Buying NFTs: Reflections on Collecting Art in the Digital Era
Includes experientially earned wisdom for new entrants interested in swimming with the shrimps and the dolphins!
“It’s not curators, it’s not critics, it’s not the public, it’s not collectors who find great artists — it’s other artists.” — David Galenson
I’ve been buying Art for about two decades now. I bought my first NFTs on Ethereum in 2018. Depending on how you look at it, you could say I’m a CryptoDino or an OG. I only invested in Cardano in April of this year but given the sheer pace of its development it feels like I’ve been around for a little while there as well.
If this sounds like I’m boasting, I’m here to tell you, especially if you are a newcomer to NFTs, that any wisdom I may have to share is the result of having taken some hard knocks along the way. I’ve made all manner of mistakes, starting way back in 2016 when I wrote my seed phrase for a wallet containing a painfully significant amount of BTC in an old, treasured copy of the Tao Te Ching, only to have someone “borrow” it without asking–entirely in good faith and oblivious to the seed phrase being in it–and promptly lose it on a bus in San Francisco! Luckily, I also have ample good karma and I’ve acquired some crypto smarts along the path.
This piece is not about the mechanics of buying and selling, nor is it a guide on the different players in the market place. Rather, it aims to offer some loose guidelines for collecting with discernment, self-awareness and authenticity.
I cannot emphasize enough how the act of curation is also an artistic endeavor: it warrants asking oneself a series of challenging questions, most of which will evolve across time. In other words, curation is a moving target. That’s precisely why it’s interesting.
Taste is something we cultivate.
1. Buy what you love
“Buy what you love” is solid advice and it’s great to see this message floating around as much as it does, even if it’s a statement of the obvious. The idea is definitely worth unpacking: why should you buy what you love?
Consistently buying what you love reinforces your conviction in your own taste, of which you are the sole arbiter. Taste is something we cultivate. Consider the archetype of the irritating rich kid in high school who had all the brands and all the accoutrements of the poseur… Now consider another jarring but far more intriguing high school archetype: the cool kid, the one who would spot the rarest of purple ankle length crushed velvet coats at the bottom of the bin at the local thrift store and dare to wear it with a younger sibling’s snug Meyer lemon cut off t-shirt that you would never have envisaged as a possible ensemble… Metaphorically speaking, as collectors, we want some of that purple coat swagger and that requires regularly making original, bold choices and that too, like everything else I’m personally invested in, is absolutely a practice.
If you develop such a practice, over time you will see themes begin to emerge in your increasingly cramped wallet and you will get a deeper understanding of what tickles your particular brain chemistry. From there, it will be easier to venture out on a limb, from time to time, not because anyone urged you to go and buy a certain project, but because you understand that out on a limb is precisely where the luscious fruit grows. Note that this is an entirely subjective experience, which you alone can create the conditions for: neither I nor anyone else can determine where such a limb might be situated on your personal decision making tree.
Collecting is about creating an ecosystem that heightens your own artistic appreciation, hopefully broadens your range of interests and helps you engage with Art and the communities that make it in a meaningful way.
2. Make your own mistakes so you can learn from them
When I tentatively started collecting NFTs in 2018–19, I initially decided that I would never buy pixel art, which is so preposterous I worry readers will think I’m attention seeking! Today I have quite a few pixelated wonders in my various wallets, not because I suddenly love pixels (I’m fairly agnostic about pixel art per se) but because there are certain projects that simply stole my heart. You will love the pieces you chose for a reason, whatever the reason may be, far more than if those same pieces are chosen for you based upon what you perceive to be some sort of a consensus in the marketplace about what’s hot.
Collecting is about creating an ecosystem that heightens your own artistic appreciation, hopefully broadens your range of interests and helps you engage with Art and the communities that make it in a meaningful way.
If you allow yourself to be entirely swayed by the noise and the hype in the marketplace (as we have all been guilty of on occasion) you are positioning yourself as a vulgar consumer. I find myself wanting at minimum to be the Curator in Chief of my own collection, even if I inevitably make mistakes along the way. If they are my mistakes rather than the mistakes of someone I’m emulating, there is the potential to learn from my own mistakes.
