Beyond NFTs as Collectibles

How Obtainable Exclusivity will Transform the Consumer Economy

Published in

Cardstack

13 min readSep 24, 2021

The post-social media consumer economy runs on exclusivity. Consumption today so often seems tied to hype markets where everything is near-impossible to cop, from clothing and video games to homes and vacations. Consider the following situations. Do they not sound familiar?

As an avid Playstation fan, you excitedly wait for the PS5 to drop on Sony’s website. At the time of release, you refresh the webpage and quickly move your cursor to the “Buy” button only to discover that the console has already sold out. No PS5 for you. Or maybe you’re a sneakerhead who’s dying to get your hands on the New Balance x Aime Leon Dore 990 collab. You know the release is exclusive but you’ve been a loyal supporter of ALD since they first launched and thus feel a reciprocal kinship with the brand. Yet despite feeling pretty confident that you’ll indeed secure the bag, you end up as the 9,438th customer in line and only 3,000 pairs of the sneakers have been made. Not a chance you’re copping. Or perhaps you’re the world’s biggest Kanye fan — like you somehow have a physical copy of Freshman Adjustment level of fandom — and you’re eager to get into a Chicago listening party for a surprise album release but the tickets seemingly evaporated into thin air upon drop. Or maybe you’re a burgeoning influencer set to attend an exclusive Diplo set at the Beverly Hills Hotel but at the last minute, you instead decide to go to Paris Fashion Week. You try to resell the Diplo ticket to a friend but Ticketmaster obstructs the sale.

The Hype Economy

These scenarios have become all too common in our age where being there holds more value than the actual there itself, where the vernissage becomes more covetable than the actual paintings themselves. This socioeconomic shift can be seen in the world of Instagram e-commerce where vintage resellers pay $6k for ‘90s’ Alladin t-shirts only to resell them after posting a few flex pics to the timeline. In the cryptosphere, you can see this occur in hype swag such as Unisocks where the exchange seems to carry more weight than the product itself. The cost of one $SOCKS token fluctuates wildly around $100K (currently at $81,396.60), and it can be either sold or redeemed for an actual pair of socks. That’s right. Those socks cost ~$100k. Imagine redeeming a SOCKS token for a pair of cotton, fairly ugly socks. Now that’s a flex.

We don’t want to get too heady, but e-transactions have developed an exchange process where the object of desire has been removed from the transaction by virtue of its permeation into the process of the transaction itself. Huh? In plain speak, people care more about acquiring something than the actual something; the acquisition takes on more of an aura than the thing itself. For example, it’s not uncommon to see resellers on Grailed or eBay post screenshots of the famous “Got ‘Em” SNKRS notification as purchasable stand-ins for the sneakers themselves. Sneakerheads are essentially buying representations of sneakers at this point. Reservations have become highly profitable commodities. We can crudely lump these logics together under the title The Hype Economy, a descriptor that aptly captures the spirit of our economic zeitgeist. Now, whether the Hype Economy is good or bad is a question more suited for philosophers than content writers. What we know for certain is that it’s not going to disappear anytime soon, so we need to focus on creating effective solutions and integrating its logics into our pre-existing models of commerce. In short, we need to find a way to make The Hype Economy’s exclusivity obtainable. To be sure, however, we already have a solution in plain sight: the NFT.

So, what exactly are NFTs anyway?

In the most general sense, an NFT is a unique digital item that can be traded. The acronym stands for “non-fungible token,” which, we know, doesn’t make things any simpler. But essentially that means the item is entirely one-of-a-kind. If you trade an NFT for another NFT, you’re trading two completely unique items. Whereas if you trade bitcoin you’re trading the same two things, namely bitcoins. Think of NFTs broadly as totally unique, totally sui generis items — often pieces of digital artwork — that can be traded, purchased, or sold on the blockchain.

How are NFTs used?

NFTs have been used in a variety of ways, from serving as NBA collectibles to containing patent disclosures for Nobel Prize-winning inventions. Despite their amorphous nature, however, NFTs are first and foremost used as collectible art. Why? Well, the blockchain’s ability to assure unique signature and ownership through smart contracts and decentralized commerce naturally accords with the world of art collecting. In 2014, digital artist Kevin McCoy minted the first NFT called Quantum, an animated octagon that pulsates and changes colors. Since 2014, other artists have followed suit, minting and selling NFTs on marketplaces such as OpenSea. During the seven years between Quantum and today, commerce within this sphere has boomed. In August 2021 alone, OpenSea generated nearly $2 billion in sales, and in June, Quantum sold for $1.4 million through the venerated auction house Sotheby’s where it garnered comparisons to Picasso’s Les Demoiselles d’Avignon and Kazimir Malevich’s Black Square. Buzz has certainly blossomed into boom for art collection on the blockchain, and many digital artists are now finding ways to be paid for work that once went uncompensated. It’s safe to say that the foundation of NFTs lies in the art world.

