Why are Web3 digital luxury goods so valuable? A brief analysis of its internal logic

Translation: MetaCat

Crypto gives us the ability to tokenize everything (especially NFTs). As a result, it has contributed to a phenomenon best described as the rise of (headless) pseudo-luxury digital goods: Punks, Squiggles, Open. Why are these valuable?

In almost all cases, in the process of generating long-term value from zero to one, when it comes to assets that are not obviously value-precipitated, the core of tokenized media works needs to have basic intrinsic value. , whether in terms of origin, cultural value, artistic value, etc.

In most cases, this asset is primarily a unit of personal expression and identity construction (expressive accessories).

In many cases, the purpose of most buyers is purely to spend money, not to make money.

Through the initial holder base, the work at hand is assigned a social value (this appreciation becomes kindling for a fire that can erupt throughout the community - most assets will never cross this threshold).

Through the initial group of holders, the work at hand is given social value (this appreciation becomes a kind of fire that may develop into an entire community. Of course, the vast majority of assets will never cross this threshold) .

The nuance to realize here is that the early social value initially generated by an asset is only possible if the holder/community member appreciates the underlying intrinsic value. In the early stages, this is the only possible way for more intrinsically motivated holders to emerge.

One of the key factors why Punk, Squiggles and Openen were able to appreciate quickly in the early days was their low prices and low entry barriers for holders. It's not that higher price points make this value creation impossible, but they make it more difficult.

Appreciation of the intrinsic value an asset represents has nothing to do with whether a person is wealthy. But converting passive appreciators into community members with a sense of ownership seems to be directly related to early price.

This may contradict the logic of traditional luxury pricing, which usually requires high prices to gain status and exclusivity. The reason I call this asset "headless luxury" is that its value comes not only from the creator, but more from the holder.

Slowly, as the underlying intrinsic value of the asset appreciates, holdings reach critical mass and a vibrant community forms. And the assets themselves slowly become emblematic of an overall movement that transcends individual assets.

As a broader consensus forms around the asset's symbolic representation, insiders and outsiders alike begin to invest further in the asset, with the expectation that more will buy it over time. New digital stores of value emerge.

As broader consensus develops about what the asset represents symbolically, insiders and outsiders begin to invest further in the asset, with the expectation that more people will buy it over time.

In this way, a new digital value storage method was born.

As this asset is traded and speculated on through market cycles, it gradually acquires economic malleability in its symbolism and store of value.

When the financial value exceeds the social value, it will be sold. vice versa. The composition of holders surrounding the asset will shift from a focus on intrinsic value to a focus on extrinsic value, and during a bear market, may fluctuate back towards intrinsic value again (if it survives the focus cycle).

The key point I want to emphasize is that the generation phase of long-term value from zero to one is almost always an intrinsically driven process that takes time. The value generated always occurs after minting and is always generated (patiently) by its holders.

Anything that rises quickly will fall just as quickly. Few assets that begin as purely speculative objects survive more than one bull-bear cycle. Most will fade away into irrelevance.

The opposite applies to assets with strong intrinsic starting points.

The rules of the game are now here.

What will people like and appreciate?

What’s financially stress-relieving and fun?

What is important and what brings happiness to people?

What is historic?

What’s next for the Punks, Squiggles, and Oppens?

Only time will tell =)

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