The term “blue chip” derives from poker, where the blue chips are the most valuable chips to own. Much of the jargon in the digital asset space is adopted from traditional finance (TradFi) where the term “blue chip” is often used in the context of stocks.
Blue chip stocks
Blue chip stocks are considered the top tier of the stock market. They’re typically issued by large, global companies that have a respected reputation and are considered fiscally sound. Examples include Apple, Coca-Cola, Walmart, and Disney.
Blue chip stocks play an important role for investors, and they are considered to be a relatively safe investment. They tend to withstand financial downturns by either holding their value or dropping slightly less than the overall markets. However, since blue chip stocks are typically less volatile than other stocks, they aren’t expected to necessarily deliver the highest returns during an economic expansion.
Ultimately, these are stocks that are expected to deliver reliable long-term growth.
Characteristics of blue chip NFTs
Non-fungible tokens, or NFTs, are unique or scarce digital tokens that exist on a blockchain and are linked cryptographically to digital files such as images, audio files, or in-game assets, to name a few.
The term “blue chip” is given to collections of NFTs that have certain fundamental characteristics which may make it more likely that the tokens will hold their value, including:
- High demand, represented by a higher floor value (defined as the value of the lowest priced NFT in the collection) and trading volume,
- A dedicated and reputable team,
- A large, engaged community of supporters, and
- NFT utility, such as access to private members channels or invitations to in-person events.
Since there is relatively high demand for blue chip NFTs, their price can be less volatile than the rest of the NFT markets. Nevertheless, blue chip NFTs are still crypto assets and display high volatility compared with blue chip stocks.
Examples of blue chip NFTs
Bored Ape Yacht Club
Bored Ape Yacht Club, issued by Yuga Labs, has become the most famous blue chip NFT collection thanks to multiple celebrity endorsements, including Serena Williams, Jimmy Fallon, and Eminem.
The collection features 10,000 cartoon apes, each with unique features. Holders of Bored Ape Yacht Club NFTs are entitled to membership to the club, which includes private online spaces and exclusive events.
CryptoPunks NFTs were created by Larva Labs back in 2017, and are characterized by their 8-bit, pixelated design.
One of the first NFT collections, CryptoPunks were initially distributed for free to Ethereum wallet holders. As interest in NFTs grew over the years, their secondary market value increased significantly, with certain CryptoPunks being sold at Sotheby’s, a high-profile art auction house.
World of Women
The World of Women NFTs were created by artist Yam Karkai with the aim of making Web3 more inclusive.
The collection features 10,000 unique representations of women, and owners include celebrities like Reese Witherspoon and Eva Longoria.
Art Blocks is a platform built on Ethereum for creating NFTs by generating art using an algorithm. The platform has become so influential that all Art Blocks collections are classed as blue chip NFTs.
One of the most popular collections is Chromie Squiggles, the genesis Art Blocks collection, which became one of the top traded collections within 24 hours of its issuance.
Cryptokitties are another example of an early NFT collection that emerged to become a blue chip asset. Issued by DapperLabs in 2017, Cryptokitties are cartoon cats, each with unique traits, that can be bred to produce Cryptokitties with their own unique traits. Unlike CryptoPunks, which became popular over time, demand for Cryptokitties was so high when they launched that it famously caused the one of the first scalability problem with the Ethereum blockchain, congesting the network with increased traffic.
Blue chip NFT essentials
- Blue chip NFTs are generally expected to maintain a more stable long-term value compared to other NFTs, although not necessarily compared to other types of assets.
- Blue chip NFTs derive their name from blue chip stocks, which are stocks in large, reputable companies.
- Popular blue chip NFT collections include Bored Ape Yacht Club, CryptoPunks, and Cryptokitties.