Thread by @mohakagr

(1/n) @Visa recently bought a Cryptopunk for $150K. Let that sink in for a while!
Is this obsessive craze around NFTs unwarranted? Or are there valid reasons for it?

I'll attempt to explore the "why" in this 🧵

But before that, I've got a story to tell 👇

(2/n) Last week, I was chatting with a childhood friend. He asked me if I still had some Pokemon Tazos left.

I remember collecting them as a child. In fact, I was exchanging services from my friends for them.

I even ran the OTC, appraiser (school) desk for them - fun times!

(3/n) My friend recalled his similar obsession with the toy, Lego. While exchanging a few laughs, I realized how madly obsessed I was with something so material.

After the call, I began asking myself - why was I so fond of those pieces of plastic?

(4/n) I remember feeling that it was truly an extension of myself.

I had pinned my identity on those tiny cards - which, TBH, had absolutely no functional value or utility in my life.

(5/n) Honestly, I feel that even today if I found them again, they would remind me of my childhood.

I'm sure that all of us have one such material item. And I guess for all of us, it is either a symbol of something, or it is just an extension of who we are.

(6/n) Looking at the near-insane craze of people buying Cryptopunks (@larvalabs), @BoredApeYC, and @Pudgy_Penguins really makes me think – is there even a difference between us investing huge amounts of money on these items…

And we as children obsessing over our toys?

(7/n) I don’t think so. The psychology of collecting is deeply ingrained in humans.

A Neolithic man collected stones for axes;
An 18th century romantic read poems to defy materialism;
A 21st-century enthusiast collects NFTs for fun

Where's the difference?

(8/n) To the uninitiated, spending $1.3M on a picture of a rock does not make sense. And why should it?

(9/n) But then why spend $20K+ on a Rolex watch when $50 does the same job? Or spend over $100M on this painting by Jean-Michel Basquiat?
#basquiat

How much of a utilitarian value do these items have?

(10/n) The answer is that the value of these items is subjective - come on, not every item we own has utility.

But for the wealthy, the expensive watch is an expression of their identity.

For the intellectual, their books are their identity.

(11/n) And for a collector who believes in space of digital creativity and unregulated self-expression, CryptoPunks (@larvalabs), @BoredApeYC, @etherrockprice, @Pudgy_Penguins, and all other whacky NFTs are an expression of themselves.

Are we not the sum of all items we own?

(12/n) Not only do these items help in the formation of our identity, but they also help induct us into a community that identifies with those items.

Punks' owners do not simply own a pixelated image of an alien.

(13/n) They own a piece of digital history. They own a revolutionary shift in the movement of collectibles.

This is quite similar to centuries-old texts and paintings being considered significant (and being valued so highly) in a digital-first era.

(14/n) Punks sell for so much because:

a) they are one of the first collectible NFTs;
b) they are truly rare (10K in total);
c) each has a different attribute (most have earrings while some have beanies).

(15/n) Sidenote - some in the Punk community believe that they were the first NFTs. They weren't!
In fact, several tokens were minted - starting in 2014 - that closely resembled the NFTs of today.

cc @etheria_feed.

(16/n) Carrying on, the same goes for @BoredApeYC- which took a step further from the pixelated punks in its design. Within six weeks, its trading volume was already in Millions.

(17/n) Because by the time they were released, a community around digital collectibles had already been formed. People were buying NFTs not just to make money, but for becoming a part of it.

You could also say that some were FOMOing.

https://twitter.com/mohakagr/status/1427569433371844622

(18/n) @beijingdou recalls the initial movement of changing profile pics and all members following each other.
But that's not the only reason.

When you buy a @BoredApeYC, you get intellectual property rights - create and sell your own merch based on the ape you own.

(19/n) Since the emergence of the market in late 2020, several people took the jump. From artists like @Grimezsz & @3LAU, to sportspersons like @FloydMayweather, to brands like eBay, Gucci, Reddit.

Even @budweiserusa bought a rocketship NFT. Guess what's their profile pic now!

(20/n) And the craze has only been increasing over the past few months. @opensea crossed the $1B trading volume mark in August.

OpenSea has been burning about 13K ETH a month, overtaking Uniswap.

(21/n) We must also not forget a crucial point.

Not all NFTs are JPEGs or music or memes. In fact, today, the landscape widely covers NFT games, NFT-based infra, NFT-powered DeFi and DAOs, and even different platforms for collectibles.

(22/n) NFT Games

Axie Infinity has become the primary source of income for many users from the Phillippines!
@YieldGuild has been instrumental in making it popular, given it offers people money to buy Axies.

(23/n) NFTs and Metaverse

They are used as the base transactional tokens for metaverse applications like Decentraland and Sandbox.

Land on these apps is being sold for as much as $900K! Even brands like @CocaCola are launching their NFT integrations with metaverse.

(24/n) NFTs and DeFi

-Lend/borrow assets using your NFTs on platforms like @nftfi
-Manage your NFT portfolio using @NFTbank_ai.
-Own a fraction of rare NFTs using @NIFTEX.
-Join other users in @arkgalleryDAO in purchasing your favorite cryptopunks.

(25/n) Moreover, NFTs have ventured to other networks like @solana, @BinanceChain, @avalabsofficial, @NEAR_Blockchain, @tezos, etc, and are also gaining traction considering the cheaper fees.

(26/n) I refrain from thinking that this is a short-lived phenomenon. But its also hard to tell if the near-insane obsession will last beyond 2021.

What do you think?