Source: MetaCat
Crypto gives us the ability to tokenize everything, especially NFTs. As a result, it has contributed to a phenomenon best described as the rise of (headless) pseudo-luxury digital goods, such as Punks, Squiggles, Opepen. Why are these valuable?
In almost all cases, the process of generating long-term value from zero to one, when it comes to assets that are not obviously valuable, the core of the tokenized media works needs to have basic intrinsic value, whether in terms of origin, cultural value, artistic value, etc.
In most cases, such assets are mainly units of personal expression and identity construction (expressive accessories).
In many cases, the purpose of most buyers is purely to spend money, not to make money.
Through the initial holder base, the work at hand is endowed with social value (this appreciation becomes the kindling for a fire that could potentially burst into an entire community - most assets never cross this threshold).
Through the initial holder base, the work at hand is endowed with social value (this appreciation becomes the kindling for a fire that could potentially burst into an entire community. Of course, the vast majority of assets never cross this threshold).
The nuance to recognize here is that the initial early social value generated by an asset is only possible if the holders/community members appreciate the underlying intrinsic value. In the early stages, this is the only possible way for more intrinsically motivated holders to emerge.
A key factor in the rapid early appreciation of Punks, Squiggles, and Openens is their low price and low barrier to entry for holders. It's not that a higher price point makes this value creation impossible, it makes it more difficult.
Appreciation of the intrinsic value represented by an asset has nothing to do with whether a person is wealthy. But the transformation of passive appreciators into community members with a sense of ownership seems to have a direct correlation to early prices.
This may contradict the logic of traditional luxury pricing, which often requires high prices to gain status and exclusivity.The reason I call this asset "headless luxury" is that its value comes not only from the creator, but more from the holder.
Slowly, as the underlying intrinsic value of the asset appreciates, holdings reach a critical mass and a vibrant community forms. And the asset itself slowly becomes a symbol of an overall movement beyond a standalone asset.
As a broader consensus forms around the symbolic representation of the asset, both insiders and outsiders begin to invest further in the asset, expecting more people to buy it over time.
A new digital store of value emerges.
As a broader consensus forms around the symbolic representation of the asset, both insiders and outsiders begin to invest further in the asset, expecting more people to buy it over time.
Thus a new digital store of value is born.
As a broader consensus forms around the symbolic representation of the asset, both insiders and outsiders begin to invest further in the asset, expecting more people to buy it over time.
Thus a new digital store of value is born.
As this asset is traded and speculated on through market cycles, it gradually gains economic scalability in its symbolism and store of value.
When financial value exceeds social value, it will be sold. And vice versa. The composition of holders around the asset will shift from focusing on intrinsic value to focusing on extrinsic value, with the potential to swing back towards focusing on intrinsic value again during bear markets (if it survives the cycle of focusing).
The key point I want to emphasize is that the generation phase of long-term value from zero to one is almost always an intrinsically driven process that takes time. The value generated always occurs after the coin is minted, and is always generated (patiently) by its holders.
Anything that goes up quickly, will fall just as quickly. Few assets that start out as pure speculative assets will survive more than one bull-bear cycle. Most will fade into irrelevance.
The opposite applies to assets that have a strong intrinsic starting point.
Now the rules of the game are in place.
What will people like and appreciate?
What is financially stress-free and fun?
What is important and what brings joy to people?
What is historically significant?
What are the next Punks, Squiggles, Opepens?
Only time will tell =)
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