Money Games, Social Currency, and Cultural Industry: Sorting Out the NFT Collectibles Market Misled by Shitcoins

Author: Beichen

Source: The Harsh Whistle

This is the 10th article from Whistle, analyzing the NFT collectibles market from the perspectives of money games, social currency, and cultural industry.

At first glance, the NFT collectibles market has constructed a sophisticated market system (the level of sophistication can be directly referenced in various NFT research reports). I do not intend to criticize the analyses from various parties; they indeed provide insights scattered across the market. However, this article may be the harshest criticism currently issued by "The Harsh Whistle," and it could easily lead to the end of friendships…

I want to awkwardly point out that most analyses regarding NFT collectibles are untenable. It’s not that they are wrong, but rather superficial.

In a market for NFT collectibles guided by superficial understanding, most are destined to be temporary illegal structures, likely to become ruins in the future, with only a few continuing to exist (such as Bored Ape, CyberPunk, OpenSea). I hope this article can serve as a reference guide for you when participating in the post-disaster reconstruction of the NFT collectibles market in the future.

NFTs as Money Games

The NFT collectibles market is a "collectibles market based on NFTs," which can be discussed at least in three layers—the superficial money game, the deeper social currency, and the core cultural products. Each layer has its own clear logic, but few can distinguish them, merely following their feelings and the shouts in the market.

The most superficial layer is the money game, which is certainly not a problem, and the prosperity of any market cannot be separated from money games. It can be said that speculation is a necessary factor for market prosperity. However, I want to point out that even if it is treated merely as a money game, two basic common senses must be noted.

First, one must distinguish between FT and NFT; the two different types of money games cannot be conflated. The vast majority of NFT research reports and related discussions remain at the most superficial level, and even at the most superficial of the superficial—they analyze NFTs using the methods applicable to FTs. Thus, they occasionally throw out terms like "liquidity," "blue chip," and "transaction fees" to showcase their professionalism, unaware that they are exposing their cognitive poverty—there's nothing wrong with the game strategy, but they are playing the wrong game, and absurdly so.

Participants in the FT market (such as BTC, Moutai stocks) come from different groups, but they are playing the same money game and fulfilling the same roles (the so-called "chives" and "whales" are actually the same role, just differing between novice and advanced players). The decision-making mechanisms are not much different, so one can evaluate its intrinsic value and the general direction for a period of time using very obvious signals from that market (such as liquidity, cash flow, growth rate, net assets).

However, the collectibles market involves many individuals playing many different money games, and the types of roles are also different (just like the decision-making of first-time homebuyers and investment homebuyers is completely different), so one cannot apply the analytical methods of the FT market to analyze the NFT market.

To be honest, this analytical framework is unreliable for analyzing FT beyond the Top 5 (refer directly to “Why Helium, Which Is Fundamentally Flawed, Doesn’t Work, Along with a Discussion on Web3 Industry Research Methods” for the latter part), let alone analyzing NFTs with smaller market caps and liquidity. If the audience and investment logic of BTC and ETH are somewhat consistent, then the audience and investment logic of BTC and the not-so-small market cap Dogecoin are already completely different.

For example, the unexpected surge of Dogecoin in 2021, besides the calls from KOLs in the Western community, was significantly contributed by young people in China—having lost money in mutual funds, they turned to the booming crypto market but found BTC too expensive, so they opted for Dogecoin… This simple and somewhat foolish logic cannot be analyzed using the aforementioned methods, yet it is remarkably reasonable among those young groups.

If you are insulated from this group, you can only analyze according to the logic of FT's money game, which means constantly tracking all the superficial signals of the market's fooling games and belatedly engaging in short-term low-buy high-sell activities. Of course, there is still a chance to catch a tailwind, as being able to proficiently apply FT analysis methods to NFTs already exceeds the level of most in this industry…

Only a few individuals, besides using FT analysis methods, also analyze using NFT methods. Although the level of industry research remains abysmally low, it does not exceed the logic of stamp and coin trading from a decade ago! The basic participants in stamp and coin trading are often poor, uneducated, greasy, and older individuals (at least fitting the above three labels).

