Last week I attended the NFT.NYC conference in, you guessed it, New York City.
I had a lot of fun - it felt more like a celebration than a conference - and I was able to catch up with old and new internet friends IRL.
But I did leave feeling a little bit more skeptical.
If you’ve been following this newsletter (or my prior newsletter, Relaynode SoCal), you know that I’ve been thinking about NFTs for a bit. I also put my money where my mouth is: my fund, Mechanism Capital, has made at least one dozen investments into NFT infrastructure and NFTs themselves.
It’s safe to say that I am excited about NFTs as a technology. I believe they are the middle layer for digital property in the Metaverse. In this excellent Bankless podcast, Chris Dixon of A16z Crypto extrapolates on this point. If tokens represent ownership in the metaverse, non-fungible tokens will represent the vast majority of the property, because most items in the real world are non-fungible. Some examples of non-fungible real items include the clothes we wear, the homes we live in, and the cars we drive.
In the past, I have also written about the passion economy, the ownership economy, and Web3 Social. Why? Because the current Web2 paradigm is broken. It is a fundamentally extractive model in which we trade our attention for $$, but the lion’s share of that $$ flows to value-extractive platforms rather than the creators of the content that we love.
Web3 Social will probably look like some kind of derivative of NFTs —> communities of creators and their biggest supporters sharing in the value they bring to one another. It is a more utopian future than the path currently promised by Zuck and Friends.
As a clear believer in these megatrends, there was a lot to like about NFT.NYC:
The size and energy of the crowds, many of whom were new entrants into crypto, and excited to learn plus contribute
Extraordinary creators like Quentin Tarantino entering the fray
The presence of industry leaders in tech, gaming, entertainment, and fashion like YouTube, TikTok, Apple, Dolce & Gabana, and Ubisoft
The signs are clear that it’s not just “retail” who are excited about NFTs, the big boys are here and see this is more than a flash in the pan.
With all that good stuff, I'm sitting here the Sunday after, sipping my tea, wondering why I feel a bit less excited about NFTs than I was before the conference.
I’m simultaneously thinking:
“Digital fashion sales are going to exceed physical clothing sales in our lifetime,”
AND
“I need to sell most of my NFTs ASAP.”
So why? Trying to figure out through this post:
Status Games - The first iteration of NFTs, like many physical collectibles, are ultimately a status game. Humans have always played status games, but the quantum on display in NFTs is unimaginable for most. Even the nicest cars and watches are “just” six figures. In the NFT world, status tied to wealth is exacerbated by owners publicly flexing jpegs that represent millions of dollars. Maybe we can’t escape status games (some might even say this post is a subtle status flex), but it ties into the next point:
Exclusivity - This may be hypocritical, because I am a member of many DAOs. However, the NFT industry is built on the back of open Discord channels, Clubhouse rooms, and importantly open-source code. Permissionless access is meant to be a core feature, but most NFT.NYC events were exclusive or NFT-gated.
Community? - NFT thought-leaders these days pay a lot of lip service to “The community,” but can we really claim this is a community-driven phenomena? Crypto and NFTs are more of a meritocracy than most industries, so perhaps I’m aspiring to some idealized version of how the world “should be,” but many NFT launches are based on…
Inside Baseball - how close are you to the center of the Tootsie Pop? Do you know the person who created the smart contracts, and that they’re safe to mint? Who gets in first is often who makes the most $$ on these opportunities.
Honestly, all of this is probably just scar tissue from my experience of the 2018 ICO crash, or perhaps I’m naturally inclined towards “prideful skepticism.” But NFTs by their nature are even less liquid than their fungible counterparts issued during 2018 ICOs - so I expect liquidity on the way down to be even worse this time.
Is it possible to be extremely excited by new technology and simultaneously disillusioned by it? I think yes and it has a lot to do with one’s time horizon.
I leave NFT.NYC slightly more skeptical about the near-term prospects of the industry, and I expect that a lot of crap that needs to be washed out will be soon(ish). Yet, I remain extraordinarily excited for the potential that NFTs and Web3 have to offer in the long run.
What I’m Reading
Ideas
Facebook Becomes Meta, Zuck Video Announcement
A Thread on Unredacted Google AntiTrust Filing
Markets
Germany Records Highest Inflation Rate in 28 Years (it’s just temporary folks)
Only 21% of All New US Home Sales Less Than $300,000
Sequoia Capital Just Blew Up the VC Fund Model, Axios
Metaverse, NFTs, Web3 Social & DAOs
5 Mental Models for Web3, Chris Dixon of A16z on Bankless Podcast
Crypto is Cool, Now Get on the Yacht, NYTimes on NFT.NYC
Why We Are Selling Our Cover As An NFT, The Economist
Crypto
A Thread on the Anti-Crypto Language in Infra Bill, Patrick Dugan
America’s Crypto Conundrum: Protecting Security without Crushing Innovation, Foreign Affairs
Decentralized Finance (DeFi): Internet Banking Beyond Borders, Grayscale
The Hotspot: Helium Network & Blockchain Podcast
A New Mental Model for DeFi Treasuries, Hasu
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