@zorloth for that same amount you can buy a house where I live. Or you can buy shares in a company with a 50+ year record of growing profits and paying dividends that will pay you thousands of dollars a year for your fractional ownership.
I don’t get the whole NFT thing either really but I also don’t get a lot of the prices cardboard sells for either. Different strokes for different folks. Surely a lot of people will lose money in NFT’s but a lot also do in stocks, housing, and Pokemon too.
The NFT community is growing like crazy. I just recently (as in two days ago) bought a couple that people were pumping via twitter. If I sold now (two days later), I would be 5X up. It’s weird.
But that’s a comparison that could be made to any valuable asset. Like, why do people spend $100k on a Rolex watch when they could buy a house?
I made the comparison I did because primordialaa mentioned digital *cards.* That’s why I made the comparison to physical cards. Like, if you’re going to buy cards at all, why buy digital cards over physical cards? I could understand it if, for $1000, you could acquire the “holy grails” of digital cards. But it sounds like people are spending $100k+ on these digital cards, and with that sort of money you could acquire some of the biggest, rarest, most organically collectible physical cards from the most popular TCGs in the world. Like, why would a *card collector* buy some brand new digital card over an Alpha Lotus or an old-back Trophy? I genuinely do not understand. I could understand if someone wanted an item from an entirely separate genre, but these digital cards are meant to emulate physical cards.
Well for the $100k ones it gives you 1% of all sales of that card on primary and secondary market for life, so imagine MTG where you own 1% of all lightning bolt sales, or birds of paradise or whatever other card.
Their SE (special edition) of this alpha set go for $1500-4000, and then unlimited cards go for like $30ish.
Very very limited prints of the SE and obv all masterpieces are 1/1 but I completely agree in general that they are being priced like early edition TCGs that have stood the test of time for 20-30 years and the game isn’t even out yet so there is definitely some level of irrationality around it which is why I’m not recommending buying from secondary market atm but rather buy at cost from the team when the release new packs and have the chance to get all of these for extremely cheap + the game itself may be super enjoyable to play. Time will tell
Hope any of you were lucky enough to grab one of these today, the cheapest was $25 → $6800 (1/300 chance roughly to be pulled in lotto), the most expensive was $1500 → $149,000 (ask, I think highest sold so far is lower than that atm). Definitely worth the 2 minutes it takes to queue for the time being anyways
@primordialaa on the /25 I queued in with only like 80 people ahead of me. I thought it was on the /50 so I thought I had a slim chance. Even then probably would have missed it.
Crazy stuff here and I don’t get it but as you said it was a quick easy lotto ticket attempt that I’d just flip quick. Especially since it’s Brady 
. Gretzky next week though.
would have been a sick one to get. I’m not close on any of them, will keep trying for the forseeable future especially since the first 6-7 athletes are all massive names
Quick qn - what are your thoughts on collateralized nfts?
As an outsider, what discomforts me about nfts is artificial scarcity - people will keep mining 10k variations of dogs cats apes wtv. At the same time, it trades on the highly liquid low cost opensea, priced mainly in ethereum where alot of people have made fortunes in
Physical art and cards do have real scarcity (old ones anyway), but are clunky, difficult and expensive to trade
Woualdn’t a collateralized nft fix both issues? There’s ownership of the actual underlying asset that ideally is held by a verified trust, but now it is in the form of an nft which is more liquid and also proves ownership (which people always talk about e.g. U can wear a fake Rolex but nfts are traceable)
Btw, i pretty much made up the term collateralized nfts - I have no idea if it exists. I suppose fractional ownership is similar, but not the same in that it doesn’t trade on the ethereum blockchain
It sounds like a big investment to create such a trust, but the outcome could be their rights to transaction fees everytime the nft is traded which i assume can be coded in, and the result is a product that is in some ways superior to both the physical asset and the non-asset backed nfts
A lot of very smart very well funded people working on exactly this, but it’s more a legal battle than anything. I think they will certainly make the physical collectible space more interesting if we get liquid indexes and some of the other interesting things that could be built but I do think there absolutely is a place for digital native stuff. And yes barrier to entry is low but you overlook how many completely dead physical games there are (board, tcg, etc.) it just is a space that’s sorting itself out and quality will emerge over time with what lasts and what doesn’t. Very similar to early web / etc., nobody knew wtf they were doing in terms of valuations all you had was relative quality and everything else just followed but it took many years to sort out the big winners and in the moment very few people knew which they would be.
