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Exclusive Interview with an Anonymous Whale: Owning 210,000 NFTs! In-depth Understanding of the Investment Logic Behind Digital Art Pieces

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Exclusive Interview with an Anonymous Whale: Owning 210,000 NFTs! In-depth Understanding of the Investment Logic Behind Digital Art Pieces

WhaleShark believes there are still plenty of investment opportunities, even for beginners to get involved.

(This article is authorized to be reprinted from BlockBeats, original title "WhaleShark Interview: The Whale Who Bought 210,000 NFTs Teaches You How to Invest in NFTs" Original article here)

Are you thinking about buying some NFTs to play around with? Or have you already started considering investing in NFTs? Or even though you still can't understand why a digital image can be sold for a whopping $69 million, but you are still open-minded about it, have done your homework, and believe that the returns from investing in NFTs outweigh the risks? Or maybe you don't mind losing this money, so you don't care that much?

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Disclaimer: The following content is not intended as investment advice. Investing in NFTs or any crypto project carries various risks and could result in the loss of all your assets. Please proceed with caution.

In this somewhat unfamiliar NFT new world, you need a guide to lead the way for you.

Introduction to WhaleShark

WhaleShark is actually a pseudonym for this individual, who is 38 years old, from the UK, and currently residing in Hong Kong. Notably, he owns as many as 210,000 NFTs. His NFT collection's total value may rank him as the top collector globally, possibly second or third, but he is confident he can make it to the top five, and he willingly underwent an independent audit by Nonfungible.com.

WhaleShark is very passionate about helping newcomers understand the NFT space. He has assisted the likes of Paris Hilton. "I simply helped Paris and her fiancé Carter Reum board the NFT ship and gain a deeper understanding of NFTs," WhaleShark said. "She was very enthusiastic, very excited, and she already had a good understanding of NFTs." (Recently, Paris Hilton announced on Twitter that she is "ready to dominate the NFT space.")

You might ask, "What if I'm not affluent?" Not to worry, WhaleShark is here to help. He has established a community focused on NFTs called "WHALE," with a Discord group boasting over 10,000 members, and they have issued a social token, $WHALE, with a diluted market value reaching $265 million.

The token is backed by Whale's treasury value, aiming to allow people to invest in NFTs without spending millions. (In a previous Medium article, WhaleShark mentioned donating a portion of $WHALE tokens to charity.)

"I've always wanted to be an art collector because I love art," WhaleShark said. "But I didn't dare to enter the traditional art collecting field because the barriers to entry are too high. The traditional art world is daunting, opaque, and somewhat elitist. But the 'crypto art' space is something I can grasp."

A few weeks ago, I had my first conversation with WhaleShark to understand his views on the entire NFT space. Now I want to delve deeper. There are many potential investors curious about NFTs eager for guidance. What advice does WhaleShark offer them?

WhaleShark shares some good news and some bad news for these potential NFT collectors. The bad news is: he believes that currently, "99.99%" of NFT projects will fail. So, maybe you shouldn't max out your credit card to buy a pixelated picture.

So, what's the good news? He says, "I think it's absolutely not too late to enter the NFT space." WhaleShark believes there are still plenty of investment opportunities available, even for newcomers. WhaleShark provides some rational, practical advice (such as a detailed Twitter follow list) to help those interested in entering the NFT space quickly, build their investment decision framework, and ensure their digital collections are not scammed.

Jeff: Suppose someone wants to start investing in NFTs, what should they do first?

WhaleShark: First, they should understand what NFTs are and how they are changing the ownership and management of digital assets. You can watch some videos on YouTube for a brief introduction to NFTs, including what NFTs are, how to use MetaMask, how to mint, how to purchase, etc.

Jeff: Let's continue. For example, this person has mastered the basics, what should be the next step?

WhaleShark: The second thing is to make sure they use Twitter. While Telegram is a common social platform in the crypto and DeFi space, Twitter is still the main platform for the NFT space. Start using Twitter and follow prominent collectors, famous creators, and some notable projects.

Jeff: Which accounts would you focus on?

WhaleShark: There are several categories. The first is informational: nonfungible.com, L’Atelier, DCL Blogger, and Andrew Steinwold. As for projects, it mainly depends on your interests, but some key projects to watch include Gods Unchained, MakersPlace, Known Origin, Super Rare, Nifty Gateway, Sandbox, Crypto Voxels, Decentraland.