How about if you are buying with a view to making an investment, you might ask? Simple answer: I then find myself buying as an investor, even if I am but a modest shrimp, or at best a dolphin and most definitely not a whale, I am still not a consumer. If I am buying with my investor hat on, and here I would add that personally, I still have to appreciate the Art, I especially don’t want to listen to random voices in the marketplace.
Who has never missed out on a “significant” drop only to over-invest in the next one or two more or less random drops?
3. Learn to dance with FOMO
In my experience it’s far more difficult to buy as an investor than it is to do the same from the perspective of a curator. This is because the noise levels are so much higher when you listen to the ambient discourse from the perspective of a potential investor rather than a curator buying Art for the joy of building a personal collection (and yes, it’s not lost on me that there are varying degrees of overlap here: I myself have set up shop on the very cusp of these two core models).
While both approaches ought to be intentional, the stakes are much higher if you are betting on a return, regardless of the time horizon. To this I would add that all acquisitions are taking place in a nascent market with no meaningful historical data, where the hype is often deafening. Predictably, successful drops that are often only a few weeks old, are being used as benchmarks to incite buyers to rush into buying into an umpteenth new 10K project.
Now I’m not an analyst myself, but I think it’s fair to say that the past performance of project X, minted just last month, cannot possibly be indicative of future returns for project Y, which is minting right now and which “you really don’t want to sleep on”… You may smile but shabby economics are rampant in the space and admonitions to DYOR typically suggest something to the effect of: “I’m covering my ass here but you’re probably a moron if you sleep on this!”
The FOMO hooks definitely run deeper when our awareness gravitates towards the hope of making some ADA. Projects, which are absolutely running a business — and there’s nothing wrong with being an Artrepreneur— , have expressly engineered the illusion that you have everything to lose by not spending your ADA, not because they are evil but because that’s the very nature of the role they are playing. It’s a beautiful psychological trick that’s evolved somewhat since used car salesmen. Even with a regular meditation practice, it is almost impossible not to get caught up in these sticky tendrils that instantly adhere to the most subtle whiff of human greed… That’s why it’s fun. Call it Jedi practice, or whatever metaphor might work for you. And learn to respect the game, because it is much bigger than you.
The difficulty with FOMO is that of course it’s the ultimate trigger, I like to call it the abstinence denier! If you can make me believe on a visceral level that I’m missing out, I’m going to want to feed my jpeg addiction. As mammals, we addict very easily. If JPEGs are your poison of choice, you ought to learn the terrain. Consider questions such as these: Where do I score my dope? What do I do if my favorite dealer is out of town and there is no good dope to be found? What do I do to avoid the subpar stuff that’s laced with that nasty compound? What do I score if I need to come down off that really good shit? The clever folks shilling their projects know all about the weaknesses of the Art addict, typically not only on an intuitive level.
Who has not missed out on an “important” drop only to over-invest in the next two drops? If you haven’t already, you will. And if you‘re perfectly confident you would never do such a thing, you’re not living nearly dangerously enough or buying with enough gusto and conviction and my ideas may not be your cup of tea anyway. My point here is forgive yourself: it’s okay, no one dies of a little mindless, greed induced acquisition. If they did there would be no marketplace, we would all be hanging out on the astral plane reminiscing about this incredible fiction we once co-created out of disenchantment with the world we lived in before NFTs!
Ultimately, this entire video game moment we seem to find ourselves in is about being wide awake, having the full courage of our convictions, while taking everything with a grain of salt.
4. Befriending hubris and greed
In Buddhist psychology, there is the skillful concept of the “near enemy”. I’m reluctant to lose readers because of my proclivity towards the arcane, so you will simply have to believe me when I declare — with no authority whatsoever, not being an actual Buddhist myself — that FOMO is the near enemy of greed, or at best, hubris.
