Why “NFTs” are dull and NFT projects are magical
New technology impacts markets to varying degrees and on different timelines. While the recent pullback in crypto will likely slow progress on Web3, it is worth asking which markets NFTs will change first?
I think it’s going to be stories about wizards.
“Wizard stories” might seem like an inconsequential market, as compared to broad “reimaginings” of finance or commerce, but wizards dominate our current media diet.
Fun Fact: Harry Potter has generated $30B+ in revenue to date — more than Shopify over its lifetime.
To show why I think wizard-themed NFTs are more than a fantasy, please permit me to share a brief history of a few analog (even medieval) technologies that have paved the way for digital collectibles.
Wizard collectibles/gaming have a long, lucrative history
The magician archetype dates to prehistory, though our current wizard boom traces back to J.R.R. Tolkien’s Lord of the Rings series, which spawned a new literary genre and summoned a horde of customers for entrepreneurs to serve.
Dungeons & Dragons, launched in 1974, was one of the first attempts to serve these socially awkward spenders.
D&D allowed the people who loved LotR to build on the stories they so enjoyed — You no longer had to read about wizards — you could be one!
Early D&D was a low-quality kludge, but it did the job of establishing rules for fantasy storytelling and incorporated key “social technologies,” e.g.:
1) Swapping solitary reading for social story creation
2) Creating rules that allowed strangers to play together
The game found an audience and became a pop-cultural phenomenon. Then, relatively quickly, companies started popping up to build on D&D’s improvements in much the same way D&D built on Tolkein.
For instance, In the late 1970s, the UK-based Games Workshop (GW) began distributing D&D books before pivoting to manufacturing miniature figurines that create an extra layer of immersion in the role-playing game experience.
Over time, GW realized the power of creating its IP and pivoted into creating its own “Warhammer” branded story universe, game, mini-figures, and shops. Today, the company currently trades on the LSE and has a market cap of ~$3B+.
In 1993, Magic: The Gathering (M:TG) abstracted the role-playing aspects of D&D even further into a fast-paced and portable trading card game and added a few new wrinkles.
1) Artificial scarcity and thus a secondary market for cards
2) New creative options, like curation in the form of “deck-building”
3) Support for a pro-tour and competitive gaming with prizes
The results were more enriching than alchemy.
In 2020 and 2021, Hasbro, owners of M:TG, reported nearly a billion dollars in revenue from the brand. Factoring in retail and secondary cards sales, M:TG is likely generating $2B+ in annual sales.
Wizard stories turned cardboard into gold!
LotR hit bookstores in 1954.
D&D changed gaming in 1974.
GW started supporting D&D in 1978.
M:TG went on the market in 1993.
These aren’t flashes in the pan.
Wizard stories have staying power.
These characters inspire podcasts and cosplayers; influence low-budget and mass-market entertainment. So what does this nerdy narrative have to do with NFTs?
The collectible nature, narrative potential, and utility in gaming make NFTs an exciting medium for modern stories about Merlin and Morgan le Fay. They strike me less as a cash grab and more as an inevitable extension of a successful design pattern into a novel technology.
Wizard NFTs > publishing houses as a funding source for creatives
They could also change the way creatives get paid. Projects like the Forgotten Runes Wizard Cult, Crypto Covens, Legend Maps Adventurers are good illustrations. [Disclosure: I own a Forgotten Runes wizard.]
These PFP projects have ~10,000 characters, and holders are encouraged to create stories/art about their witches/wizards. They are experiments in collective storytelling whose originators hope to one day crowdsource a tale to rival Harry Potter — or at least DragonLance.
Token airdrops and asset appreciation could rapidly rival the notoriously low-pay publisher advances in genre fiction. If projects like this can attract talented creators in decent numbers, bootstrapping a legitimate media property is possible. And as a fandom grows, these NFTs could become legitimate collectibles, in addition to accruing licensable value in the way traditional IP does. This vision may be an unsustainable experiment in creative patronage, but it’s worth watching.
You may not buy into the concept of communal storytelling paired with a soupçon of speculation. Still, the previous examples prove the existence of a large market of enthusiasts willing to pay for avatars of fantasy worlds that they can collect and use in gaming.
Put another way, I’m not sure NFTs will change the world, but I wouldn’t be shocked if they conjured a new fantasy universe or two. Maybe they’ll even put a dent in this one!
Magic Words
Swords and sorcery aren’t for everyone. Thankfully, There are undoubtedly similar opportunities in sports, music, and any number of areas.
The principle extends beyond NFT and into tech generally. Eric Paley has noted that Apple and Amazon didn’t set out to build horizontal platforms with iOS and AWS; they were instead by-products of well-built point solutions.
Put simply, “Use Cases > Platforms” and “Projects > Protocols.”
Over the last few months, I’ve talked to a lot of people looking to buy into NFTs and my advice is simple — buy into projects you understand. Many NFTs have enchanting aesthetics, but none possess supernatural abilities. Don’t let yourself become hypnotized by abstract and overly romantic roadmaps that often lead nowhere. There is powerful magic that comes from deploying new technologies in the service of well-understood customer behaviors and preferences.