I recommend you all read www.investopedia.com/terms/g/greaterfooltheory.asp
I do think NFTs have a strong future as a mechanism for loads of things, including TCGs.
but where we are right now is pure “speculative investment” (ala met4zoo) where beanie babies were in 1999. People are only buying because they believe they can sell to someone else for more. we are peak greater fool theory
I kinda agree on the greater fool point, technically pokemon and any non cash generative collectible asset is similar, but the interesting thing about nfts is that it’s an entirely new asset class
It may well be that alot of capital will continue to flow in until it reaches its steady state and then overshoots
For example, if physical art as an asset class was invented right now, capital would keep running in until an equilibrium. But during the initial period till equilibrium, it would sure look like mania.
Not saying we are not at a speculative stage yet, I dont own any and know nothing, but I noticed the opensea market is still not that big compared to more established markets. For example, chrono24’s valuation is about the same as opensea, but the nft market seems to have a much larger addressable market than used watches
Project veve looks decent they have a crypto called omi sell licenced NFTs which are carbon neutral plus Al khan and David yu is on their side, think Jeremy padwar may have been envolved too, sleeping giant this!!
basically all of collectibles fall under this category, they are very on-sided completely illiquid markets with no real pricing mechanisms. The raw cost of all of it was near 0, the retail cost of all of it is basically approaching 0 relative. For the most part bets on collectibles are bets on culture, pokemon has won out for so long because it had and maintains such a strong presence in modern and past culture. You can get artifacts from some long dead ancient king that nobody cares about anymore for basically pennies compared to a PSA 10 copy of a card that was printed in your lifetime. There is a reason a letter written on God by Einstein may go for like $500k+ but you can probably get handwritten letters by obscure popes for a fraction of the cost. Anybody who knows anything about Art (I don’t know that much) I think also can understand that this is true, it’s not necessarily the “quality” of the art but the cultural relevance. Look at Bansky, or look at basquiat ffs ;p
and yet people who spend their entire lives studying and being technically “perfect” in many of these areas never sell a significant artwork in their entire lives.
So yes, very clearly all of this is greater fool and that too is part of playing the game. What is culturally relevant now, what still will be in 2 months, 6 months, 10 years? What has a shot to be but isn’t yet at all, and so on and so forth. Almost none of this, physically or digital is “worth” something significant but it’s value is what we assign to it and we typically assign those values based on desirability, demand, and scarcity.
isn’t what @sgbased, referring to is what a DOA is? where people join a group of people to invest together and chose an interest of sorts. Or was the question more towards people owning a shared wallet which then makes the difficulty of legal around that?
so not exactly, a DAO (Decentralized Autonomous Organization) in terms of collectibles is if say… all of us at E4 decided we wanted to spent ~$1m and buy a new XCOPY piece, but none of us individually have enough $ to buy it. So we each invest in chunks of $100 into a DAO contract, and the contract buys the piece, and we each get 1 token per $100 spent.
Now we each own a stake in the piece we purchased, and also are able to vote on what happens to it. If at any point in time 70% of us signal ‘yes’ for sell, the item is put up for auction and the proceeds are sent to the contract and split up pro rata between the token holders.
That would be a very simple example of a DAO.
What @sgbased is referencing is collateralized NFTs. So right now when we trade cards it’s a pretty onerous process super rife with middlemen and excess fees. We may trade a card on ebay and pay ~12.5% fee, then we need to pack it up, mail it, hope it doesn’t get lost, maybe pay import taxes at the border, receive it, and store it. Clearly there is a lot about that process left to be desired in terms of having it be an accessible / liquid market.
