Dirt: Are NFTs status symbols?
Exclusivity in the digital world.
W. David Marx asks what NFTs actually signal about their owners.
In 1999, the New York Times reported that Americans were flying to London just to procure rare jackets “with a camouflage pattern of apes” from the exclusive Tokyo streetwear brand A Bathing Ape (BAPE). “I paid $700,” boasted art director Ramon Yang, “But it was worth it because all my friends wanted it, and I got there first.” Two decades later, the lust for rare ape goods remains with us, albeit in digital form. The Bored Ape Yacht Club sold out its run of 10,000 simian-head “unique digital collectible” NFTs in a single day, and no one even had to get on a plane.
As rational people of the modern age, we get very anxious about consumer frenzies for goods without obvious inherent value. There are the expected reactions: NFTs are a bubble! They’re the next Beanie Babies! Certainly no one is naive enough to believe they are “fine art” (except this HK gallery). In our desperation for credible explanations, there has emerged a compelling rationale for NFTs: They are status symbols. At least the creators themselves believe so.
A crypto CEO told Dirt’s own Kyle Chayka at The New Yorker, Bored Ape NFTs had become “a status symbol of sorts, kind of like wearing a fancy watch or rare sneakers.” Kevin Roose in The New York Times heard from one of the Pudgy Penguin avatar project founders, “The way I describe it to my family members and friends is like, people buy Supreme clothes, or they buy a Rolex.” The spotlight on status inspired Packy McCormick at Not Boring to analyze NFTs within Eugene Wei’s “Status as a Service” framework, concluding “Powerful things happen when you combine money, status, and community.”
NFTs do seem to be status symbols of some sort, and whether or not this particular NFT bubble bursts, we should take them seriously as status symbols to better understand how humans will create exclusivity in the digital world. The next question is then, are NFTs effective status symbols? To answer this, we have to look at how status symbols work in real life. Whether Bathing Ape jackets, Bored Ape NFTs, or actual apes in a private zoo, status symbols are never irrational gestures: We acquire them as a means to gain status, because status improves our quality of life. To rephrase the central question: Do NFTs get people status?
While luxury goods are the most obvious examples, status symbols can be anything that connotes a high social position: e.g. a posh accent, a refined taste in music, or a detached demeanor. To function effectively, status symbols need three properties: signaling costs, alibis, and cachet (i.e. symbolic associations with high-status people).
Status symbols require what economists call signaling costs: acquisition alone must be difficult so that possession serves as proof of exceptional assets or privilege. This is most obvious in conspicuous consumption: Rich people buy very expensive things to show they can. But wealth is not the only signaling cost. Status symbols can also be based on time (living in a manor passed down from an aristocratic family), information (knowing the “best” wine), exclusive access to acquisition (owning a jacket only sold in London), or uncommon tastes (true appreciation of Einstein on the Beach).
Acquired status symbols like luxury goods have a fatal flaw, however: The intentional signaling of status is a low-status activity. The highest-status individuals should never need to plead for status; their reputation precedes them. So the most effective status symbols require more than signaling costs: They also need alibis, plausible excuses for ownership other than the intentional acquisition of status symbols. Luxury watches and sports cars are tools. Mansions serve as shelter. The most effective status symbols offer advanced utility as an alibi to justify the expenditure as anything other than an obnoxious act of conspicuous waste. This is why luxury brands talk endlessly about unprecedented craftsmanship, brilliant design, or engineering prowess — to sell a veneer of functionalism that hides raw positional marking.
While signaling costs and alibis are important, the most critical aspect of a status symbol is cachet, clear associations with existing high-status groups. The point of brandishing these symbols — Sun Valley vacation homes, Gainsboroughs in a grand entryway, tailored suits worn to board meetings — are ingredients for an all-encompassing, high-status lifestyle. All status symbols should appear to be “behavioral residue” of those lifestyles. This is why middle-status individuals flaunting status symbols often fail to impress: a luxury handbag alone isn’t enough to suggest an elite position. So while signaling costs help elites keep status symbols exclusive, the resulting associations with those groups provide the fundamental value. Both Porsches and municipal garbage trucks are very expensive, but only Porsches work as status symbols, because rich people don’t drive garbage trucks.
NFTs clear the first bar of status symbols: They have very high signaling costs. Steph Curry just paid $180,000 for Bored Ape #7990. For those who got in early, time becomes the signaling cost. At first, it may appear that the costs of faking an NFT are extremely low — screenshotting a Bored Ape is free — but with the guarantee of provenance in Blockchain, fraudulent usage can be exposed immediately.
Next, do NFTs have good alibis? The current offerings boast only the flimsiest practical utility other than “art” (as Roose says, Pudgy Penguins are “fundamentally pointless”). But there is a more basic issue: There is no way to own and display NFTs without intention. They aren’t “natural” parts of a high-status lifestyle. Every NFT tells the story of an individual taking the time and money to acquire an NFT.
But this is where things get very complicated. The best alibi for NFTs is that they are an investment. Steph Curry didn’t waste $180,000 on a jpeg — he bought it up to cunningly flip later. At the same time, the entire status symbol story itself serves as an alibi for the existence of NFTs: Without the usage in individual self-expression, they are simply volatile and speculative financial vehicles. There is a circular loop, where NFTs are investments posing as status symbols posing as investments. Whatever the case, the fact that people so easily brandish their investment properties to demonstrate taste says a lot about our age. Surely no one in the Seventies sent out receipts for corn futures as their holiday cards.
On the final measure of cachet, NFTs at the moment offer no unambiguous associations with high-status communities. Steve Aoki, Mike Tyson, Pussy Riot, and many famed crypto-evangelists use NFT avatars, but so do anonymous nobodies. Anyone who reads a few newsletter articles can figure out how to buy one. That being said, collective ownership creates an “avatar club.” For Kyle, they are a “strange combination of gated online community, stock-shareholding group, and art-appreciation society.”
NFTs thus serve as entry-level status symbols to join these groups. Once inside the “swamp club for apes,” Bored Ape owners can enjoy the warm glow of acceptance from strangers. Follower counts explode. Kevin Roose, upon buying a Pudgy Penguin, noted, “My mentions were overflowing with bulbous and beaked interlopers, all congratulating me on joining them.” But NFTs communities host individuals of both low- and high-status positions, making them fundamentally different from country clubs or VIP lounges. Anyone can join, if they have the money.
As much as NFTs work as golden tickets to these clubs, to say something is a “status symbol” normally implies it affords global status, not just the esteem of insiders. At the moment, NFTs are only effective for those who wish to join the imagined communities around NFTs. At best, NFTs may signal to normal people a deep knowledge in crypto, investment prowess, and familiarity with cutting-edge pop culture. But in our pre-metaverse world, NFTs draw no value from being part of a high-status lifestyle; they only broadcast the money required to buy them. This obviousness curbs their effectiveness. To be better status symbols, they must become more nonchalant; wielders need to appear so bored of Bored Apes that they just happened to acquire a few in the course of their aspirational life adventures.
NFTs are status symbols, albeit limited ones. But perhaps the status-symbol story itself is an alibi: NFTs are speculative investments aspiring to be anything other than just speculative investments. — By W. David Marx
W. David Marx (@wdavidmarx) is the Tokyo-based author of Ametora: How Japan Saved American Style (Basic Books, 2015) and is writing a book about status and culture for Viking Press due in 2022. His newsletter Culture: An Owner’s Manual is launching Fall 2021.