For those today who pride themselves on being at the forefront of the NFT collectibles field, stamp and coin trading may seem very old-fashioned (though it has not been around for a decade), but the core of the two groups is surprisingly similar—so-called industry research in stamp and coin trading involves analyzing dimensions such as circulation, face value, material, condition, era characteristics, and market hotspots in a production-line manner. The so-called platforms provide services for multi-dimensional queries of collectibles, market predictions, value exploration, and investment consulting. You will find that changing the terminology for stamp and coin trading is equally effective for the NFT collectibles field.

Secondly, the NFT collectibles market resembles an overly financialized real estate market, a game between necessity and speculation, with the critical point being the limit of necessity's endurance. In the real estate industry, some people naively believe that emptying their wallets and going into debt to buy houses is an eternal market demand; similarly, in the NFT collectibles market, some still naively believe that there will always be someone to take over. However, in reality, whether in real estate or NFT collectibles, the true critical point of this money game has long been exceeded.

If you want to have a longer-term operation that spans bull and bear markets, you must skip capturing the superficial signals of money games and touch upon what Bourdieu referred to as "social currency" or "cultural capital."

NFTs as Social Currency

The crypto industry is at the forefront of technology and finance, and both fields speak through productivity; culture is indeed unimportant, but both need to adorn their façades with culture. Thus, the halo of productivity allows them to boldly express extreme opinions about collectibles (just like the internet giants in the 2016 IP boom guiding cultural and creative development, ultimately leaving a mess behind), which resonates with many unadorned individuals and serves as a theoretical basis.

However, even among these unadorned individuals, there are distinctions and even contradictions.

Those who only stay at the level of money games may think that someone will use it to show off (mainly because they do not have enough money to act as true consumers). They are the survival strategy of sheep, merely following the leading sheep in the flock to reap the benefits (though often leading to the slaughterhouse). Nevertheless, this is indeed their optimal strategy, as one cannot give up what they do not have; for example, they cannot give up independent thinking.

Some others, while also unadorned, at least know that certain NFT collectibles are too unrefined to be speculated upon, but this judgment is merely drawn from their life experiences.

The contradiction between these two groups lies in the fact that wealthy unadorned individuals want to use excessive money to purchase cultural capital (for example, the first group of crypto nouveau riche consuming NFT collectibles), while the less wealthy unadorned individuals stubbornly believe that money determines status and think they are similar to the former, leading the former to silently think: thank you.

So how can one analyze the NFT collectibles market beyond money games and life experiences? This requires the use of theories of social currency or cultural capital. Although this has been discussed ad nauseam by sociologists since the last century, it is still worth popularizing in the crypto industry…

Bourdieu divides capital into four forms: economic capital, cultural capital, social capital, and symbolic capital. Economic capital needs no elaboration, while social currency is the simplest way to pursue cultural capital, social capital, and symbolic capital, as it does not require institutional forms (such as issuing degrees or certificates) and does not require embodied forms (such as skills and appreciation abilities learned from long-term piano practice). Customers can directly use economic capital to purchase those object forms to display their cultural tastes.

NFT collectibles serve as social currency in social media, just like fashion and luxury cars in real life. Different groups require different social currencies (depending on demand and purchasing power; for instance, reclusive wealthy individuals have purchasing power but no demand), and social currency increases in value through artificially created scarcity to differentiate oneself from others.

Therefore, whether as investors or entrepreneurs, if you want to grasp NFTs as social currency, you must distinguish the different cultural tastes they embody and resonate deeply with them—because the cultural tastes of people from different classes are entirely different, as taste is a manifestation of social distinction, and this taste is a habit formed over a long period.

People often choose social currency based on their life experiences and feelings. Unadorned individuals can only judge all social currencies based on their already low class taste—anything below their level is too low, and anything above their level is too pretentious, so they often feel that discussing NFT collectibles outside of money games is too pretentious.

The most common word to praise an NFT collectible is "exquisite," which gives you an idea of the level of unrefined individuals in this industry. Because the boundaries of language are the boundaries of thought, I truly cannot find a difference between "exquisite" and "wow"; both are meaningless buzzwords that can describe anything.