So now imagine PWCC gets more and more cards sent to it and decides that rather than having owners go through this process, when you submit a card you will get 1 token that represents the card, and whoever owns the token can redeem it whenever they want for the card. This token is now ‘collateralized’ or backed by a physical asset. You can sell it, trade it, fractionalize it, do whatever you want and still it can be redeem at any time for the card.
Now take this a step further and imagine we only care about the grade of cards, now you can say ALL of the PSA 10 Zion Williamson rookie cards are all equivalent, and so now you could put these into some AMM or other structure and have it be a very very liquid index where as rather than buying a specific Zion you can just buy ZION and if you redeem it you can redeem it for a random one of the say… 5,000 Zion PSA 10s they have backing them. This would mean you always know an exact price (there isn’t a bid/ask price but it’s in an AMM structure) and if you want to sell you sell into the AMM and if you want to buy you buy from it, including fractional pieces. This would make price discovery muchhhhhhh more efficient. Now if this sort of structure is happening there are all kindddssss of cool things you can do, stuff that is being done regularly currently in digital assets but have no physical asset counterpart currently. This could be things like an index on all Base Set PSA 10 cards (Common, Uncommon, Non-Holo Rare, Holo Rare, etc.) or it could be on all Pikachus or whatever else. So so so many possibilities that would make these incredibly liquid, always redeemable, and super fun derivatives that could be built on top.
Now why is this legally tricky? Well asset backed securities are very common in the real world, i.e. you don’t buy physical gold you buy a synthetic gold derivative that is backed 1:1 by physical gold, you dont buy actual real estate you buy an index of real estate that is backed by held mortgages, etc., etc., and so there is a lottttt of legwork to be done to make this a super clean process. People like rallyrd.com/ and plenty of others are leading the way in the purely physical space but not tokenized yet, but anyways there are lots of super cool super smart people trying to solve ways to make these markets easier to engage in and also far less savage when it comes to fees. There isn’t any real reason why swapping a modern card on the internet should cost ~20-30% of the card between site fees + shipping + import, and if you want to resell it soon after you need it to have a huge markup just to break even. Liquid trading + you only pay shipping/import on redemption seems like a very obvious next step for this, still have all of the ability to redeem and have in hand exactly when you want in your hand but none of the forced headache or middlemen fees when you don’t need it right now. Complete optionality I imagine would be the ideal state.
Above is exactly my thoughts. For context, in the investment world a 5-7% real rate of return is what many think is the best we can expect going forward for the entire market, due to the high price of assets today vs underlying cash flows. Investment grade bond yields are all negative real return
This means every purchase of a physical card, which would be 20-30% in fees, is the equivalent of wiping out 4 years of expected returns upon purchase. It’s completely unpalatable for 99%+ of professional investors (the institutionalized kind - not the ones we see on forums). Most investors have a hurdle rate before they collect any performance fee and making a loss of this magnitude puts them at much bigger risk of zero returns or losses after years of effort. So professional investors in general won’t touch anything with more than 3-5% total fees (and that’s the max - that’s private equity which incurs the most fees per transaction. Public equity and fx etc is far far far lower)
The second issue is the lack of a liquid market with pricing transparency (that lacking is also a function of high transaction costs - highly liquid markets typically have low transaction costs which allow for frequent trading), that makes it very difficult to enter and exit large positions, or prove that the trade has been successful I.e. mark to market. A crypto fund manager can tell people how much he’s up or down at anytime, and if he’s up he can go out and raise more money etc. You cant do this in collectibles
I’ve spoken to the managing partner of a $10bn usd family office casually on this topic, and they have a very flexible mandate in investing due to their nature as family owned (no specific investment mandate in eg equities only for GP type funds) - they thought pokemon and cards in general were very interesting, but there was simply no way to deploy their minimum check size which is in the tens of millions due to the aforementioned challenges amongst others. They can do it in crypto and nfts, and that’s why they’re in crypto and nfts. That’s also why crypto has a $2tn market cap
So once the concept of collateralized nfts is solved, and currently there are alot of legal challenges such as KYC, AML in the traditional securitization and trading process - if it actually gets solved, you might just see the mother of all bull markets
If it doesn’t however then we’ll just drift along producing decent returns that will increasingly be unattractive given the lack of liquidity and so forth. Ie mostly collectors only
Maybe someday efour can organize a zoom call to discuss stuff like this where everyone can participate - there’s alot of interesting things to explore and learn from each other here - unlike four years ago when I joined this forum, alot of people have moved on to various careers in software, crypto, finance, law, and can bring their own insights and lens on how they see pokemon to the table. Who knows - we might already have all the people here with the necessary skills to solve this problem together
Man I don’t think I’ve ever felt as lost or out of place as I have reading this thread. It’s intriguing none-the-less.
