtful it will, but it is likely that speed and low cost of transactions will make PulseChain the preferred platform to trade their NFTs.
There are few possible outcomes when it comes to NFTs value after the fork:
- All NFTs on both chains will lose value, and they will trade at low prices,
- NFTs on PulseChain will be worth nothing because they will be regarded as worthless copies,
- NFTs on Ethereum will lose value and gain on PulseChain because now they trade on a high performance chain with low fees,
- The price of NFTs will balance out to bring them to the middle ground,
- Some NFTs will gain value because owners will make burn parties during which they will burn their Ethereum versions to increase the value of those on PulseChain.
How NFTs gain value
NFTs gain value because of the combination of scarcity, visual appeal, utility, creator’s fame, community, and the economics of royalties.
For example, Beeple’s “The First 5000 Days” sold for $69 million, is a collage of art pieces. It has visual appeal, it is scarce, and it is a cumulative of 13 years of artistic effort.
On the other side we have CryptoPunks selling for $28 million. Barely anyone can say they are beautiful, but they have appeal because they are rare and because they may express a certain type of traits of character.
It is important to understand what makes an NFT valuable so one can predict its value after its copy has been released on PulseChain.
Art is tricky. You never know when a painting becomes art or why people pay so much for certain pieces of splashed paint, but they do. Same with NFTs.
Other than art, there are also other kinds of NFTs:
- digital identity,
- financial (bonds, stakes, CFDs, etc.)
- tickets, etc.
Financial NFTs like Hedron have different price mechanics than art NFTs. Hedron HSIs depend on HEX price. The assumption is that if all the Ethereum HEX (eHEX) gets bridged to PulseChain and the Original Address (OA) scoops it all up in PulseX, the value of HSIs would not change much.
Does PulseChain NFT is same as Ethereum NFT
Although PulseChain NFTs have the same contract address, data, and transaction history, they are not exactly the same thing because they live on different networks, so one cannot be redeemable for another. If you go to a place and try to access a venue you have a membership for, you will not get in with your PulseChain NFT, but if you wrap it and bridge to PulseChain, then yes.
Their redeemability depends on NFT contract developers/creators. If developers/creators decide to support PulseChain by creating a front-end then the users will be able to access the features and functions of that smart contract. The issuers and/or developers would thus allow the user to use the PulseChain version to represent a valid membership, tickets, digital identity, VIP perks, and financial instruments. But it is up to the contract creator to make that decision.
Where to trade NFTs on PulseChain
At launch, PulseChain will already have some NFT marketplaces. NFTonPulse created by the HowToPulse team, Mintra, Pulseverse, Powercity, and a fork of OpenSea Richard Heart talked about are some of the example NFT marketplaces.
Hedron has its dedicated HEXmarket where users will be able to trade tokenized HEX stakes on PulseChain.
My guess is that some people will start using PulseChain to conduct their day-to-day transactions for a next-to-nothing fee. Once Ethereum gets clogged again and gas fees spike to astronomical levels, PulseChain may see an influx of users who will have to do nothing else but change their RPC settings in Metamask. On PulseChain, they will find all their tokens ready to be used. We do not know yet what their value will be, but AMM bots and arbitrage should level up the price while different categories of NFTs will follow their own path. Until then, don’t try buying any Pulse because you can’t. You’ll be able to do this on PulseX when the chain launches.
Those who invest in cryptocurrencies and NFTs should be prepared to lose all their money. Cryptos can see large increases in price as well and large drawdowns, and some NFTs and cryptos never recover their value. Stay safe out there and DYOR.