When people refer to an NFT collection as being "blue chip", they usually mean that it is a low-risk collectible. People refer to something with this term to give others the impression that it is a sure store of value, a guaranteed success for years to come.
If you have been around the crypto space for a while, especially if you are an NFT collector, then you have probably heard the term "blue chip NFT" tossed around quite a bit. To fully understand what is meant, we need to consider how this term is defined, both in terms of NFTs and in terms of the industries where the term comes from (specifically the worlds of stock traders and art collectors). Then we can discuss whether there truly are any blue chip NFTs (and if there ever will be).
What Do People Mean When They Say “Blue chip NFT”?
When people refer to an NFT collection as being "blue chip", they usually mean that it is a low-risk collectible. People refer to something with this term to give others the impression that it is a sure store of value, a guaranteed success for years to come.
There are two reasons I have a problem with this. First, people usually start calling an NFT collection a blue chip too early, either when it first launches or even before it comes out. That’s speculation. No one can know something will become a blue chip collection in advance. As I will discuss in the next section, being blue chip is a status that has to be earned.
My second issue is that blue chip has become a buzzword that influencers use to pump and dump collections. So when it comes to doing your own research, I encourage caution when you encounter this term, as people are throwing around the term blue chip prematurely.
What Does the Term Blue chip Mean in the Stock Trader and Art Worlds?
So what does blue chip actually mean?
In the stock world, being blue chip means that you’re talking about a large and well-established company that has an excellent reputation. They must have been in operation for many years – so, a start-up is not a blue chip stock. And the company’s earnings must be dependable – you can’t call a stock blue chip if there is a good chance the company will go out of business in the next few years. Blue chip companies are also in a position to survive bear markets. Even then, a blue chip stock is not a guarantee. It is a well-earned title over a period of many years of performance, and therefore is considered low risk.
Of course, I personally don’t like comparing NFTs to investments. To me, they are more like art collectibles. So what does blue chip mean in the art world?
Blue chip art is all about the artist. The artist must have a well-defined place in the art market. Their art must consistently sell at high prices and in an elevated way for many years. A new artist or an artist that makes their first 6-figure auction sale is not a blue chip artist. Museums and galleries should recognize the artist, and they may have solo exhibitions besides individual artworks in galleries. Auction house results for the artist should be strong, even when there is a downturn in the market.
Will There Ever Be True Blue Chip NFTs?
By modern art world standards, most successful NFT collections would be considered red chip art (for further discussion of blue chip versus red chip art, see this blog post from Masterworks). The artist may have a cult following, but they are not yet well-represented in prominent art galleries and auction houses. They may have a large social media following and increasing prices but are yet to establish themselves over a period of many years.
Will there ever truly be blue chip NFT collections? I believe so. But for now, just know that this is too often used as a buzzword in the crypto world and is a misnomer. At best, there are some red chip NFT collections, and all NFTs are high-risk, high-reward. In a decade, we’ll look back and see which projects emerge as real blue chip NFT collections.
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