Believe it or not, the current NFT PFP craze with its famous communities of fun-loving primates and felines has its conceptual roots in a refugee camp in the Netherlands.
In 2014, a blockchain specialist (who later famously recounted how he had ordered a pizza to the camp with Bitcoin) experienced such difficulty proving his identity through existing documentation that he came up with the idea of a decentralized, incorruptible identity certificate. Years later, this became possible thanks to the same technology that underpins the raft of NFT profile pictures we see today.
The power of the NFT (or ERC721 standard to give it its formal moniker) can be hard to comprehend from the perspective of a passive viewer. The very idea of a simple JPEG that suddenly accrues enormous value seems ridiculous. But at its heart, ERC721 is simply one of the ways of recording data on the Ethereum blockchain, allowing the emission of different tokens with metadata (additional “description”), through smart contracts. They are a confirmation of authenticity (and a real breakthrough, from which the dynamic development of cryptocurrency applications began).
The popularity of NFTs and the raised awareness of their possibilities is possible because of first movers such as Crypto Punks, Crypto Kitties, Bored Ape Yacht Club, and other PFP projects, such as Doodles, Cool Cats and Fancy Bears, and many smaller collections.
While Crypto Punks have become the OG showpiece of the crypto world, BAYC was the first project to break into the mainstream and start the real PFP revolution. A number of celebrities, rappers, actors, athletes, and CEOs basked in the collective “flex” of displaying a distinctive Ape in place of their ordinary profile pictures.
That means Bored Apes and similar PFP projects have become status symbols, much like a fine watch, sports car, or country home - but in the digital realm. More than that, they offer entry into the most prestigious of gated communities, limited to just a few thousand like-minded souls and the occasional megabrand like Adidas. Yet whatever the prestige of a digital avatar, the human need to create, adapt and personalize cannot be so easily satisfied. Already, a healthy secondary utility is developing that allows for further personalization - new accessories, a change of hairstyle, a snazzy new outfit - enabling the owner to connect more deeply to their digital persona and - naturally - add value to their asset.
Fancy Bears Metaverse is putting considerable time and energy into its “NFT 2.0” model which combines the standards of ERC721, ERC20, DeFi, and gaming to enable its community to personalize, engage and interact with each other and other projects seamlessly. Its parent company, Fanadise has also recently launched “Trait Swap”, enabling Bear holders to further customize their Bears. The same technology could easily be rolled out to other projects, enabling interoperability between projects so different communities can share resources more easily.
We are at the start of real metaverse existence, no longer just a digital alternative to the workplace we visit with the help of VR goggles. Rather, it is the layering of physical and virtual reality. The fact that a digital avatar can command the same price as a Ferrari is a testament to how the world is “metaversing”.
Once upon a time, the alphabet changed the world by making written communication between people possible, and printing allowed the recording, forwarding, and accumulation of knowledge in large amounts.
Now, in the metaverse, it is servers and processors that make NFT possible, allowing for decentralised, immutable, global databases in which the creation, possession, and transfer of value is available to anyone with access to the Internet.
The larger NFT startups are recording huge revenue numbers and eye-watering valuations. This is fuelled by their popularity amongst Millennials and Gen-Zs, where how you are perceived online is more important than your physical status. As a result, the trend won't just fade away, on the contrary - digital goods will mean more to people than physical goods and so will people’s desire to put their own stamp and creative input into them.