@primordialaa, I wanna say thanks for the information you’ve given here, even when getting memed on hard you’ve just calmly kept giving out information.
I’m still trying to get my head around NFT’s, the technology but also the psychology. I’ve got a few questions for you if you have the time to answer them!
How did you feel when you made $150K in a week off a cartoon penguin picture? That’s more than I make in a year so I can’t even begin to imagine my reaction. Did you feel like you’d won the lottery or did you feel like you’d made a calculated, well researched investment and it was perfectly reasonable for someone to buy for that price?
Feel free to ignore this one as it’s more personal - at this point, does your NFT portfolio represent life changing money for you or is it still just seen as fun money for you? (I ask this as I’m interested if there are people out there willing to consider staking their life savings on this stuff or it’s more just fun for the wealthy)
Where do I see evidence of the popularity for these things? With the amount of money flowing into these things I’d expect it to be a complete cultural phenomenon. But the Pudgy Penguin subreddit currently has 44 subs, all of the Pudgy Penguin related posts I saw in the NFT subreddit have less than 100 upvotes, their Instagram account has less than 1,000 followers, all of their related twitter accounts have less than 20K followers, some of the founders listed on their site have a few hundred followers.
What makes Pudgy Penguins so much more valuable than this random project I found on a low upvote reddit post yesterday - opensea.io/collection/secretsocietyofwhales ? I can kind of get my head around CryptoPunks being so much more valuable as they were a first. But what differentiates Pudgy Penguins from the hundreds of other auto generated characters that are all popping up at the same time?
From being in the space for a while, what is the average buyer profile? What kind of people are dropping million on NFTs? What kind of people are dropping thousands on NFTs? What kind of people are dropping hundreds on NFTs?
Do you think the scarcity of these things is overstated? To compare to Pokemon, the current total pop of the PSA10 Skyridge holo set (including crystals) is under 4,000 - I wouldn’t be surprised if it never hit the 8,888 total pop of Pudgy Penguins. So, the Skyridge holo is rarer, and almost infinitely more popular, and has 20 years of history and a beloved franchise behind it, and yet the lowest buy in for the Skyridge holo is around $500 on eBay, but the lowest Penguin is around $6000. - This is the part I just truly can’t get my head around, the relative value of these NFTs just make no sense to me.
Appreciate the insight!
@primordialaa, Thank you so much for your thoughtful reply! To add on to @explorer, 's point, I really do appreciate how much information you have given out about this market on such a public forum as it is quite a learning curve but nonetheless a valuable starting point with great links to assets to start the discussion and have myself dive into it on the individualized discords or Twitter discussions.
@sgbased, I would actually be down to do a discord voice session around this if anyone else would like to join, possibly some time this week and just see where everyone’s mind’s at with this space.
