Broadly be described as digital collectibles, NFTs lie at the intersection of crypto and culture. They represent value for the same reason a Chanel handbag, a Rolex watch, or a Lamborghini automobile are valuable: not merely to carry objects, tell time, or get around town, but rather as a statement about the owner’s means, taste and position in society, as implied by ownership of such desirable, scarce and hence expensive luxury goods. Whereas digital goods were previously resistant to collectibility because of their intrinsic reproducibility, NFTs represent the innovation of digital scarcity, in the form of uniquely identifiable and incorruptible digital certificates of authenticity. Anyone can “right click save” a copy of a JPEG, but only the NFT holder can flaunt ownership of a unique (and hence collectible) digital asset tied to the image.
The current landscape for NFTs can be divided into several verticals (albeit overlapping) >>
- art (aka “1/1”)
- crypto gaming
One one side of the spectrum, we begin with pure “art” collectibles that most closely resemble collectible art (originals and limited editions) as they existed prior to NFTs — certificates of authenticity are not new, but rather for decades already they have underpinned the collectible value of contemporary art, especially for readymades and other intangible/ephemeral media.
Moving away from pure “art” NFTs, we observe innovations and manifestations unique to the digital medium and the programmability it enables, including aspects of algorithmic composition, dynamic interactivity, and gamification.
PFP (aka community/avatar) projects have evolved rapidly over the past year to become the most important segment of NFTs. PFP projects represent an exclusive community built around a collection of avatar images that are algorithmic variations on a common set of traits, such that each avatar is unique but yet recognizably related to the others. The commonality of traits underpins the idea of a tribe/community/club that connects the holders — essentially, membership in an exclusive club. Meanwhile, the uniqueness of each avatar within the collection allows the owner to adopt it as an expression of their personal identity — personal branding and a representation of identity on social media and going forward into the metaverse (as our lives become ever more digital and virtual).