Throughout 2021’s crypto faze; we’ve watched meme currencies rise and fall, Tesla (TSLA) accept-then-unaccept Bitcoin for cars, and Non Fungible Tokens - also known as NFTs - sell at ridiculous prices.
How ridiculous has the NFT craze gotten? Well, Beeple - a once unknown digital artist and graphic designer - auctioned off his piece “Everydays - The First 5000 Days” for an eye-watering $69 million at a Christie’s auction. The piece, which was created by conglomerating art that he had made every day for 5,000 days straight since May 1, 2007 when the artist set out to create and publish new artwork everyday, a task that Beeple has been at for over 13 years now.
Beeple’s ascent made him the third most expensive living artist in the world by auction price and helped solidify a craze in digitally-unique goods.
This rise in popularity has come with the good, the bad, and the ugly as artists and crypto investors alike flock to the Ethereum-based tokens to own a piece of the “future” of art. But this is a risky path to riches for investors as the kind of art that is valued by multiple generations is rarely valued as such during its time, because, well, how am I supposed to know what from my generation my grandkid’s grandkids are going to value.
I know future generations will probably still care about Leonardo da Vinci’s “Mona Lisa” and Van Goh’s “Starry Night”, as my generation and previous generations have all valued those artworks at exorbitant prices. But when we are talking about art, and perhaps especially digital art, that is today-years old, well, it's just unpredictable.
Despite a foggy crystal ball, I am willing to go out on a limb and say that the latest craze, “Pudgy Penguins” - which are cute cartoon penguins that resemble the classic children’s online game “Club Penguin” - will not be highly sought after for generations to come, or even years or months to come.
This project, which has resulted in the creation of 8,888 Pudgy Penguins, is a little over a month old and, despite some of these penguins now selling for hundreds of thousands of dollars, there is already ample skepticism that the whole thing is an elaborate scam by its creators - one of whom is already known to have been involved in several NFT-related scams before.
Based on the operation as a whole, I’d be completely comfortable to take my beliefs about the longevity of these penguins a huge-speculative step further out on that limb and say that the only way any of the “Pudgy Penguins” become remembered art that continues to appreciate value over the long-haul, is if the whole thing turns out to be the worst-case scenario scam that becomes a sobering lesson for generations to come.
The entire pitch given by its creators is this: “Located in the freezing cold, arctic region of the metaverse you can find 8,888 cute chubby Pudgy Penguins sliding around on the ETH blockchain.” No philanthropic save the penguins from climate change, no social game to go along with the penguins. Just 8,888 pictures of penguins and their creators's.
While I would never say that people can’t change, I would remind everyone how the saying (actually) goes: “Fool me once, shame on you. Fool me twice, shame on me.”
Co-founder ColeThereum, before adding the “Thereum” to his name and entering the blockchain, ran a dropshipping business “eBoy Outlet” that was flooded with negative reviews of people never getting their orders, or refunds. After this was revealed on Twitter, the Instagram for the company, previously confirmed by ColeThereum to be his, was removed.
The same co-founder was also found to have been faking an NFT giveaway to promote the NFT project FameLadySquad. After promising to give Lady #500 away, the user posted that exact NFT for sale on OpenSea just days later.
While under heat, ColeThereum went on to admit that he used to be paid to shill NFT projects and even said he regrets those ventures. That shouldn’t inspire confidence in the project but the Pudgy Penguin community didn’t seem to care in the slightest.
So is that it? People are going to lose millions dollars over some pump-and-dump penguin scheme?
Well, I guess not necessarily. There is currently no evidence to suggest that this particular instance is in fact a scam. The penguins flew onto the scene and overtook existing animal meme-NFTs like Crypto Punks and Bored Apes. And I’d actually say you don’t even need to focus on that part, because true or false, it doesn’t change my thoughts on it at all.
Let's remember this about Pudgy Penguins and NFTs as a whole: while it is a debatably legitimate project, there is absolutely nothing special or unique about this or most other NFT ventures. Besides the Pudgy Penguins brand, and sure - a unique code, - there really isn’t a single thing that is special about this project. Cute animal memes that come with a unique Ethereum-based code and a jpeg image are a dime a dozen.
The value proposition from an investor's point of view is that people will want to keep looking at and obsessing over these penguins, but even more importantly paying even higher prices for them, as they can be looked at for free. But, if the barrier to entry is so low that it only took a little over a month to overtake older projects like Crypto Punks and Bored Apes, why would you ever want any of them?
So with an easily replicated, but admittedly cute, cartoon image coupled with a unique code being the value proposition, what is the actual point here? Sure, I can have a decorative TV on the wall that cycles through all of my $200,000 cartoon artworks. But I can also have that same TV showing those same images, except I could use my computer’s built-in snipping tool to do so for free.
Cute can sell forever in womens' and childrens' clothes, and perhaps with dog toys. But cute cat memes tend to be in and out of the spotlight pretty quickly. In fact, it took a very Grumpy Cat for a meme to stay around for any amount of time.
So if you are investing with the idea in mind that a meme investment will always be the center of attention, tell Bad Luck Brian I say “hey” when you visit the land of the misfit memes.