Next are some renowned artists that you must follow, such as Trevor Jones, Pak, and Xcopy. They not only discuss their own artwork on Twitter but also talk about the health of the NFT space because they are integrated into the ecosystem. Also, in terms of collectors, you must follow individuals like MoCa, Pranksy, myself, Gary Vee, Jamie Burke.

If you follow them and genuinely engage with their posts every day, you will quickly immerse yourself in the NFT space.

Jeff: What's the next step after following these NFT-related Twitter accounts?

WhaleShark: I believe people should listen to some NFT podcasts while working. I highly recommend Andersen Steinwold's "Zima Red," NonFunGerbils' "NonFunGerbils," and "The Matthew and Rizzle Show."

DCL Blogger also has a podcast and a YouTube channel. Additionally, "The First Mint" is an amazing podcast about NBA Top Shot, rich in content, often hitting the nail on the head and very objective. Also, Jamie Burke's "Outlier Ventures."

Jeff: Do they need to join some Discord groups as well?

WhaleShark: Essentially, joining the two largest NFT Discord groups in this space can be very helpful. The largest is Whale, note: this is a community founded by Whale Shark and currently has over 10,700 members. The other group is TokenSmart.

Jeff: So, if someone says, 'Okay, I now fully understand NFTs, I want to collect, I want to invest. How can I do this without losing? What's the smart way?' I guess it's not as simple as 'just buy what you think is cool,' right?

WhaleShark: As I've mentioned on Twitter, one thing to bear in mind is that 99.99% of the NFT projects existing today will have no commercial viability once mainstream resources flood in. So, as you said, investing in NFTs truly requires caution, careful analysis of their intentions in entering the NFT space, what they want to collect, etc.

Right now, I think they can be divided into two categories: true collectors who collect things simply because they love them, and investors who may collect things they like for the long term but also have the additional goal of long-term profit. But I believe the most important aspect of collecting is 'If I don't love it, I don't collect it.'

Jeff: Let's temporarily set aside 'collectors' and focus solely on 'investors.' What strategies do you commonly use to evaluate an NFT project?

WhaleShark: In a project, the first thing I look at is whether there is a parallel concept drawn from traditional collectibles and digital collectibles. I want to ensure that digital collectibles have a historical provenance, and the value of physical collectibles is also being upgraded.

Jeff: Interesting. Can you give an example?

WhaleShark: Take sneakers, for example. In recent years, there has been a craze for sneakers. This makes me very optimistic about digital sneakers that can be worn in the Metaverse, such as RTFKT. Let's shift our focus to digital sports collectible cards, an area that has seen a resurgence in the traditional world. Digital collectible cards can be held for 10, 20, 50, or even 100 years, and their value will continue to appreciate. Hence, NBA Top Shot bringing traditional collectibles into the digital realm makes me very bullish about it.

DJ 3lau, also known as Justin Blau, on Randall's Island in New York City. Brian Killian/Getty Images

Jeff: Understood. What's the second thing you do?

WhaleShark: The second thing is the team. A brilliant idea can be hindered by a bad team, but a bad idea can be elevated by an excellent team. Whenever I invest in a project, I carefully examine the founders and team, understanding their professional knowledge, professional spirit, past performance, and whether they can steer the project in the right direction.

Jeff: And the third thing?

WhaleShark: The third thing is the nature and quality of the NFT. I believe some people take shortcuts with their work, merely tokenizing 2D pieces without any special features. I usually don't invest in these.

You really look forward to seeing high-quality projects that fully leverage the potential of the digital canvas, bringing collectibles into the digital age. Similarly, we will see many mainstream projects enter this space, but only those of truly high quality will succeed.

Jeff: In your eyes, which projects have fully leveraged the potential of the digital canvas?

WhaleShark: The most famous example is NBA Top Shot. Its production team didn't just take a 2D player card, scan it, and send it out; on the contrary, they created 3D works. These works include all the information about that Moment, and they didn't just use a static image but tokenized a video.

Jeff: What else do you focus on?

WhaleShark: Before investing, the last thing I focus on is funding, something many people overlook. In short, I prefer to invest in projects supported by strong investors and robust funding lines.

