Two years ago, I remember reading multiple people emphatically telling their readers that NFTs (non-fungible tokens) would change everything — that people “wanted” to own a unique digital object, and indeed that said uniqueness would make pictures of apes or animated GIFs of sporting moments worth millions. Their logic entirely hinged upon the idea that something being one-of-a-kind somehow made it valuable, and that a digital token connected to a picture or video was the same as, say, a rare baseball card or comic book, or the sense that owning part of a digital entity like a game was somehow valuable.
My friends, I have a bit of advice: whenever somebody tells you to ignore your eyes and ears, to dull a voice in your head that says “that’s really, really stupid!” or, of course, put a bunch of money into an unproven asset, you should always work out how they get paid at the end.
Alexis Ohanian, the founder of Reddit, sunk $54 million into an NFT project called “Doodles” last year through his firm 776, claiming in January that Doodles (a collection of NFTs and an associated cartoon that appears to heavily rip off the aesthetic of Adventure Time) wanted to “build the next generation of Disney and a whole world of IP that is…giving people a stake, a sense of ownership.”
One might wonder how ownership actually translates into value, especially in the case of Doodles. Users who buy Doodles NFTs do not own any intellectual property, and while they’re able to “merchandise it for up to $100,000 through the sale of physical goods,” I have found absolutely no evidence of that ever occurring.
Doodles, like many NFT projects, was also sold on the idea that ownership allowed you to “vote on the future of the company,” which oftentimes leads nowhere as (like with the Bored Ape Yacht Club’s “ApeCoin'', which was airdropped to owners of Bored Ape Yacht Club NFTs) the company in question and venture capitalists end up owning the majority of the supply (for example, Andreessen Horowitz received 14% of ApeCoin’s initial airdrop). These DAO (decentralized autonomous organizations) are always framed as some sort of democratic process, carefully leaving out the fact that a democratic system with transactable votes is by definition a kleptocracy, which is exactly what these things were designed to be.
Except now Doodles is “no longer an NFT project” and will “no longer cater to speculators” according to a statement from March by co-founder Jordan “poopie” Castro. A company that less than a year previously was, according to its investor, “positioned to continue to define the NFT industry” and “onboard millions to the blockchain, and become one of the most inclusive, creative, joyful media brands in Web3 and beyond” had officially pulled the rug out from under customers that had only lost money if they’d invested at that time. Those who had blindly followed Alexis Ohanian and FTX Ventures (seriously) in investing in “Doodles” were shit out of luck, with their “joyful” cartoon portraits losing 85% of their value in the last year. The company, however, has happily made (and raised) millions off of the royalties on every secondary sale.
It’s arguably one of the most egregious rugpulls I’ve ever seen. Doodles sold people a dream — albeit an arguably stupid one — that you’d be investing and participating in the future of an intellectual property, and have some industry over its future. What they’ve actually got is a borderline-worthless portrait that is officially not part of the future of the company and, by the looks of it, a dying community.
Doodles had to remove the 50% quorum (IE: less than 50% of NFT holders actually interacted with the project’s votes) requirement in March, voting to appoint a “founding community council” to make decisions about where the “Doodle Bank” (I hate every single one of these people) would be spent in the future. It’s now entirely deleted their “visions and guidelines” document — you know, the one that actually explained how the project’s blockchain elements worked — meaning that the 9th most popular NFT project (as of writing) has begun to remove its association… with NFTs.
The Doodles Community Discord, which boasts 85,716 members, feels like a ghost town. The “news-stand” hasn’t had a post since August 30th (announcing that Doodles’ crocs collaboration had sold out — terrible news for the least-fuckable people alive), and many other official channels haven’t been updated since May or August 2023. The “general-hall” channel is dominated by a mixture of bots and people responding to other people’s Doodles with “Doods Rule,” with very little of what one might consider human communication — no conversations, camaraderie (beyond shared purchases), or what one might call “community.”
This was the community behind a brand that was, at one point, worth $700 million — a giant chatroom with the charm and vibrance of a dying mall. The supposed “next generation of Disney” lacks any real fans. There are people that would scream in your face for insulting the wrong Star Wars or Marvel character, and Disney adults that cried when Disneyland reopened after lockdowns — yet Doodles’ $500m in sales and massive valuation have created nothing. There are no superfans, no true loyalists, and no evangelists. Just a depressing chatroom of marks that have yet to admit they’ve been conned chirping “GM” at each other.
That’s because none of these so-called “future of IP” plays actually built meaningful intellectual property. 10,000 procedurally-generated portraits of monkeys or doodles are not recognizable or meaningful because there are thousands of them. Worse still, these NFT companies — the same ones that want to replace Disney — seem incapable or unwilling to do anything approximating world-building.
Doodles (again, worth $700m) has, from what I can see, two main characters: Hap and his cat Mello. There is very little about them anywhere. A post on Instagram, and a vague video about their journey in the “Doodles universe,” but otherwise nothing else.
It’s all so incredibly half-assed.