So you either aim at a specific group, strive to understand them, resonate with them, and guide them to consume social currency (rather than imagining what they like based on superficial data). Or you analyze the transformation rules of social currency among different groups like anthropologists or cultural scholars who emphasize field research, using a large number of samples and theoretical tools. Here, I strongly recommend Bourdieu's "Distinction: A Social Critique of the Judgement of Taste."

As an additional note, both of the aforementioned abilities are possessed by Sun Yuchen. As a child, he was taken by his mother to various pyramid scheme classes, laying the groundwork for years later to harvest unemployed farmers playing Pi coin in Zhu Ma Dian (this sinking market is even more submerged than Pinduoduo; under normal education, who would notice it, let alone understand and harvest it?). And Mr. Sun Yuchen, who can switch between identities such as genius writer, KOL, student leader, disciple of Jack Ma, and Grenada's permanent ambassador to the WTO, fully demonstrates that he is a born speculator who can skip academic training, although he is on a downward slope (not in terms of wealth, but in terms of the targets becoming increasingly submerged).

NFTs as Cultural Products

At this point in the article, our analytical tools for the NFT collectibles market have transcended money games and life experiences. We also understand that using economic capital to purchase cultural capital is to enhance class differences relative to others, but we still have not touched the core—how to analyze NFT collectibles that are originally aimed at different group tastes as social currency?

This requires borrowing the cultural industry theory proposed by the Frankfurt School a century ago, but not using it entirely… because they are leftist intellectuals as critics, possessing biases in their positions and flaws in their knowledge structures.

This theory is used to denounce "capitalism's incorporation of cultural production—consciously catering to consumers, industrially mass-producing and selling, ultimately reducing culture to a commodity rather than a purely autonomous spiritual product."

How to say it, using their theory for analysis, you would conclude that everything from the Dunhuang murals to Shakespeare's plays is not "purely autonomous spiritual products."

They merely stop at philosophical speculation and political commentary because they themselves do not fully understand the operation of industrial systems, thus unable to accurately describe the mechanisms of production and reproduction, only criticizing it for not being elegant enough or not being rebellious enough from the results. However, they at least pointed out a fact—cultural products, like other products, are produced within an industrial system. When we interpret cultural products from the perspective of cultural production mechanisms, everything becomes much clearer.

However, regarding the mechanisms of cultural production, one cannot directly seek help from practitioners, because although they are familiar with the operation of the cultural industrial system, they largely respond instinctively driven by commercial interests and only understand their specific subfields (for instance, fashion magazines and classical literature publishers are basically worlds apart, let alone those in even broader fields).

So we might as well combine the two, distinguishing different cultural products from different stages of cultural industrial production. I know this is difficult to explain, just as it is hard to give an accurate definition of pornography, although a discerning person can easily identify it. Due to space limitations, this article will simplify it as much as possible, starting directly from the controversies.

Many cultural debates (such as highbrow vs. lowbrow, trendy vs. outdated) stem from their lack of clarity about which stage of cultural industrial production the cultural products they support and oppose are in, often resulting in verbal disputes based on misaligned comparisons. This is particularly evident in the generally unrefined NFT collectibles market.

Here’s a test question: Picasso and Beeple's works have both fetched sky-high prices; are they the same kind of thing?

Unrefined individuals would think that the market determines discourse power. Since both are high-priced and backed by top auction houses, they must naturally be artworks. If someone criticizes Beeple's work, it must be bullying of artistic discourse power. In short, they evaluate both Picasso, who led the direction of modern art history, and the American "Ugh Qi Lin" (who can be said to express positions through cartoons) based on sales, and they believe Beeple is technically inferior to Ugh Qi Lin. This is akin to using MC Tianyou's income to deny Dou Wei's musical level.

Although many NFT projects claiming to be art have brought in mediocre critics and curators from the art market to forcibly elevate their status, they can only pile on artistic jargon, which essentially serves to cover up a barren core, but is sufficient to deceive unrefined individuals.

