Updated: Jan 5
NFT's have become wildly popular in the last two years. For many, this demand is inexplicable and even crazy. Beeple's digital artwork Crossroad fetched an astounding $6.6M. Beeple (Mike Winklemann) himself has raked in $100M over the last two years from his digital artwork.
While NFT popularity is staggering, I do think the ballyhoo over NFTs is overshadowing a larger cultural need that is not being met. Allow me to explain.
The rise in demand for digital artwork comes in tandem with the technologies which underlie it; namely, the blockchain. The blockchain is a digital ledger that records data. Data being any digital commodity: an image, text, audio or video.
You may say, that's the same as a hard drive or database that holds data. Yes, in a sense. However, the digital ledger that records the ownership of that data is publicly visible by anyone with an internet connection.
Contrary to our cultural obsession over data privacy, this public visibility is actually what keeps the data's security in check. The blockchain assigns a randomized code to each piece of data and that code is called a non-fungible token (NFT). The token is not able to be replicated or corrupted. This means that an NFT is an entirely unique and permanent commodity that is wholly owned by someone.
I believe this desire to possess unique and permanent ownership is what is truly desired by those who pay such exorbitant amounts of money to own.
Where the deep desire for ownership is coming from
Let's look at who is buying NFTs and what they have lived through in just the last ten years alone. NFT demand resides mainly among Millennials and Gen-Zers who have lived through more social, economic, political and cultural change in the last decade or so than any generation previously.
To be sure, the Silent Generation (1928-1945) and the Baby Boomers (1945-1964) saw major changes in technology, culture, economics and politics. But these were stretched out over a period of fifty or sixty years.
The Millennial and Z Generations experienced as much or more in a period of ten years. I myself am a 36 year old Millennial who lived through the events of the last decade:
2008 Wall Street Crash; sub-prime mortgage investments; collapse of Lehman Bros.;
The Opioid crisis; Occupy Wall Street; Black Lives Matter; Antifa; Donald Trump; Oil;
Corporate takeovers of whole industries; ongoing int'l wars; a weakened US dollar;
Rampant unemployment; rises in mental illness, depression and anxiety; college debt;
The harmful effects of social media; online bullying; alternative media; misinformation;
And to cap it all off, the COVID pandemic.
That's a lot of change for young people to live through – in just 12 years! I ask you, what has been 'permanent' or 'safe' to hold on to in the secular world? This is not meant to be a political post. I am simply pointing out that there has been a lot of disruption and change in our culture in brief moment of time. Both sides of the aisle would agree, I think.
The point is, aside from a religious faith, which anchors one outside of this world, there isn't any stability or security in the world. Young people today know that there is nothing 'permanent' as existed for their parents' generation: job security, financial stability, home ownership, etc. Those days are long gone and there aren't other 'permanent' things to replace them.
People feel a collective loss of ownership.
What Millennials and Gen Zers want is permanence, ownership and immutability. Moreover, the collective ripple effect of the events over the last few years is overlooked in spades. People feel a collective loss of ownership over material goods, previously useful skills and personal identity.
Exacerbating this is the sheer lack of ownership surrounding valuable possessions today; namely, content and data. Consuming content is almost entirely conducted without truly owning any of it. You essentially 'rent' content on platforms that constantly tell you terms and conditions about how the content doesn't belong to you.
Enter NFTs: a permanent ownership of a commodity that is immutable, wholly one's own, unique, expressive and representative of the owner. They are worth a lot to people. They are worth millions of dollars to people who desire to own a semblance of 'permanence' in a temporal, chaotic world.
The new status symbol
Human beings have always wanted to own things. This is why wars are always fought over the same three things: land, commodities and economic power. On a more personal level, the status symbol has become outdated. Those physical tokens have, in large part, become extinct. We don't collect vinyl records, CDs, paintings or DVDs like we used to.
NFTs are the new status symbol. Someone out there would buy the original digitized Zapruder film showing 26 frames of President John F. Kennedy being assassinated. That would be an icebreaker at parties, for sure. With NFTs and the blockchain, it is possible for one person to claim ownership of it.
From the Zapruder film to a cartoon of a bored ape wearing a fez, these digital items are in high demand for the status they bring to buyers. Further, the Bored Ape Yacht Club (heavy on the Club part) denotes a members-only status. If you are willing to shell out $250,000 for a Bored Ape NFT you are part of that exclusive club. Exclusive because there are only a few thousand Bored Ape NFTs and no more.
People want a sense of permanence. They want to collect things that are unique, original and in demand. For now they are willing to pay major money for it. It is unprofitable to try to predict where the NFT trend is going. Will an ape in a fez worth hundreds of thousands of dollars a few years from now? Maybe.
What is for sure is that the technology underlying it – the blockchain – is not going away. Neither is the blockchain limited to NFTs. Smart contracts, cryptocurrency and more all work off of the blockchain. And whatever else is invented using the blockchain will also be worth millions and billions.