The Flex Economy
Since March 2020 we’ve seen record participation in asset markets. The big story since then has been the growth of the Crypto and NFT space. We’ve seen huge amounts of capital flowing into Crypto, and adoption over time is a chart that is up and to the right essentially!
A chart that’s been thrown around quite often is the one below. We’re seeing Crypto adoption on par with and even outpacing the growth of the internet which is absolutely astonishing.
If we look at a chart for Bitcoin active addresses over time the trend is exponential. After the 2017 bull market, we saw this drop off pretty considerably as retail interest in the market fizzled out. This once again picked up in 2020 and we saw a new ATH in active addresses. This metric can be used as a great indicator of demand in the crypto market.
After the heavy sell-off in May 2021 active addresses once again fell off and have mostly failed to recover or go on to make new highs.
There are hundreds of theories floating around as to why the market topped off in May 2021 but one undeniable factor was China’s decision to ban Bitcoin and Bitcoin mining state-wide in May. Up until then, China had controlled close to ¾ of the Bitcoin mining share and the majority of these operations had to close down or move.
You can see the effects of this through the Bitcoin hash rate plummeting by almost half in May. However, the resilience of the Bitcoin network shone through and the hash rate is now at new all-time highs showing the strength and adaptability of the network.
So where do NFTs come into this?
Even though we saw a huge slowdown in active Bitcoin addresses in May 2021, which is typically an indicator of demand in the crypto market, Ethereum wallet addresses continued to reach new ATHs at a steady rate.
And Metamask active users went parabolic! In April 2021 Metamask had 5 million monthly active users, by November 2021 that increased to 21 million with 11 million of those joining in the 3 months leading up to November.
Looking back at the Bitcoin active addresses chart, you can see that it took a good 3 years before people really began to understand the technology and adopt it. With NFTs, it took less than a year which poses the question why?
In my opinion, it has a lot to do with what I like to call the “Flex Economy”.
Our lives have become increasingly digital- largely in part to Covid sending the majority of our lives online. Instead of socializing at a restaurant or bar, we’re now on WhatsApp, Twitter and Discord. So if we’re now spending all our time online does it make sense to flex in the same way we used to- by having a fancy car or a huge house? Or is there a digital alternative that’s more appealing?
The flex economy is centered around our digital life starting to mean more to us than our physical life. This was an interesting perspective first sparked by a thread on Twitter I saw from @ShaanVP.
His point was that we were all focused on the metaverse being a place like Decentraland, Roblox, Ready Player One. But what if it’s a time in our lives instead of a place. A time when our digital life is worth more to us than our physical life.
Social media culture now revolves around perfection and portraying yourself to be living your best life. What crypto culture has added to platforms like Twitter is tribalism. NFTs have essentially become a status symbol and the digital alternative to flexing. Owning a Bored Ape or Cryptopunk and putting it as your PFP is now the ultimate flex and sends across a powerful message to your followers.
And now with Twitter’s new verified PFP feature, users don’t even need to have an iconic NFT to flex- they just need the hexagonal PFP and they automatically become part of the tribe.
Brands are also understanding this and entering the metaverse and NFT space. Take Fortnite for example collaborating with high-end brands like Balenciaga and Moncler. Nike and Adidas entering the NFT space. Leaders of the physical flex world are understanding that the future of materialism is more online than it ever has been.
There’s no denying that wealth is a popular measure of success and status. Rich people are often admired because of the importance of money in our capitalist society. If you combine this with our human desire to be recognized and admired by our peers you can see why displaying our wealth is arguably just as important as having it.
What’s your opinion on NFT’s, Web3 and digital status in our society? I’d love to hear your thoughts!
Author:
Brand Marketer / Writer