However, NFTs are not entirely limited to collectibility. They can be used in a variety of more generalized commercial ways:

Personalized ticketing: NFTs can serve as more personalized tickets for live events such as music festivals, art shows, sporting events, and more.
In-game assets: many decentralized video games such as Axie Infinity use NFTs as virtual tools that players, rather than developers, can utilize and modify
Loyalty rewards: NFTs can be used as badges that prove a member’s patronage to certain communities and grant awards based on loyalty and previous support
Creating virtual worlds: Community-based NFTs like the Pudgy Penguin collection generate unique virtual worlds through membership benefits, private Discord servers, bonus content, and more
Patent disclosures: NFTs have been used by academic institutions like UC Berkeley to sell patents and inventions
Limited edition content: Artists, athletes, celebrities, movie studios, etc. can use NFTs to distribute limited edition content to loyal supporters on a more personal level
Purchase conditions: Collectible NFTs can be accompanied by conditions that reward loyalty and previous support

Why do we need NFTs?

The mystery surrounding NFTs in the public sphere has become such a hot news item that it’s spawned SNL parodies and birthed countless long-form think pieces from just about every publication around. They have not only excited the public but have also generated legitimately massive revenues. Elon Musk’s girlfriend, the musician Grimes, made $5.8 million selling NFTs. The auction house Christie’s recently sold a collage by the digital artist Beeple for $69 million. It’s safe to say that NFTs have captured the public’s attention. Despite so much coverage and hype, however, many newcomers still greet NFTs with skepticism and even hostility. The biggest misunderstanding still surrounding them is that they exist only as useless and, at times, ridiculous modes of digital JPEG art. While this claim isn’t entirely untrue — there’s plenty of wild JPEG NFTs on the market — there’s so much more to it than a pixelated animation loop of a leaping cat with a Pop-tart as a torso.

For one, NFTs offer models of consumption that accord nicely with our Hype Economy. How exactly? Well, remember how the Hype Economy created large demands for transactions and reservations themselves? NFTs can help make this schema much more streamlined and accessible. Consider this hypothetical: it’s the not-so-distant future and you’re an Apple fanatic. You’ve snagged a position as the seventh person in line to cop the iPhone 17 at the posh Fifth Avenue Apple store. In the world of the Hype Economy, that position is worth big money. So what device would guarantee your position in line in the digital realm? An NFT with ticketing capabilities. Yep, an NFT could function in our scenario as a digital tool of reservation that contains its own value. To gain access to the store, you would simply let the bouncer scan or observe the NFT and be on your merry way. Or, if you decide that you don’t want the phone, you could sell the reservation NFT to the highest bidder. Moreover, community-based NFTs could be used here as membership badges displaying customer loyalty and support. In this case, you’d flash your badge to the bouncer and they’d grant you VIP access as if you were a high-roller at casinos like the Bellagio.

NFTs operate with great flexibility, and if their capabilities are properly developed, they will help redefine our current economy. They can be much, much more than JPEG images. To be sure, however, there’s still plenty of fantastic artists selling and sharing compelling digital art, and that should always remain one of NFTs’ essential functions. But they have the potential to serve as the keys to the Hype Economy’s obtainable exclusivity. We need to begin using them to unlock the doors.

How are we failing to grasp the full potential of NFTs?

To begin answering this question, we have to divide the NFT audience into two main groups: crypto stalwarts and everyday people, or more plainly, heads and newcomers. Though this might be a somewhat reductive claim, the cryptoheads don’t entirely see the use of NFTs as tools of loyalty, reservation, access, and membership. They don’t quite grasp how they can become the new digital badges of special privilege and VIP access. Why exactly? Well, cryptoheads are typically not that concerned with flexing in the IRL. Rather, they tend to care more about their reputations within the Metaverse.

Maybe we’re essentializing here but wouldn’t it make more sense seeing a cryptomillionaire flexing their CryptoPunk collection as their Twitter avatars than witnessing them using NFTs to score bottle service at Soho House? This is why the Metaverse can sometimes feel like an enormous digitized high school; cliques form and members rely on signifiers of taste to display their allegiance and earn a spot at the cool kids table. Perhaps owning the right CryptoPunk is the new “on Wednesdays we wear pink!” This cycle of social capital ultimately renders series-based NFTs more popular than singular, 1:1 pieces because it allows for social mobility to take place, generating a unique conformity among cryptoheads. Consider the recent sale of Bored Ape, an NFT art collection replete with 107 unique images of cartoon apes. The set sold for a whopping $24.4 million at Sotheby’s. Does this enormous price and esteemed venue not tell us something about the value of communal artworks in the world of blockchain? Of course it does.

It is precisely this intersection between art and commerce that makes cryptoheads fail to utilize the full potential of NFTs. They understand them as aesthetic objects capable of generating revenue through flipping and reselling. The logic goes as follows: you purchase an NFT from a hype collection for a low(ish) price, and then immediately resell it to someone else on the blockchain at an up-charged price. It’s a quick way to gain and display wealth in a virtual world where physical goods — cars, watches, houses, shoes, etc. — do not work as status symbols. There’s just so much more to NFTs than that particular mode of quick commerce.

