NFTs and Kanye West: How Hype can Redefine Value

Table of Contents

How can NFTs and Kanye West be alike, you ask? Well, it all starts with how they establish value

Kanye’s Rise to Popularity

In 2010, Kanye rose to popularity levels unknown to the average man. He created arguably the greatest hip-hop album of all-time and started dating the “queen” of media, Kim Kardashian. Subsequently, all this fame and talent created one of the most profitable shoes that ever existed: the Yeezy

The Yeezy and Rise of Sneaker Culture

Yeezys were part of an Adidas partnership with Kanye beginning as early as 2015. The sneakers cost around $75 to make and then were sold from the Adidas website at anywhere from $200-$350.

Flocks in their thousands would sit feverishly in virtual queues waiting for each colorway and style to be released. As they were already relatively expensive shoes, they still had ties to Kanye and celebrities, and the shoes would sell out in minutes, and then resold for over 500% of the retail price to $1000-$4000. This philosophy didn’t only apply to Yeezys, as for the next several years sneaker culture grew into a major business for both fashion and investments.

The Idea of Value

Kanye and the rise of sneaker culture poses the question, “What defines value?”. How can a pair of shoes, overpriced relative to the whole market, be worth over 5x their own retail value? 

Well, it all revolves around trends, specifically hype, which “promote or publicize (a product or idea) intensively, often exaggerating its importance or benefits”. With celebrities and major influence increasing the popularity of sneakers, demand increases which cause prices to rise well over their intrinsic value.

Value in Non-Fungible Tokens

In 2022, this same question of value is posed to Non-Fungible Tokens (NFTs). NFTs are simply stored data that are associated with a unique asset such as art or digital media. They are stored on the blockchain and can be owned, sold, and traded across some platforms. 

Just like sneakers, NFTs have grown to fame through hype, and have been promoted extensively by celebrities and “investor gurus” across the globe as being “the next big thing”. Unfortunately, NFTs lack one major thing: utility.

Lack of Utility and Worth for NFTs

NFTs are only worth what people would pay for them. They are fairly cheap to mint, don’t generate sales, and don’t benefit the owner in any way aside from a right to ownership. Although also overvalued, Kanye’s Yeezys and other overpriced sneakers have at least some utility; Yeezys cost $75 to make and you can wear them for fashion or fitness. 

As investor sentiment and the hype surrounding NFTs have lost steam, their worth goes with it. With lack of intrinsic value or utility to them, they rely solely on trends. This means they can go from a 40 billion dollar industry to a free copy-and-paste in a matter of seconds.

I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

Share:
More Posts
The Crude Oil Bust 🛢

Surging global crude oil prices, driven by factors like OPEC+ production cuts have pushed U.S. West Texas Intermediate futures to over $95 per barrel.

Metaverse Returns 🤖

Meta, led by CEO Mark Zuckerberg, is intensifying its commitment to innovation in the Metaverse through the introduction of the Quest 3 VR headset.

Higher Rate Households 📈

The recent Fed decision to pause rates has left the federal funds rate at its highest level since 2000.

Get your daily Invstr Crunch

Get the market news and updates you need, delivered to your inbox or available on our daily podcast.

Risk Disclosure:

Invstr is not a bank and banking services are provided by Vast Bank, N.A.

Brokerage and Banking services are currently only available to U.S. residents.

Invstr app and web services are provided by Invstr Ltd. Advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC) details of which can be obtained here. Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value.

Investing involves risk and can lead to losses. Past performance does not guarantee future results.

Invstr app and web services are provided by Invstr Ltd. Invstr+ advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC). Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value. Vast Bank N.A. a nationally chartered bank and member of the FDIC, provides the banking products, including the products and services related to digital asset accounts. As with any asset, the value of Digital assets can go up or down and there can be a substantial risk that you lose money buying or holding digital assets. You should carefully consider whether trading or holding Digital assets is suitable for you in light of your financial condition. Your digital account does not support wallet to wallet transferring of your digital assets (i.e. cryptocurrencies) outside the platform. Any Digital Assets in your digital asset account are not insured by any government entities, including but not limited to FDIC or SIPC. The Invstr Visa® Debit Card is issued by Vast Bank, N.A. pursuant to a license from Visa U.S.A Inc and may be used everywhere Visa debit cards are accepted. Invstr Ltd, Invstr Financial LLC and Invstr Securities Ltd are subsidiaries of Marketspringpad Holdings (collectively “Invstr”) and Invstr is solely responsible for the application services and website content.

Watchlists provided when users first access the service are not a recommendation to invest. Instead they are provided to help users better navigate the service. Users are free to edit and create their own watchlists. From time to time, Invstr will suggest instruments solely based on an individual’s interest and the interest levels of the Invstr community. The statistical and portfolio builder models generated by Invstr do not reflect actual investment results and are not guarantees of future results. Comments provided by Invstr leaders, influencers or members of the Invstr Community are not recommendations and should not be construed as such. Invstr does not endorse the content or the positions posted by them. Their investment approach, and that of the models provided by Invstr, may be different from yours and may not be appropriate for you.