In the NFT space, a project's rise and fall can be swift. Projects with substantial funding that can maintain resilience throughout a bear market are the ones that can thrive in a bull market, and once a company goes bankrupt, it's game over.

However, I've found that projects with solid funding and the ability to remain flexible throughout the entire bear market are not only most likely to survive during the bear market but also to build a massive following.

Jeff: Which categories of NFTs do you particularly favor?

WhaleShark: I have always believed that crypto art will be the first to break out. Over the past two years, I have been promoting this on Twitter. So once people own crypto art or digital artworks, I believe they will look for places to showcase these digital artworks.

Currently, everyone can display on their screens, and each person uses three to seven screens daily, but it's still limited, right?

Jeff: Watching art on a phone is not ideal.

WhaleShark: You are still limited by those screens. People who collect 10 pieces of art, 20 pieces, 100 pieces, they will want a place to showcase all their collections. As far as I know, the only place that can do this today is the Metaverse. So I think we need to prepare for the vibrant development of the Metaverse, which will evolve very rapidly. My primary bet is on Cryptovoxels because many artists naturally like this platform due to its ease of use, and I believe the Metaverse is the next direction for development.

Jeff: What other types of NFTs do you think can stand out from the crowd?

WhaleShark: Music NFTs. Crypto art has spent two to three years creating this expressway, this road to tokenization and commercialization. Now, music NFTs need to drive on this completed expressway and speed to the finish line. That's why I bid $3.5 million on 3LAU's first NFT album because it's historic. It's the first tokenized NFT album. I believe music NFTs will be able to stand out from the crowd.

Jeff: When you buy an NFT as an investment, what return cycle do you estimate? One year? Five years? 20 years?

WhaleShark: I am looking for things that I invest in and never need to sell. I am looking for assets that I can hold for the rest of my life and continue to appreciate. For example, if my grandfather started buying player cards in the 1920s, today I would have a collection worth millions or even billions of dollars. That's what I'm really looking for.

Jeff: Let's talk about security. Given the size of your collection, what methods do you employ to prevent hacking?

WhaleShark: I believe security is paramount. If you want to become a collector in this space, you must follow rigorous security procedures.

The first step is to store your NFTs in a cold wallet. While it's simpler to keep NFTs in your hot wallet like MetaMask or the platform's custodial wallet, I still take everything out and put it in a cold wallet.

Jeff: How should a cold wallet be properly stored?

WhaleShark: Ensure that you store your cold wallet in a very secure place. I have backups of multiple cold wallets stored in safes around the world. Also, ensure that the private key never touches any digital communication device, not even connected to the internet, which is crucial.

Then, cut the private key you wrote on paper into several parts, and store them separately in multiple safes. I might be a bit paranoid, but when your collection has the potential value of $300 million, this should be the safest approach.

Remember, if your private key is stolen, your NFTs are no longer yours.

Jeff: Whenever I hear about an investment opportunity, it always seems to be too late (not necessarily in the NFT space but also in the financial sector). In other words, if even a layman like me knows about it, then the real bull market has ended. I guess many people are in the same situation, where the smart ones have already made their profits and left, leaving the 'fools' flocking in. How do you view this issue?

WhaleShark: That's a great question. First, I don't think it's too late to invest in the NFT space. I have two reasons. The first one is what I mentioned earlier, that currently 99.99% of projects will fail, meaning new projects will enter the space and become mainstream. By keeping your ears open and eyes on Twitter, people will be able to distinguish which of these new projects will thrive in the mainstream.

The second reason is related to digital art. Sotheby's and Christie's have stated that digital art will see long-term development; they see the enormous potential of NFTs. Now the crucial question is which of these visual artists will land on auction houses. When you observe the crypto art space, the artists who can sell high-priced works are few and far between. So, if you can identify which artists in the digital art space today will conduct auctions at these two auction houses, investing in their artwork now will yield significant returns in the future.

I absolutely don't think it's too late now, but understanding which of these artists in the space will go mainstream requires extensive research and analysis.

Jeff: Well, one last question, I believe this is one you've heard often. But I'm curious. You mentioned that 99.99% of NFT projects might fail, yet you own 210,000 NFTs. How do you reconcile this?

WhaleShark: laughs That's a great question, you're the first to ask me that.