@explorer, I think you asked some great questions that primo would have better answers to, but to answer the 3rd and 5th question a bit. Most of the popularity measurements/discussions around NFT’s happen on Twitter and Discord’s so while the other places are important for other reasons having a forum type discussion like e4 is a lot more useful for a lot of these projects to surface and become discussion points. (#5) Scarcity is definitely the thing that we are playing against in the NFT space in the sense that there are just so many things coming out right now that assessing the value solely on that is difficult to truly define. Additionally, the people that interact in these markets are different. The average buyers in NFT’s most likely have higher salaries/net worths than the amount of those people in pokemon which allows not only the market cap to be higher but each individualized token that is sought after to see a grander run up, at least in the short term.
I too am just getting started in this but I hope that some of this was helpful for you explorer!
No problem, happy to answer and genuinely just want people to be open to exploring new things, especially those with strong economic opportunities for many who don’t have it other places. I grew up in a town of 900 in the middle of nowhere in New Hampshire, dropped out of university, and have had more economic opportunity in a ton of different fields than 99.99% of the people I live around currently (and I live in the city with the highest NW in all of Canada so it’s among the extremely economically privileged) and I have done nothing but follow what’s new and interesting. There has never been a time even remotely close to as high upside as the current economic environment in. That said, let me see how I can answer the questions
to be honest, I felt nothing (or very mild excitement). Part of this is just years of conditioning when I was playing poker to not focus on outcomes but only on decisions and so my emotions in general are fairly muted, and 1000x more when it comes to money because it’s always just been a big game for me. Everyone else cared about the money, I cared about doing something interesting and trying to be better than everyone else at it. I know it’s a ton of money for a lot of people, and I try to keep sight of that in general but I didn’t feel anything exceptional it was within my expected range of outcomes which I kept adjusting based on market conditions, I had a bunch of them listed lower earlier, saw what the market was doing and threw them up way higher expecting if it continued they would get hit, and they did.
umm, my NFT portfolio is pretty big at this point, like my twitter profile picture is probably worth almost $1m or a bit less so it’s a pretty reasonable amount in general but I fully expect most NFTs to go to near 0 except for the exceptional few so I’ve acknowledged the risk and would only be mildly annoyed if they all went down to nothing. I put in $ I could afford to lose and I played the game and found some things I thought were really cool. I’ve also obviously taken some profits along the way, sold that airdropped meebit for 100 eth ($320k current value), a couple hundred k of penguins, etc. so that’s derisked me almost entirely. That said though it’s certainly not only for the wealthy, almost all of the super wealthy I know from this space agree that if you have a low-ish NW there probably is no better place for upside than the NFT space currently. I have a ton of now-friends who went from almost nothing to 7 and 8 figures just by being early on NFTs, even more recently the release of parallel cards minted a ton of fresh high 6 / low 7 figure NW people who put in only a few hundred bucks. Same thing with early artblocks, topshot my friends put in <$1k and had >$10m worth so… you just can’t find that in most real world things but obviously it carries with it some risk. I think the upside asymmetry is well worth the risk but the risk is definitely present. For me it’s just a fun past time because the community is super crazy and eclectic (love the community) and it’s fun to be a part of it while it’s happening even if much more on the sidelines than most. Also I know (because I’ve gotten DMs) a couple members here have started dabbling and done pretty well.
*Also I want to caveat this point that the current NFT market is super scary to me, definitely opportunity but it’s less easy than it was a little bit ago and I’ve pretty much stopped minting in general partly because my time has been much more constrained lately with real work but also because the upside seems dampened currently by the massive amount of people flocking to be flippers / extract profit. There will still be some absolutely killer stuff, the next DK drops (tomorrow I think), the next parallel packs, and a bunch of upcoming projects I don’t even know about yet. But the lowest of effort stuff that was “near guaranteed” wins not long ago are becoming fast an immediate losses or will be soon*
Twitter is where all of this stuff lives, all of it (and maybe bleeding into tiktok). You see Alexis Ohanian talking about pudgypenguins on TV, you see world famous people setting them as their avatars, etc., but yea all of that happens on twitter. OpenSea volume and all of the NFT rarity tools stuff is another place to see general activity but the communities live on twitter.
