 | Hi y’all —
Fashionable I am not, but I do love a good trend. I make a point of staying in the loop on current events, if only so I can mock them later on Twitter.
I eat trendy foods (like Trader Joe’s cauliflower gnocchi) and do my nails with a trendy manicure kit (Olive and June). I follow trendy Instagram accounts (@deuxmoi) and watch trendy TV shows (how ’bout that WandaVision finale?). I download trendy apps (yes, I’m on Dispo), listen to trendy music (Machine Gun Kelly’s new album slaps) and even use trendy slang (did you see me just say “slaps”?).
So when something pops up that I don’t know about, I want to crack the case immediately. That’s what happened last week when I started seeing mentions of NFTs all over my social media. I felt like a switch was flipped — without warning, the GameStop headlines vanished, and in their place a million articles about NFTs appeared. Meanwhile, I didn’t even know what the letters stood for.
Motivated by my FOMO, I’ve decided to fix that. What are NFTs, and why are they blowing up all of a sudden?
Richard Smith, an expert in markets and financial cycles, agreed to help me figure it out. He began by defining NFT, which stands for non-fungible token. The word “fungible” refers to a good that can be mutually exchanged — if you have a $1 bill and I have a $1 bill and we swap them, nobody is the richer.
Non-fungible is the opposite of that; the token is attached to a super special item.
“We can’t just trade one for another and not lose any value,” Smith says. “It’s a collectible, and you'll be able to uniquely identify and authenticate yourself as the owner of that collectible.”
NFTs are tied to blockchain, which is essentially a big encrypted ledger. Transactions often use Ethereum, a kind of cryptocurrency like Bitcoin. When people buy NFTs, they’re purchasing the “keys” to them — “you own it, and you can exchange it with somebody, or sell it, or do whatever you want, and we can verify that,” Smith says.
Because it’s all digital, NFTs can pretty much be anything. Right now, the biggest mainstream NFTs are in the art and sports spaces. | NFTs aren’t new. CryptoPunks, which are little pixelated avatars generated by an algorithm, debuted in 2017. There are only 10,000 CryptoPunk NFTs in existence, so each one is a collectible. The scarcity makes them expensive. In January, CryptoPunk 2890 — a blue guy with a purple hat — sold for 605 ETH. That’s equal to more than $760,000.
Why would I spend so much money on something I can’t even hold? Mason Nystrom, a research analyst at the crypto database Messari, says people’s motivations for buying NFTs vary. I might want one because it’s a collectible or because I think it’ll increase in value later on. I might want one to support the artist. Or I might simply think it’s cool.
“If someone thinks an NFT has value because it's a clip of LeBron James doing a dunk or piece of artwork or a game asset they want to use, it’s a different way to display value,” Nystrom adds.
One interesting aspect of NFT art is that due to the way sales happen, creators can make money off of secondary sales. By purchasing an up-and-coming artist’s NFT, I’m not only supporting them and getting in on the ground floor in case they blow up later but also making it so, “as they’re developing their brand, [they] don’t have to sacrifice the future value of their work,” Nystrom says.
That’s partially why NFTs are so popular right now. There’s a ton of inventory. It’s not difficult for artists to mint, or make, NFTs of their art — and there’s a chance they can earn royalties in perpetuity. It’s a no-brainer. (Except for the environmental concerns.)
From the consumer’s point of view, NFTs are hella trendy because they’re fun. There are a ton of weird NFTs depending on what I’m into. There are NFTs for playing beer pong against Post Malone, for famous Shawn Mendes outfits, and for a video of a Russian man eating an actual bat outside of a government building. For sports fans, there’s NBA Top Shots, which allows people to own moments like this aforementioned LeBron James dunk that recently sold for $208,000.
This also makes them accessible. When I think about the stock market, I envision old, rich men in expensive suits throwing cash at esoteric things I don’t understand. But I can appreciate, say, an NFT that will let me sit front-row at IRL Kings of Leon concerts. In that sense, it is similar to the Robinhood/GameStop phenomenon — it’s easy for regular people to get involved.
It’s taking crypto out of just-for-nerds territory and making it hip.
“The early adopters of Bitcoin were cryptographers, people who were deep into technology, Libertarians — which are niche groups,” Nystrom says. “But, OK, who likes music? Who likes art? There’s these much broader categories where more a lot of people can get excited about it.”
There are risks to this, of course, because NFTs are heavily speculative. But it may be a fun thing to look into as long as I’m careful |  | (but please don't tell me you scrolled past all of my hard work) NFTs are like digital trading cards for anything I can think of. They’re predicated on the idea of collecting and owning something valuable, though people’s reasons for buying them range from “for the lulz” to resale value to legit perks.
The hype is real right now, and I should exercise caution. Spending my entire savings on a Logan Paul Pokemon card might not be the best idea. But in general, Nystrom predicts NFTs are here to stay.
“Any type of asset where an NFT makes sense, I think, will eventually be tokenized as such,” he adds. | North West, a 7-year-old who is wealthier than I will ever be, doesn’t cut corners when it comes to dressing her bearded dragon. Her mom, Kim Kardashian, posted photos of North and Speed wearing matching sets from her Skims Cozy line. Speed has three robes and three hoodies, which — based on Skims prices — add up to nearly $300 of clothing. Speed just took up-SCALE fashion to a new level. | five things I'm loving online right now | | 1 | With owners at home 24/7, pets have had it pretty good during the pandemic. But The Wall Street Journal may have just ended their lucky streak with a story about how animals are putting on the pounds. Aside from the adorable photos in this piece, I love the anecdote about Cakes, a Kentucky Fried Chicken-loving cat. “One night, after waking to a loud crash, the family found Cakes ‘going to town on the chicken bones’ from the garbage can she overturned,” it reads. “Cakes has maintained a stable weight lately ... by working out with a laser pointer.” Incredible. | | 2 | Chicken on sled. | | 3 | I really respect the work they’re doing over at Every SpongeBob Frame in Order, a Twitter account that is — you guessed it — posting every SpongeBob frame in order. It’s like Bikini Bottom Twitter on steroids. | | 4 | If you’re having a bad day, check out this online self-care game, which asks a series of questions as it leads you through drinking water, socializing, exercising and identifying problems. Tiny actions like loading the dishwasher or Skyping a friend can help your mental health loads, but they’re often hard to see for ourselves. Playing the game can get you started on a path toward feeling better. <3 | | 5 | Currently obsessed with this resin art Instagram account. Do I need a glittery wall hanger with pressed flowers, snake bones and Venus de Milo photos in it? No. Will I buy one anyway? Maybe. | | send me cute pictures of your pets, please | Meet Teddy Bear, an aptly named mini Labradoodle who thinks NFT stands for Now, Fetch Time. Nobody tell her otherwise. | Time to mint Dollar Scholar.
See you next week.
Julia
P.S. You guys sent in a ton of great tips after the issue on car rentals. Scholar John told me about how he saved over $250 in January by shopping around on various rental car sites and using the no deposit/free cancellation options. Scholar Marion warned me to not rely on the chain to provide children's car seats. Scholar Kevin reminded me to turn off the toll pass transponder and pay with my own money. And finally, Scholar Jeanette suggested freezing strawberry halves, dipping them in pancake batter and DEEP FRYING THEM. Wow.
P.P.S. Do you own any NFTs? What’s your favorite episode of SpongeBob? Got any self-care tips? Send comments to julia.glum@money.com or @SuperJulia on Twitter. | | | This newsletter is free because Money earns a commission when you click or make purchases from the links in this email and on our site. We also receive compensation for some of the products and services featured in this message. Offers may be subject to change without notice. Learn more about how we make money.
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