Celebrities, athletes and business leaders are spending hundreds of thousands of dollars on digital pictures of apes, monkeys, badgers and punks.
NBA All-Star Steph Curry of the Golden State Warriors has a Bored Ape as his Twitter avatar.
Hip-hop icon Jay-Z posted a CryptoPunk that looks just like him.
And television personality Steve Harvey recently added a cartoon image of a monkey to his Twitter profile.
These non-fungible tokens (or NFTs) don’t come cheap.
The lowest price of a Bored Ape is now 40 Ethereum, or around $120,000.
A CryptoPunk will set you back $400,000. A rare one is the cost of an oceanfront mansion.
There are even fractionalized NFTs. If you can’t afford to spend $5 million on a zombie CryptoPunk, you can pool with other investors to own a piece.
NFT mania has spurned dozens of new launches every day on the Ethereum, Solana and Tezos blockchains.
It’s a digital gold rush. And today, I’ll explain what’s behind the surging demand for these digital goods.
Admission Into the Metaverse Won’t Come Cheap
When I was 10 years old, I remember a classmate’s father picking him up from school in a red Ferrari.
I can recall this day because it was the first time I recognized that there were families who had more material things than we did.
Sociologist and economist Thorstein Veblen described it as conspicuous consumption.
This explains why people (especially men) purchase luxury goods or services to display one’s income or wealth publicly.
The thinking is, if you’re wearing an expensive watch or driving a fancy sports car, you belong to a superior social class.
You’ve provided more value to the world, so you can purchase nicer things. I don’t generally agree with this philosophy but to each their own.
This isn’t a new concept, and it didn’t start with yuppies driving Ferraris in the 1980s.
Our ancestors loved ornate jewelry. And I’m sure the caveman with the largest saber-toothed tiger coat was the envy of their peers.
Nowadays, people aspire to improve their digital image.
According to Scotsman.com, the average person spends a whopping 8.5 hours a day online.
Ask a teenager if they’d rather have 10,000 followers or $10,000 in the bank, and they’ll tell you the former.
They might be onto something if they can figure out how to monetize that following.
If your Twitter or Discord profile has a Degenerate Ape or a Lazy Lion, you were either early at spotting a new trend or have an extra $10,000 laying around that you don’t mind risking on a JPEG.
It proves you have worth, one way or another.
And if you’re willing to spend $120,000 on a Bored Ape, you can be one of 9,999 other people in the same rarified air as Steph Curry.
But NFTs are going to be bigger than just flexing one’s digital self-worth. They’re more than just conspicuous digital consumption.
That’s because two key technological breakthroughs are quickly transforming the metaverse:
- A creator can earn a continuous stream of royalties without a middleman. Each time a CryptoPunk is sold, Larva Labs automatically takes a royalty payment on the transaction. Think of how this technology can be applied to music and videos. Digital creators will be able to cut out platforms like Spotify and Netflix and sell directly to the consumer.
- An NFT may give you access to exclusive content. Rather than signing in to a website in Web 3.0, we’ll self-credentialize by connecting a cryptocurrency wallet. The website will be able to look into your wallet but not know who the owner is. It will never need a password and will never store any type of payment mechanism, like a credit card. This will also allow websites to differentiate between users who don’t own a specific cryptocurrency or NFT.
Our lives are moving from the analog to the digital, and our consumption habits are too.
Maybe it’s time to buy a digital Ferrari NFT while they’re still cheap.
Editor, Strategic Fortunes
P.S. Adam O’Dell is the chief investment strategist of our friends over at Money & Markets. Adam will be hosting a special live event on September 23, where he’ll be revealing all the secrets of his incredible new investing strategy that has the potential to turn $1,000 into $5,000 in just 48 hours. You can reserve a FREE VIP spot by clicking here.