Nothing but the community. PudgyPenguins was a meme, cute, funny, and it just caught on in the same way Dogecoin is a literal meme but it meme’d itself into a massive massive community of diehard followers. Basically w/ PudgyPenguins it’s similar it’s a huge community with limited access / shared ownership and that’s what’s drives it’s value. People want to own one in the same way they want to own an authentic piece of memorabilia or a card or whatever else vs owning a fake or some like off-brand version of the thing. The community is what gives it it’s value, same with punks. It became “cool” and to show you were part of the earliest iterations of moving towards digital identity and some decentralized metaverse and now it’s everywhere, auction houses, television, everywhere.
For the hundreds and thousands it’s very similar to any early gaming community I’ve ever seen. You have the early elitist who loved the thing, spent time on it when it was worth nothing and it exploded and they have infinite worth but still barely sell because they have unconditionally strong attachment (very similar to early pokemon community), then you have the people who saw it later but early in the grand scheme of things and ‘paid up’ which let a lot of the mild conviction early people get out at a substantial profit and go their way while leaving the most zealous believers and the new wave of people who just reset the price floor on everything. Then you have the speculators, investors, and those types who all flock (think collectibles_guru, etc.) and then you have the people who fall in love with the community, passion, and cool factor and are willing to spend millions (Gary V, Steve Aoki buying charizards, etc. ,etc.). All of that is almost perfectly paralleled within NFTs except everything is new and timelines are playing out on a scale of a few months to a few years rather than 30+ years however now a lot of stuff is being heavily marked up which becomes the concerning part. Topshot was $9/pack early and you could buy moments worth $100k-$500k now for $1 early on, and while topshot pricing for packs has stayed similar some new derivative NFTs are pricing their stuff at $500-5k entry point like projecting the same success as topshot without any of the upside, but passionate people usually get super rewarded in this space. Early parallel players got custom stuff worth 5-6 figures now, early flow community contributors got allocations now worth millions (friend got like 2 BTC allocation, couldn’t afford it, asked someone else to put it up and give him just 20% of it, it’s now worth $40m… just as someone who was passionate and helped community early on)
The fact is relative pokemon is EXTRMELY niche, 4,000 skyridge PSA 10s but probably 100k+ cards printed, lots of 9s and below diluting the value of the 10s, lots of binder sets, etc., and not thattt many people card to own explicitly PSA 10 versions of them, and even when you do you make a post on IG, add them to your personal collection, and feel satisfied. Compare that to… twitter profile pics (206 million daily active users on twitter) each creating a social graph that shows off these pictures to the other further expanding it’s effect, desirability, and presence. Now 8,888 or 10,000 or whatever really just is NOT a lot of a thing to have. There are ~20m millionaires worldwide currently so when you are talking 1-5 of these profile projects really take off in a winner-take-all sort of distribution of ‘clout’ it’s just not a lot of the thing to have in existence and a lot of people want to be part of that “club”. This obv spawns derivatives (Penguins trying to be a cute/funny low cost version of punks) that then sometimes take on their own life and become huge in their own right while others stay small communities, cheap but enjoyable for a long time where people just like collecting the rares and having the coolest one / etc.
Hopefully all of that helps, mostly just my ramblings/musing before I go back to doing more architecture but I do enjoy sharing this stuff with you guys and while the easiest and earliest days may be fading for NFTs the opportunity is still excessively abundant, especially if you believe the next generation while be digital first on almost everything and their value being much more on digital flex vs physical (i.e. the rise of CSGO, dota, fortnite etc. skins being billion dollar markets was the early stages of all of this)
@primordialaa , this is great, nice writeup.
@nikhil , I think he answered it mostly but if you read through every post on this (www.elitefourum.com/t/why-is-a-card-more-valuable-to-you-than-a-proxy/31989/1) thread I think you’ll start to agree on the “99% of the value of Pokemon cards as well as NFTs comes from the flex value”
FWIW, I view the space as 100% gambling but it is pretty fun. I delved into some of the projects that @primordialaa mentioned and was somehow able to make a nice profit.
