08 | Defining Internet Culture
Gamestop, Dogecoin, NBA Topshot...what's next?
Welcome back to Two Cents! I cover crypto broadly with a focus on questions around adoption, product design & business. If you haven’t subscribed yet, follow along by subscribing here:
image of Beeple’s “Everydays - The First 5000 Days” NFT
Eight weeks ago, a majority of the tech industry didn’t know or care what a non-fungible token was. Non-fungible token is quite possibly the least sexy internet term we could’ve come up with.
So - what happened? I’d say the real trigger point was NBA Topshot’s success and virality. This was followed by a wave of influencers discussing NFTs on Twitter and Clubhouse. The “sudden rise”, was preceded by 4+ years of development and grinding by the crypto industry. The real backdrop is a shift in online culture, powered by a few underlying ideas.
First - a quick review of NFTs and the current state.
NFTs make it possible to have code attached to any digital media. This includes digital art, gaming items, music, collectibles, and more. This code provides authentication, transparency, scarcity, and transferability to these items.
Today, value primarily flows to intermediaries, with economics heavily skewed towards platforms
I like the way Jesse Walden describes NFTs:
NFTs represent a way for creators to create, own, sell and benefit from their work. NFTs provide independence, authenticity, and scarcity in a way unlike anything we’ve seen online before.
How will this evolve internet culture?
I have a few ideas. First, I think the creation of new schelling points will be a huge shift, as described by Alex Danco. Schelling point is essentially a fancy way of saying, where the masses congregate (I’m paraphrasing). Between 2009-2020, online communities have congregated on platforms like Facebook, Twitter, Reddit, Discord, and more. With NFTs, the platforms themselves are unlikely to be the schelling points. Instead, online communities and fanbases around NFTs will be the center of the discussion.
Here’s how Alex describes it
“So whether we’re talking about product traceability or authenticity; multiplayer digital art; or any new application we haven’t thought of yet, having NFTs as a Schelling Point for discussion is a fast and powerful way to get lots of different people - developers, artists, merchants, influencers, whoever - to a common gathering place. These are groups of people who, normally, do not speak the same language, and would not find each other at the same parties. So the fact that we now have a common, obvious, and fun gathering place that everyone knows about, in and of itself, is very cool.”
NFTs are quickly becoming the “it” category for how creators and brands will evolve.
Second, is the emphasis on working online. The rise of creators has been primarily fallen into two models: the mega-influencers who monetize their brand and micro-influencers who found a passionate online hobby. What are we really missing? A middle class for starters. A new economic model? As Packy puts it:
“People follow people, not companies, but companies have long had the advantage because of all of the coordination it takes to build scaled products. As a result, they capture a disproportionate share of the profits. Even Creator Economy platforms like Substack and TikTok treat creators themselves as commoditized supply. While people are making great livings through their work, which is a great step, I think the confluence of the Passion Economy, DeFi, and NFTs will mean that the creators themselves will capture the lions’ share of the profits.”
The person is the product. The evolution of internet business models points to favoring individuals > corporations. Internet culture will focus on finding your niche and doubling down. NFTs enable online social status by “discovering” the next famous artist, musician, DJ, or whomever and having proof that you backed them first.
Lastly, I want to talk about memes.
Proof of memetic culture grows with each passing year. It’s a defining quality of the best internet content and platforms. Now, it’s spreading to investing. Whether it’s Gamestop or Dogecoin, meme investing is becoming a legitimate, albeit risky, investing strategy. Finance is infiltrating our online culture. I’ve witnessed this firsthand with DeFi. But honestly, I think it’s about the get much bigger than anything we’ve seen. I really enjoyed John Luttig’s observations:
“Today, social media is a magnifying glass for wealth. Posts of wealth generation abound: from DFV’s reddit posts, to Chamath’s IRR tweets, to Elon’s Dogecoin memes. Social media acts as an emotional coordination layer, increasing the amplitude and frequency of culture. Jealousy, resentment, and fomo are more viral and powerful than ever, particularly when everyone is on their computer all day post-lockdown.
What Instagram did to body image, wallstreetbets and Twitter are doing to bank account image.”
The financialization of internet culture has long been underway. Up until recently, we’ve taken the physical and monetized it via platforms. Experiences, filters, blogs, vlogging. Moving forward, the content itself will be ownable. I suspect memes and virality will become a key component of how we value content you own.
Elsewhere
Female founders in crypto - please reach out! Would love to chat more!
I shared some views on Consumer & Crypto, if you’d like to dig further.
Signing off! Hope you all have a wonderful weekend.
Okay, I am so happy I found your blog this morning.
It's crazy.
Yesterday, I was just talking to my partner about NFTs and how Tech Twitter was buying all kinds of meme NFTs this week. Rocks, penguins, gravel and more 😂. I found it amazing, and to me, it made sense to buy them.
As you mentioned in your blog, "I suspect memes and virality will become a key component of how we value content you own." Their value roots from their virality. And all virality is, is how much love and energy people are giving it.
For those who wonder why anyone would ever spend money on these meme NFTs, I would tell them exactly what my friend Morgan mentioned in her tweet:
"i hate the cats. but i still bought them. why? because i want to make money anon, i don’t care about being right" (via https://twitter.com/guccitr0ll/status/1426299184836120576?s=20)
Which reminds me of another thing I love about the industry. We just dgaf about the status quo anymore. Instead, we're challenging it with every single NFT meme or crypto we invest in.