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Sorry to break it to you, but that’s what most people outside of crypto think.

And to be honest, we can’t really blame them.

Collecting JPEG of Monkeys or Penguins for thousands of dollars is an objectively bizarre thing to do.

Unless everyone is looking at it from the wrong angle..

Welcome To The Casino

The place where fortunes are made and dreams are broken.

I walked in a casino for the first time in 2017.

I was a 19 year-old eager to lose my entire salary, and I still remember the neon lights on top of the main door promising fortunes waiting to be won.

After entering the casino, and as I was deciding which game I was going to run into disaster with, I quickly realized there were different games for different types of gamblers.

Right next to the smoking room, I quickly noticed a group of serious-faced dudes gathered around a poker table, their eyes locked in deep concentration. These were playing poker, and all seemed skilled in strategy, at reading their opponents and at taking calculated risks.

They were all here with their minds sharp and analytical, navigating the game with precision and a calculated approach.

Then looking towards the slot machines, I noticed a little further along a roulette wheel which seemed to attract a different breed of gamblers—those who were drawn to the thrill of chance and pure luck. The thrill-seekers placed their bets with hopeful eyes, eagerly awaiting the whims of fate, and were developing all sorts of false theory to rationalize their wins.

This seemed a quite fascinating game, and I ended up spending my first night at a casino watching the roulette players go by.

As the hours passed, and amidst the clinking of chips and the hum of the wheel, a realization dawned on me:

Poker players kept playing pokers. Roulette players kept playing roulette.

Sure, they were all under the same roof, breathing in the same blend of luck and second-hand smoke, but their approaches were very different, and no poker player would thought of giving advice to roulette players.

Because inside the casino, it seemed obvious those were two completely different games, with their own distinct rules and own mechanics.

The Real-Life Casino

Yet, when it comes to the real-life casino, the lines blurred.

In one corner, you have the traditional investors pointing fingers and making fun of the crypto degens—the ones who throw caution (and often, common sense) to the wind while placing their bets on shitcoins and NFTs.

On the flip side, you have crypto degens rolling their eyes at the suit-and-tie brigade, those super serious investors making bets that take longer to play out than an internet explorer tab takes to load.

But both sides don’t realize one thing.

They all play completely different games.

Historically, traditional financial markets have relied on mathematical models to assess the value of assets. Leveraging fundamental analysis, earnings reports, and economic indicators, so very smart people make calculated risks hoping to make a ton of money.

Traditional Investing is a game for the poker players, the ones who are analytical and leverage data.

Then comes Crypto Investing, with the valuation of NFTs and social tokens mainly relying on a cultural model, heavily influenced by cultural factors such as media attention, social media trends, celebrity endorsements, or memes.

All those elements play an important part in shaping crypto market sentiment.

So much so than when a story sounds good (even if the story has a fake origin or is backed by no data), the speculative wave of crypto buyers who think that it will happen is more than enough to send the NFT or token to the moon by itself.

Crypto Investing is a game for the Roulette players, the ones who like to create narratives as justifications for their wins and losses.

And here you have it.

The massive difference that so many can't seem to quite wrap their heads around.

What Kind Of Player Are You?

The reason critics hate crypto is the same reason fanboys tend to love it:

It's the first attention economy native currency with a *cultural* (not mathematical) valuation framework.

Indeed:

When people give crypto attention, its price goes up.

And when they don't, it goes down.

*as easy as it gets*

And it's not "better" or "worst" than Traditional Investing - it's just different.

Most crypto assets have very few utilities, I'll admit it.

And if you're investing in NFTs or social tokens through the lens of supply, utility, or some other data-backed criterion, I can assure you you'll lose money. 

But it'd be because you'd play the wrong game with the wrong rules.

But if you start understanding that Crypto Investing is a different kind of game than Traditional Investing and that NFT and tokens' value derives not from data or utility but from narrative and culture, that's when you start to win.

Don't believe me?

Let's take a look at the stupidest, less data-driven memecoin: $PEPE.

PEPE is an OG meme that first appeared in 2005. Over the past decades, the character and its memes have proliferated across the internet, and Pepe is now one of the most popular memes in crypto and Web3. So it was inevitable that, at some point, the $PEPE token would appear.

And that's exactly what happened a few weeks ago.

In a matter of hours, the market cap skyrocketed to ~$116 million, making $PEPE the 7th most valuable memecoin on the market.

Now, let's get real: $PEPE ain't a rational investment from a data POV. Hell no.

But if you're looking at this investment through a cultural lens and from a narrative POV, does it makes sense?

You bet.

And some early investors understanding the cultural baggage of this meme made a ton of (magic internet) money. 

So, you see, hearing haters saying that valuing assets through ~ ViBes & cUltuRe~ is more stupid than rational investing is a point of view I can understand.

But their argument is beside the point.

Roulette players aren't more stupid than poker players simply because they base their bets out of thin air, and everyone does what they want with their money.

The whole point is simply knowing which game you're playing and understanding its rules.

Closing Thoughts

Crypto is a new game with new rules.

And investors playing by the rules of the past believe they can leverage their experience to win this new game - but they can’t.

So now I ask you the question again.

Are you stupid for buying NFTs?

Or is it simply that the narratives we keep hearing about crypto investing are told by people still operating on an outdated mental model?

And if you answered the latter, then collecting JPEGs of Monkey or Penguins for thousands of dollars based on no data, but your internet culture is actually your best bet to win the money game.

Speak soon,

- Eliot

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