Newcomers to the cryptosphere, however, often meet the entire concept of NFTs with total skepticism and even hostility. Try explaining them to your grandparents and you’ll see what we mean. Everyday people don’t understand why someone would pay millions of dollars for an animated JPEG that could simply be right-clicked and saved. They tend to consider paying for any digital content tagged with any price (let alone $1 million+) a ludicrous waste of money. A fool and their money are soon parted, they may say. At the worst, newcomers write off NFTs entirely by decrying the whole thing as a scam, a Ponzi scheme, or a speculative bubble that’ll eventually burst into nothingness. To be generous, it is somewhat easy to sympathize with this confusion — Web 3.0 is a tough new concept to grasp after all — but it, of course, entirely fails to discern the transformative power of NFTs.

Yet, not all seems to be lost on NFT newcomers. There are a handful of aspects and qualities of the marketplace they understand. While your grandparents may not totally get why someone would pay over $4 million for a cyberpunk imagining of the life of a copy machine, they may understand why someone would spend a little over $1 million for computer art by the late Jerry Garcia. Why? Newcomers tend to understand the NFT world’s emphasis on collecting. Indeed, it’s easy to see why devoted fanbases such as Deadheads might be interested in the collector’s allure here; collectors still get to partake in the thrill of the auction house and purchase a sought-after grail to further complete their shrines. Additionally, newcomers also seem to grasp the value of exclusivity tied to collectible NFTs. They understand that, while digital art may not be their particular cup of tea as far as high-end goods go, it does carry luxury status for some people. While some prefer Birkin bags, others may desire a CryptoPunk, so the logic goes.

What can NFTs do?

As we’ve already mentioned throughout this article, NFTs can do many different things. On a basic functionality level, they can be purchased, sold, and traded among art collectors or speculative resellers, and thus, serve as badges of ownership. In this way, collectible NFTs can almost be thought of as beautiful, glorified receipts, digital items that prove ownership. The commerce surrounding these assets has also spawned auction houses and marketplaces such as OpenSea, undoubtedly the website for NFT acquisition.

But the secondary effects of NFTs are much more expansive and complex than their central exchange functions. Perhaps most obviously, the exclusive nature of collectible NFTs makes them prime symbols of status and wealth that can be used to grant access to select opportunities. Think of a Discord server dedicated to Bored Ape whose members must own one of the ape NFTs to gain access to insider knowledge, rare drops, etc. Or consider Collab.Land, a community-management system for NFT holders that uses a bot to grant membership access to token holders who meet certain thresholds. Membership NFTs can generate both exclusivity and community, or, what we’ve been calling obtainable exclusivity. Moreover, they can also serve as conditions for transactions. For example, Damien Hirst could ascribe a condition to the newest work in his Currency series that requires buyers to own another NFT from the same collection before purchase. Here, NFTs serve as items that prove loyalty and patronage.

An even more compelling possibility surrounding NFTs at large, however, is their ability to engender competition among commercial entities. An NFT in this context works similarly to retail apps like Shopular or ShopAdvisor. Pretend you’ve just purchased $100 worth of groceries and you were hoping to keep the bill under $80. To save money in the future, you begin thinking about cheaper brands. A retail app would provide alternatives by, say, scanning your receipt and transforming that data into tangible deals offered by other brands. Or, for a more luxurious example, an Audi dealership could offer a $2500 competitive bonus for BMW owners who are willing to switch over. NFTs can be used in conjunction with this cross-honor logic. Hirst could set conditions of purchase that encourage buyers who have Banksy collections to migrate to his page. Conditional NFTs have the potential to reshape commerce into something more playful, more competitive.

From here it’s also easy to see how NFTs can be used as more exciting digital coupons. Today, coupons within e-commerce work in pretty straightforward, boring ways. We have standard SAVE20 deals that are so ubiquitous they’re almost entirely bogus. Or we have very minor coupons from niche groups, the EASTERNCHURCHSERVICE10OFF type of promotions that won’t even be completely redeemed. And, of course, let’s not forget classic email spam that typically finds itself buried in the daily deluge of e-commerce promo mail. An NFT, however, could offer substantial discounts and special benefits in fun ways. For example, a collectible NFT that’s limited to 2000 could conceal a code of 20% off or more. It would be a more personalized mode of e-commerce. A retailer or artist could manage these discounts, allowing limited edition transfer capabilities, loyalty deals, bonuses, and more. This would be much more versatile than our current PASTECODEHERE coupon systems.

Okay, but how would NFTs affect daily life?

Well, let’s return to our discontented figures of the Hype Economy. The frustrated Playstation fan, instead of waiting to purchase a PS5 on Sony’s website, could spend the month prior to release accumulating NFTs that guarantee a good spot in line. Similarly, the crestfallen sneakerhead could earn an NFT for his patronage that could be redeemed for early access to the New Balance x Aime Leon Dore drop. The Kanye superfan could get tickets to the listening party through rewards points accumulated in a fan-based NFT. And the up-and-coming influencer could easily exchange their Diplo access for Paris Fashion Week tickets if both badges were easily tradable like NFTs. When we fully realize the potential of the NFT, we will finally achieve the notion of obtainable exclusivity, perhaps the great desire of the twenty-first century.