NFTs, an explosive speculative bubble raised by pop culture and crypto mania

NFTs, an explosive speculative bubble raised by pop culture and crypto mania

The Bored Ape character seems derivative of the drawings of Jamie Hewlett, the artist who drew Tank Girl and virtual band Gorillaz. According to to the creators, each variant is “generated from over 170 possible traits, including expression, headwear, clothing, and more”. They say every ape is unique “but some are rarer than others”.

Eminem’s ‘Bored Ape’ avatar on his Twitter profile.
Twitter, CC BY

Which is unlikely. While publicity given to the rapper’s purchase certainly seems to have boosted demand, the average price paid for Bored Ape NFTs so far in 2022 is about 83 Ether (currently about US$280,000). Eminem may have been prepared to pay much more for the one that looked more like him; but would anyone else?

That’s about it. The intellectual property (such as it is) remains with the creators. He is not entitled to any share of merchandising revenue from the character. He can only profit from his purchase if he can find a “greater fool” willing to pay even more for the NFT.

Story Highlights

  • The latest NFT mania involves fantastic amounts of money being paid for “Bored Apes”, 10,000 avatars featuring variants of a bored-looking cartoon ape. Last month rapper Eminem (real name Marshall Mathers) paid about US$450,000 in Ethereum cryptocurrency to acquire Bored Ape No. 9055 – nicknamed EminApe, because its khaki and gold chain resembles what Eminem wears. It purportedly joins more than 160 other NFTs in the rapper’s collection.

  • So what does Eminem now own? He has an electronic version of an image, which he is using for his Twitter profile. But then so does anyone who copies it from the internet. The only difference is that he has a record in a blockchain that shows he bought it. He also gets to be a member of the “Bored Ape Yacht Club” a members-only online space whose benefits and purpose beyond being a marketing gimmick are unclear.

‘Bored Ape’ sales activity from NFT marketplace OpenSea. Prices are in ‘ether’, the currency unit of the Ethereum blockchain platfrom.
OpenSea, CC BY

NFTs are a highly speculative purchase. The basis of the market is proof of unique ownership, which only really matters for bragging rights and the prospect of selling the NFT in the future. NFT mania arguably combines the most tawdry and avaricious aspects of collectibles and blockchain markets with celebrity culture.

The rise of the celebrity influencer Eminem’s monster payment in particular has lent credibility to the idea these NFTs have value. But he is not the only celebrity who has helped attract attention to the Bored Ape NFTs.

Others to buy into the hype include basketball stars Shaquille O’Neal and Stephen Curry, billionaire Mark Cuban, electronic dance music DJ Steve Aoki, YouTuber Logan Paul and late-night television host Jimmy Fallon. Jimmy Fallon’s tweet about his Bored Ape purchase.
Twitter, CC BY

These well-publicised purchasers effectively act as a form of celebrity endorsement – a tried and true marketing tactic. It is a graphic example of the power of media culture to stoke “irrational exuberance” in financial markets. There has been a shift away from traditional investments and sources of investment advice. With prices disconnected from any future cash flows, there is less interest in forecasts from technical experts. Instead people turn to social media and “doing their own research”.

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FinTok and ‘finfluencers’ are on the rise: 3 tips to assess if their advice has value A lot like Ponzi schemes

This has opened up the field for celebrity influencers. One survey in mid-2021 (polling 1,400 investors aged 18 to 40) suggested about a third of Gen Z investors regard TikTok videos as a source of trustworthy investment advice.