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The Chomp #060

The Chomp
The Chomp #060
By Cody McCauley  • Issue #60 • View online
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Hey Everyone 👋 ,
Welcome back to The Chomp—your biweekly dose of the best strategic thinking content and top emerging business trends from the internet and beyond.
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With that, let’s dive into it.

✍️ Deep Dive
For all of you who keep up with the zeitgeist, it’s been hard to avoid the recent rapture around non-fungible tokens (NFTs). While interest in NFTs has been slowly bubbling up to the surface over the past year, the rapid increase over the past month has been akin to a full-scale eruption. Data from Google Trends shows that interest in NFTs spiked nearly 100-fold over February alone.
Google searches for NFT in 2021
Google searches for NFT in 2021
If I’ve lost you with those first few sentences, and the only thing that NFT means to you is ‘no fuckin thanks’, don’t worry—you’re not alone. Unless you’re a crypto enthusiast, NFTs likely haven’t been on your radar. As a quick primer, NFTs are essentially unique digital assets. They are one-of-a-kind, and can’t be replicated. Think of a signed pair of game-worn Michael Jordan sneakers, but on the internet. 
Despite the incredible surge of recent interest in NFTs, they are still far from mainstream. What we’re seeing right now is a surge toward the peak of inflated expectations on the Gartner hype cycle. The ultimate potential value of NFTs is starting to reveal itself, but right now many of the popular use cases, such as NBA Top Shot, are mere novelties. 
In my eyes, what we’re seeing with the current NFT trend is a prime example of “the next big thing will start out looking like a toy”. Right now, people are typically collecting NFTs for speculative value. If you think of NFTs as an asset bubble, we’re entering the frenzy phase. If I had to take a guess, we’ll likely see comparable patterns with NFTs in 2021 to crypto over the winter of 2017-2018. Prices of assets went astronomical and then plummeted. Yet, in the background, the true believers kept building full-steam ahead and laid the framework for crypto’s resurgence in 2020. 
Even though the bubble around NFTs will eventually pop, the increased market activity we’re seeing now offers a long-term positive for both the adoption and perceived value of NFTs. With that in mind, I’m excited about the future of NFTs and the many opportunities they present—especially for the creator economy. 
There are two main reasons why I’m excited about NFTs in regards to the creator economy. 
First, NFTs allow creators to monetize a subset of their fans in a new capacity. This is unlocked through the unique ability of NFTs enabling fans to share in the success of their favorite creators’ businesses. For example, let’s look at what Kings of Leon are doing with their new album. They are launching the first-ever album as an NFT, and as part of the release, they are offering six unique tokens with elaborate audiovisual art. Over time, the value of those tokens is expected to increase immensely. Fans who purchase the tokens and choose to resell them down the road will likely make a profit, and in turn, share in Kings of Leon’s success.
On the surface, this doesn’t look different from any limited-edition merch offering from a popular creator. Fans generating profits through reselling a creator’s goods is nothing new. But that’s not really what’s happening here. The unique thing about NFTs is that a creator generates proceeds every time their digital goods are resold. Each time a fan resells one of the unique Kings of Leon tokens, the band gets a return. 
Before NFTs, creators weren’t able to capitalize on any increase in the resale value of their goods. A pair of Yeezy’s might resell for $500 on GOAT or StockX, but Kanye West and Adidas only get the $220 from the original retail price. The creators see none of the upsides. NFTs fundamentally change this dynamic. They open up a whole new world for fans to earn value alongside the creators they support. While there’s no real method currently available to link physical goods like sneakers to NFTs, I have no doubt there are entrepreneurs out there building one.* 
The second reason I’m excited about NFTs is that they lower the cost of kinship and reduce barriers to showing status as a fan. Keeping with the theme of music, let’s imagine you’re a fan of an up-and-coming rapper who goes on to blow up. You found him before all of your friends and shared clips of his songs on your Instagram story, way before he was popular. You, as a fan, want credit for that. You want status as an early fan who supported that artist during his come-up. 
NFTs enable fans to earn that status—and display it. NBA Top Shot is currently the best example of how this is done. Top Shot allows you to build a “showcase” of moments you collect and display them to the world. A digital trophy shelf, more or less. Here’s mine, which includes Spencer Dinwiddie ABSOLUTELY posterizing Tobias Harris.
Now, think of something similar to Top Shot, but within the music world. With this, you could easily show off the songs and albums you purchased from your favorite up-and-coming artists, long before they become famous. You are no longer limited to the Instagram clout of posting cool songs before they blow up. You have an authentic, digital record of a song that is no longer just a piece of music, but also an asset. As that song gains popularity, the value of your early edition copy goes up. 
Imagine Drake released So Far Gone via NFT back in 2009, and as an OG fan, you purchased one of the earliest copies. Owning a copy of that beats out Instagram clout any day of the week.
🔗 Chum Bucket
Power to the Person | Not Boring by Packy McCormick
Creators Eating the World | Trends, Analysis, Lies and Statistics
The Clubhouse App and the Rise of Oral Psychodynamics | Insight
The Microwave Economy | David Perell
Data Is the New Sand | The Information
🗓 Tweet of the Week
rat king
some personal news: every part of my life is the same
🎵 Song of the Week
📚 Books
Currently Reading
Recently Read
💭 Parting Thoughts
This Week in History
On March 2, 1969, the Concorde supersonic transport jet made its maiden flight. The Concorde is only the second supersonic passenger airliner to have been commercially operated. (Source)
“Any effort that has self-glorification as its final endpoint is bound to end in disaster.“
— Robert Pirsig
If you found something that piqued your interest this week, please help me out in expanding the reach of The Chomp by forwarding it along to a friend or sharing it with others in your network. Until next time. ✌️
This newsletter is created and authored by Cody McCauley and is published and provided for informational purposes only. The information in the newsletter solely constitutes Cody’s own opinions. None of the information contained in the newsletter constitutes—or should be construed as—investment advice.
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Cody McCauley

The Chomp is a roundup of the most interesting content I've read, along with occasional musings on technology and the world. You can expect to find a mix of sub-topics including web3, tech, investing, philosophy, and culture.

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