Cultural products in the cultural industrial production system can be divided into at least five stages: original ecology—niche—trendy toys—popular—consumer goods, with each stage having its own user profile and market logic. The reason for dividing them into different stages based on upstream and downstream is that the production department directly selects already mature products from upstream for processing and transformation, yielding the highest input-output ratio.

Original ecological culture is the cultural tradition formed in real lifestyles, such as the Indian culture formed in tropical rainforests, street graffiti and hip hop formed in lower-class Black communities, the old Beijing folk culture formed in Beijing's alleys, and the study of inscriptions and calligraphy in traditional calligraphy… In short, original ecological culture is naturally formed and possesses real vitality, and has not yet been incorporated into the realm of cultural industry or consumerism.

The cultural industry will seek inspiration from original ecological culture, incorporating it into a homogenized and standardized product system, turning it into niche cultural products with consumption value. The audience for niche culture consists of those who can afford a certain monetary cost and are willing to spend a certain amount of time capturing cultural capital to enhance personal prestige. Note that niche culture is small because the time cost for learning and experiencing it is relatively high.

Trendy toy culture seeks inspiration from niche culture, mass-producing cultural products with lower monetary costs and less time required for learning and experience. The subsequent popular culture (such as pop songs) and consumer goods culture (such as TikTok hits that satisfy entertainment needs) operate under the same logic. In short, the costs borne by users are continuously decreasing, and the cultural capital behind the products is also continuously diminishing. Cultural capital is nearly exhausted by the time it reaches the consumer goods stage, but it still holds value and may long exist due to its real vitality, forming new original ecological culture (for example, the American cowboy hat worn by Kham men has seemingly become part of national attire).

The prevalent misconception in the NFT collectibles market is to equate consumer goods with art (for example, various NFT collectibles based on game IP claiming to be art), at best calling it digital trendy toys (like Rare Pepes, NBA Top Shot, etc., foreign IP PFP series). Art, as original ecological culture, does not simply mean that buying it is sufficient; it requires institutional forms (such as being incorporated into the art education system as part of future artist training) and embodied forms (such as skills and appreciation abilities developed through long-term training and immersion).

As cultural products, different NFT collectibles occupy different stages in the cultural industry, and their logic naturally differs. If we also consider the tastes of segmented groups, it becomes even more complex, much like how social dance varies across Qinghai, Guangxi, and Northeast China, despite appearing indistinguishable to those unfamiliar with social dance.

Conclusion

This article does not claim that all NFT collectibles are unrefined; after all, the first NFT was born from art—on May 3, 2014, an animated video titled "Quantum," generated by code, was uploaded on Namecoin, which forked from Bitcoin, declaring ownership of the original digital work via blockchain.

This article aims to emphasize the following points:

1. NFT collectibles are merely digitized collectibles; they are different cultural products and should have different market logic.

2. It is essential to acknowledge that money games are the cornerstone of the NFT collectibles market's prosperity, but do not stop at the most superficial money games (and still FT's money games) to understand the NFT collectibles market. The vast majority of research reports and discussions remain at this level, which can be said to have barely scratched the surface.

3. It is crucial to recognize that NFT collectibles have the role of cultural capital, aimed at widening class differences, so one must resonate deeply with the audience behind cultural capital. Otherwise, merely using the cultural tastes of a specific class in a specific field to grasp the entire market is like a small bourgeois in Shanghai opening a café in a second-tier city but not being able to replicate it in a county. The fact that even the topic of royalties can spark debates within the industry fully illustrates the astonishing uniformity of unrefined individuals in the NFT market.

4. It is necessary to provide a clear positioning of NFT collectibles in the cultural industry, and do not compare cultural products from different stages together. They exist in different stages of cultural production, corresponding to different markets, with entirely different logics. Additionally, consider the tastes of segmented groups; for instance, popular cultural products in Asia and Europe and America are bound to differ.

Returning to the viewpoint in the previous article “When the 00s Who Entered the Circle in 2020 Are Called OG—A Review of the Crypto Industry's Ten-Year Three-Cycle”: there are not many opportunities left for ordinary people in this era, but the crypto industry still has them, not only because it is still growing rapidly but also because there are many unrefined individuals here.