I was due to cover The 5 Principles of Success Part 2 in this week’s blog, however I shall push that to next week as I came across a fascinating article last week that has made me think a lot about how we create value..
Today I returned in Dubai after 7 weeks in Europe for the summer. Due to the nature of my work, I tend to have more ‘free time’ than usual during summer as corporate training tends to drop over holiday seasons. I usually try to use this time to do something useful such as developing new content or learning a new skill. This year was the summer of NFT’s!
NFT’s (short for ‘Non-Fungible Tokens’) are digital tokens, each one unique, that initially were used for pieces of digital art, and are now becoming conduits for brands to access Gen-Z consumers. I believe that they are the future of commerce and while I can quite easily navigate the years I have remaining without needing to understand NFT’s, my children don’t have that option so I am learning in the hope of guiding them before they inevitably overtake me.
Some people have made a lot of money through NFT’s. The ones that were fortunate enough to get in early have seen something they received for free or paid a few dollars for rocket to a resale value of over USD100,000.
Last week however, Pudgy Penguin #6873 was sold for a record 400 Ethereum (equivalent to USD 650,000). This is the most a single NFT has ever been sold for and the reason for his price, wait for it… is that out of the 10,000 penguins issued, #6873 is the only one looking to the left. That one small difference makes it the rarest of the rare, and allowed its lucky owner to make a small fortune.
To anyone with a traditional concept of value this is ludicrous. When you look at the penguin, anyone can cut and paste it. There is nothing stopping someone else with basic graphic design knowledge creating an identical version. A famous artist didn’t take months to paint it, there are no gold or diamonds encrusted onto it. No insult intended to the creator, but it’s really quite plain. However, it sold for USD 650,000 because someone sees value in it.
Many commentators try to explain such phenomena with ‘Greater Fools Theory’ which basically states that as long as there is a bigger idiot waiting in line to buy, then the price will hold. During the early days of Bitcoin this was a popular retort. However, one of the things my summer of NFT research has shown me, is that there is a community behind the good projects which drive the perception of value. While many of these projects will still fail and people will lose money, there will be those like pudgy penguins, bored apes and crypto punks that make their holders a fortune and it’s this psychology I would like to highlight.
Whenever we create the perception of value, we will attract interest. People are addicted to following a route that gives them value. The question is of course, what defines value? Some readers will see no value in NFT’s, others will see huge value. There is no right or wrong answer – we have unlimited wants and limited resources which we must allocate in a way that allows us to realise value in the best way for ourselves.
When we are trying to persuade someone, it is good practise to first ask ourselves what value we offer and challenge our first response to this question by considering is that value from their perspective or from ours? If we cannot in confidence answer that the value is from their perspective, we are aiming at our target blindfolded. If possible, delay your attempt at persuading your target and learn more about what they value. Who knows, it may be a digital penguin rather than a diamond..
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