Back in undergrad, I was always in awe of the footnote economists that “coined” some relevant term. It’s a goal of mine to have at least contributed some made-up term to the NFT economics space. Oh yeah, I just made up my own category that I placed myself in - “NFT economist”: studies the relationship between culture and markets; a beautifully twisted crossover of a cultural economist and a complete degenerate.
Pick one: Consume or Invest
There are a few different classes of items that lie at the intersection of consumption and investment, sneakers, watches, and sports memorabilia to name a few. There is obviously a spectrum needed when assessing the participants of these markets, some are pure investors, and others are pure consumers. It turns out though, it’s pretty difficult to do both. Of course, there are still buyers of slightly used goods but the size and value of that sub-market shrinks dramatically and I think most would agree that it’s virtually impossible to fully consume something like a luxury watch while simultaneously treating it as the crown jewel of a portfolio. Art is actually the best model we have for a physical good that blurs the line between consumption and investment. Yet at the highest valuations of art, we begin to face the same problem present in luxury watches, one cannot fully consume the item without introducing extreme risks.
NFTs, specifically PFPs, flip this model upside down and provide us with the first pure example of what I am calling a “convestment”. Defined as “an item, typically digital in nature, that its owner can consume to its fullest extent without impacting its investability or valuation.”
Why is this interesting?
From the purest point of view, investment is just deferred consumption so what does a market look like if it is comprised of assets that can be simultaneously consumed? My guess is that the market is HUGE. Imagine the sneaker market without wear/tear, not only does everyone wear shoes but they are equipped to trade them too. This is a key point behind my idea that the PFP market is larger than anyone thinks.
BTW - There’s not any proverbial wisdom that accompanies this term/idea, it’s mostly just an observation of something I find cool and interesting.
Cheers,
🚬⌨️🎧