Doodles shows a deep loathing for creativity, storytelling and their ideal customer. Pendleton Ward made the original five-minute-long Adventure Time video (which Doodles clearly rips off) over a decade ago without funding or assistance, and it drips with creativity and love for making cool shit that people might enjoy. Doodles’ Youtube page has at most seven minutes of random teasers and advertisements for brand collaborations despite tens of millions of dollars of funding and hundreds of media placements because it was never about creating anything.
Doodles, much like the Bored Ape Yacht Club or Logan Paul’s CryptoZoo, is not an entertainment company or a “community” — it’s a thinly-veiled attempt to sell securities to suckers, one that’s falling apart as the markets and the SEC turn on these loathsome products. It never tried to create stories or characters or a lasting brand. It did the bare minimum to try and convince people they were “buying into the future,” and because the prices kept going up, the media (and as a result the general public) chose to believe it.
The NFT hype was a long con on customers and the media at large — a classic scam where companies built the appearance of value without ever actually generating any. And it worked, enriching already-wealthy people like Marc Andreessen and Alexis Ohanian and conning retail investors for profit.
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NFT investors are pretending to sell a dream of access to wealth - both for the artist and the collector - as a means of generating their own wealth. Except the chances of being left with a worthless piece of shit are high for most people - and all that’s left are people desperately trying to evangelize an industry in the hopes that it will buoy their questionable investment decisions. While there may be a few people that make money on this, the majority - like a lot of crypto - will be left in the red, and every new entrant - every new NFT - will seek to devalue the industry as a whole, as the novelty of owning one of these not-quite-pieces-of-art is already waning.
And I was totally right, as an industry report from this week showed that 95% of NFTs on the market are now totally worthless. The analysis of 73,257 NFT collections found that 69,795 have a market capitalization — the total value of all NFTs in a collection — of zero.* Almost every single person encouraged to “invest” in them by gormless articles from the New York Times and CNBC is a victim of a massive legal fraud peddled by internet charlatans that used wash-trading to pump their value and already-rich venture capitalists looking to take advantage of post-lockdown desperation. NFTs were never really “worth” anything, and the majority of the industry, as it turns out, is made up of faked transactions, plagiarized or “fake” collections (your ape might be unique, but it’s not the real ape), and outright scams.
Editor’s Note: For the sake of transparency, it’s worth noting that the aforementioned study isn’t without its critics, most notably the wonderful Molly White (of “Web3 is Going Just Great” fame). White astutely points out that many NFTs were, even from the outset, completely worthless as the NFT goldrush led to an influx of “creators” flooding the market with drawings that were unlikely to ever sell. Additionally, White points out a couple of methodological concerns in the original study (namely a disparity between the NFTs included in the original sample, and a larger sample of NFTs used to estimate the environmental impact of digital collectibles, as well as a mixing-and-matching of individual NFTs and collections, which may contain multiple NFTs).
While the conclusion of the report is ultimately correct (as White notes), and most NFTs are indeed worthless, or at the very least, have declined precipitously in value since the boomy heydays of the NFT market, I felt it was important to be upfront about the flaws in this particular study. White’s writeup goes into further detail, and it’s absolutely worth reading.
NFTs were never a “great investment” or the “future of intellectual property” — they were a vehicle used to extract capital from consumers. They were (and are) a gruesome, exploitative scam, creating just enough collateral and artwork to fool the average person into believing that this was a lasting product, engaging the language of conspiracy theorists and televangelists to tell people that they were “going to make it” and that others would “have fun staying poor.” The most successful projects took on venture capital to give them the appearance of a lasting creative enterprise that users would “own a piece of,” despite the fact that no NFT granted stock options, voting rights, or any part of the company, and that every “community vote” was heavily weighted toward those with the most resources — if these votes were even consequential.
And what’s important to remember about every single one of these companies is that they didn’t even try that hard. The Bored Ape Yacht Club (its holding company, Yuga Labs, was valued at $4 billion last year), despite their lofty goals of “going Hollywood,” has created very little — a vague promise of a metaverse product, a contrived cartoon about monkeys and toilets that led to a quickly-exploited eBaumsWorld-esque game that required owning a bored ape, and a great deal of hype. These are not creative enterprises or entertainment companies — they’re shell corporations for the ill-gotten revenues from the secondary market sales of 10,000 generic-looking profile pictures that were hyped up by a media that incredulously drank the slop fed to them by venture capitalists.
NFTs were (and are) vehicles to exploit people - particularly Americans - who are desperate and fairly questioning their place in a world that has continually turned upon providing basic social services and the ability for its citizens to thrive. There are few honest ways for the average person to accumulate wealth — it’s near impossible to buy a house, the rising cost of living means few have the capital to invest in the market, and most Americans are woefully unprepared for retirement.
The overall exploitation of cryptocurrency is something that should be studied as a symptom of a global state of economic desperation and pain. This horrible industry took root because the average person cannot simply work and thrive — they must hustle, they must suffer, they must find any way they can to make even a modest wealth, and that same desperation makes them susceptible to con artists that promise an easy way out.