To illustrate my point I refer to the image above: I got scammed and bought a relatively underpriced and very fake SpaceBud. It chafed. It really fucking chafed. It chafed all the more so that I knew better. The specifics are uninteresting. I allowed myself to be caught off guard and suffice it to say, that’s no state in which to be buying pricey jpegs.
I offer this mortifying anecdote with wholehearted humility. Judge as you may, I would add that there have been many an occasion, here and indeed in other corners of my life, where I have been trusting and where this has borne incredible, juicy, luscious fruit. Nothing ventured, nothing gained sounds trite precisely because it is profoundly true and has indeed been tested. However, it does not preclude you from doing your due diligence beforehand. Ultimately, this entire video game moment we seem to find ourselves in is about being wide awake, having the full courage of our convictions, while taking everything with a grain of salt.
For the most part, scammers can be avoided. Please keep in mind that greed makes us vulnerable to more harmless forms influence. Often we can be tempted to buy what the people we follow have purchased and these lovely people aren’t exempt from making mistakes. Keep in mind that collectors who’ve already bought in to a project have a vested interest in getting you to buy in as well. They want you to invest in order to rationalize their own investment decisions, this is human nature. Also consider that folks are generally supporting their peeps, which granted is perfectly lovely (I certainly do the same), but should be neither here nor there in the sense that as the buyer you want to remain sovereign in your decision making process.
If you play this titillating game long enough you are certain to buy something cringe worthy sooner or later (here I speak in relative terms of course, what I mean is something that doesn’t fundamentally ring true to you). When this happens, chances are no one on cnft.io will want it either. Or maybe they will. Either way, you’ll live. This is another kind of teaching. If you fully integrate the lesson you won’t do it again. I suspect you think I’m kidding. It’s rather endearing that you think you are above making such a mistake and more importantly, it’s part of your problem!
Again, to win at this game, on your terms, no matter what, you need to develop the balls to be a curator and/or an investor, rather than an events driven consumer buying NFTs as if you were indulging in a never ending retail therapy session on Amazon. I realize it sounds deceivingly simple. And I invite you to stress test my premise.
Identify an underdog or two, this archetype is well represented in the metaverse, find Art that moves you and buy it, for no good reason other than you dig it.
5. Renounce scarcity for abundance
One standard deviation away from “buy what you love” is a more subtle idea I would like to put forth and invite you to chew on. It might seem a tad esoteric but it’s a rewarding practice, regardless of your budget. It might be good form for me to issue some sort of a trigger warning here, as this idea is countercultural, not merely countercultural to our crumbling dominant paradigm, but similarly anathema in the metaverse.
I strongly recommend that from time to time, you buy something you genuinely love, solely for the sake of supporting an unknown artist. It’s really quite simple: identify an underdog or two, this archetype is well represented in the metaverse, find Art that moves you and buy it, for no good reason other than you dig it. Be kind enough to be vocal about your purchase. Finally, please do not allow yourself to feel smug: that’s hardly the point, much as it’s a beautiful thing to support an artist who might only be getting started.
But for the sheer beauty of generosity, why would I urge you to try this? Because unless we are as skillful as a Tibetan monk with lifetimes of practice under his antique woven silk belt, the scarcity mindset we have inherited from our Western sociocultural conditioning permeates everything we do. If we are generous, we give ourselves the opportunity to practice abundance. If that’s too woo for you, I can also put my hedge fund manager hat on for a minute and inform you that the market most definitely rewards flow. If you’re reading this, you’re most probably on Cardano and you will hopefully grasp what I am talking about. If your ADA is sitting on an exchange, even I cannot help you.
There will be difficult lessons to learn for collectors belonging to the dangerously overpriced finishing school of Wishful Thinking.
6. Do your homework and know what you’re buying
This holds true especially if you are buying in the hopes of making significant returns and you are looking at jpegs as an asset class in their own right.
It’s deceivingly easy to feel like a talented trader if you get started at the beginning of a bull run. I helped run a fund of hedge funds and like everyone else I learned that all great traders acquired their craft and honed their skills in bear markets.
