When Celebs do Crypto: A $40k picture of a monkey walks into a bar…
NFTs. Non-fungible tokens. If you’ve been on the internet, watched the television, read a magazine or listened to any man-who-works-in-finance in a bar lately, you’ve probably heard of ‘em (If you’ve managed not to, congrats, here’s a quickish summary by yours truly. Disclaimer: not an expert, just someone with strong feelings).
Love them or hate them, you just can’t fung them. These digital representations have made their way into the online lexicon faster than a cockroach to a pile of crumbs. But are they here to stay?
“I was going through a lot of them,” Paris Hilton explained to Jimmy Fallon on The Tonight Show, regarding a Bored Ape NFT she recently purchased, “I was like, I want something that, like, kind of reminds me of me. But—this one, it does.”
Some context. The Bored Ape Yacht Club is a limited collection of 10,000 NFTs depicting – you guessed it – bored-looking apes, with their owners including Serena Williams, Jimmy Fallon and, of course, Paris. If you’ve never seen another NFT, you’ve probably seen one of these. Owning one of these “unique digital collectibles” not only gets you unequivocal proof that you own a picture of a monkey wearing clothes, it also grants you exclusive access to the online “Yacht Club,” including a member’s-only graffiti board on which owners can draw one pixel every fifteen minutes, and, er… an NFT… breeding… machine… game? It feels a bit like Neopets, but for adults with tens of thousands of dollars in disposable income.
Let’s be fair, like other blockchain-based activity (Bitcoin et al), it can be argued that NFTs are an investment. They’re speculative, so there’s no intrinsic value, but if enough people buy into this digital scarcity then the financial payoff can be huge. Sure, it’s a huge upfront cost, but, like shares in Apple, they’ll inevitably appreciate in value if you hold onto them, setting you up for financial independence and a life of freedom. It’s the future! Paris Hilton, already famously very wealthy, will be able to sell this receipt for a monkey picture in a few years for a tidy sum and have to worry even less about money. Whoever buys it from her will be set for life if they ever decide to sell it on, bolstered by the previous owner’s celebrity status. Right?
Not quite. While celebrities such as Grimes and A$AP Rocky have seen very generous margins on NFTs they’ve sold themselves, their buyers haven’t been quite so lucky, seeing huge losses. ‘Earth,’ an NFT issued by Grimes, saw sales of just under $6 million dollars in less than 20 minutes. However, one of the 303 limited editions (originally sold for $7.5k) recently resold for just $1.2k – in an eye-watering 84% drop.
This clash between the cult of celebrity and crypto raises ethical considerations that, as netizens, we’ve never really had to think about before. Liam Payne of One Direction fame recently set up a Twitter account exclusively to talk about his “NFT journey.” Granted, the average age of a 1D fan will certainly be higher than it was at the height of their fame, however, I get the impression that the majority of his 72K followers are likely fans of Liam, not crypto, and probably don’t have quite the liquidity he has access to if their investment goes into the red.
Celebrities talking about crypto and NFTs – particularly on Twitter, where I’ve seen more bored apes than I’d care to number – comes across as an exciting venture into a new hobby, not a careful investment with capital at risk. Moreover, as they’re not being paid to promote anything, but rather sharing their own views, there’s little to stop them giving terrible financial advice to very large audiences – or, indeed, affecting the value of investments themselves. We’re seduced by the glamour of digital scarcity, but the stock market, with its rules and regulations, doesn’t sound quite as sexy.
Twitter itself has recognised the huge spike in popularity, now offering hexagonal profile pictures for users wishing to use non-fungible tokens as their avatar. Thing is, anyone can mint their own NFT for free – so it’s not quite as exclusive as the collector crowd hoped it would be. If you really wanted to upset someone, you could – in theory – right click save their NFT as an image file, change a few pixels (invisible to the naked eye) and re-mint it. It’s not really theft, because it doesn’t really exist. It’s not really fraud, because there’s little to no regulation yet. Uh oh, they’ve been funged.
Fallon received criticism for showing off his NFT in his chat with Paris, with sleuths reckoning he spent approximately $216,000 on a record on a digital blockchain ledger proving that he owns it. Talking about his NFT on prime-time television is likely to hike the resale price up despite historical celebrity NFT value depreciation, but an NBC spokesperson said that Fallon “did not violate the company’s conflict of interest policy, noting that hosts are able to promote outside projects such as books and movies” – even though another workplace policy notes that employees should not “use company info, resources, time, etc. for personal benefit.”
Being a late-night show host with millions of viewers is one way to artificially inflate the price of your NFT, but theoretically speaking, someone looking to make a few bob could also do this via something called “wash trading.” This involves a seller opening multiple accounts, trading with themselves – hiking the price a little each time to create the impression of demand – meaning the end user could pay thousands over the actual valuation, believing many people are desperate for this NFT… when it’s really only the original purchaser.
In short, I’m concerned about millionaires with lots of capital to lose promoting risky, speculative methods of investing to their hoards of followers, and here’s where the crossover between entertainment and economics gets grey. If you really want to do crypto, do crypto, but remember: Paris Hilton has hotels to fall back on. I’m more inclined to listen to Keanu – or a licensed financial advisor – instead.
When George isn’t getting angry about NFTs, they’re a cat parent, crocheter and Senior Community Manager here at Puzzle. Shout out to Influencer Manager Lily Aey for the assist on research. But we don’t just know about what Liam Payne’s up to on Twitter – drop us a line on firstname.lastname@example.org to see how we can meet your social and engagement goals.