But what if NFTs are all really going to the moon? Even if you are under the delusion that NFTs will never experience a downturn, in fact, even if I’m wrong about this and they never do, there will be difficult lessons to learn for collectors belonging to the dangerously overpriced finishing school of Wishful Thinking.
If you are over invested in jpegs, unless you have a bottomless pocket of wealth, liquidity will be your kryptonite. Furthermore, trust that your assessment of the value of your jpeg portfolio is based on a series of assumptions which is just that–a series of assumptions. If you’re finding yourself needing to sell in a hurry one day, chances are you won’t be alone, you will then familiarize yourself with the danger of assumptions.
To that harsh reality I would add the acute unpleasantness of highly unpredictable potential tax consequences, in any given jurisdiction, of buying and selling tokens. This particular risk makes me feel especially nauseous so I propose to navigate us out of this buzzkill moment as quickly as possible. Maybe put a pin in it and revisit when you’re feeling at the top of your game.
Blockchain is nothing if not a war cry for sovereignty! Be autonomous and for Satoshi’s sake, do You!
7. Don’t believe anyone, including me!
Being the profoundly contrarian spirit that I am, if nothing else, I’m hoping to leave you with some radically potent ideas to consider and to adopt, if and only if, they resonate with you. Please disregard anything that doesn’t serve you.
Notwithstanding my sincere forewarning about liquidity and wishful thinking, I wouldn’t be authentic if I didn’t also call out the folks who are endlessly covering their backsides by sending out catchall statements to the effect of “don’t spend anything on jpegs that you are not perfectly happy to lose”. My inner cynic suspects some of these players are significantly leveraged themselves.
How does “don’t invest anything you’re not happy to lose” sit with me then? Short answer is I call bullshit. Would I starve if I lost my entire portfolio? Probably not and this is a significant data point everyone must ponder for themselves. Would any financial advisor on the face of planet Earth support my eclectic investment decisions? No. Obviously said “advisors” have a conflict of interest because they’d want me invested in their ETFs and whatnot but even beyond that malarkey, they would most likely call me some faux polite equivalent of batshit crazy.
While I am here to encourage discernment and the development of skillful investment strategies, I cannot possibly accept that anyone should be expected to use crumbling paradigm FIAT metrics to determine how one chooses to allocate between FIAT and DEFI. This is flawed reasoning in the vein of comparing Tuscan blood oranges with California pink lady apples.
To me, there are tokens I still cannot quite bring myself to call “bluechip” for the very reasons set out above, that still seem like a far better retirement plan than say, what one might hold in a typical 401K (not that I have a 401K, being utterly unemployable myself). And of course I am also a deeply countercultural anarchist, living an unconventional artist life, with the courage of her deep, heartfelt convictions. In short this is a thoroughly independent take on something rather controversial that may be a tad daunting in the way that something we feel drawn to do without entirely understanding it often is… “Let’s continue to examine this as a community” is what I’m proposing instead of DYOR.
The good news is I have nothing to sell and this is offered freely. Do with it what you will: I am not invested in anyone agreeing with me. The bad news is that like everything worthwhile, what I am proposing requires rigor and discipline on your part. Everyone needs to devise their own strategy, be it driven by a desire to collect art or to amass wealth. Absent a strategy, you will simply be buffeted by the winds of an accelerating outpouring of 10K projects.
My particular approach works for me because there is a carefully thought out method to my unique madness based on decades of engagement in the financial and art markets. I invite you to take the time to figure out what works for you.
The take away — I almost wrote the giveaway — for newcomers and more seasoned folks alike, is: Create your own curation philosophy and/or investment strategy. Blockchain is nothing if not a war cry for sovereignty! Be autonomous and for Satoshi’s sake, do You!
If you’ve read all the way to the end, you are beyond AMAZING! Thank you! I suspected reading was still a thing. And if you think differently, please reach out because I’m also thinking of starting a podcast…
If you’d like to RT this article on Twitter and add a comment showing that you’ve gleaned something interesting from this piece, you will be a solid contender in the ongoing Medium giveaway for one of my CNFTs!
