Editor's Note: This article comes fromCrypto Valley Live (ID: cryptovalley)Editor's Note: This article comes from

Crypto Valley Live (ID: cryptovalley)

, Author: Nick Tomaino, Translation: Jeremy, reproduced by Odaily with authorization.

NFTs have exploded into mainstream consciousness recently in a way that has never been seen in the history of our industry. Google Trends data shows that interest in NFTs has recently surpassed interest in cryptocurrencies.

As for why this is the case, I have a theory based on years of experience and share it with those who have not. This may not be new to anyone who has followed the industry closely for a while.

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Bitcoin: Digital Gold - 21 million

A story and scarcity created a cryptocurrency with a market capitalization of $1.1 trillion today, which is larger than the currency market capitalization of all but 13 countries in the world.

Tens of millions of people around the world now own Bitcoin and believe it has enormous value, despite countless times the media and Wall Street conventional wisdom proclaiming that it is worthless. The success of Bitcoin is a testament to the authenticity of creation (it was the first protocol to enable trust to minimize digital scarcity) and the belief of the community. The community doesn't care what the agency says, it just believes the story. Over time, more and more people come to believe the story, validating the beliefs of early backers, adding value.

Despite Bitcoin's massive success so far, there are still billions of people in the world who don't care. Maybe they don't care about money and finances. Maybe the digital gold story isn't interesting or relatable. If you haven't insisted, it is estimated that you were once a member of this camp. Bitcoin was my first love, but I'll be the first to admit it's not (yet) for everyone.

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NFT turns countless stories into scarce resources

Stories and scarcity are now driving interest in NFTs, just like Bitcoin. But now mainstream interest is stronger for two reasons:

NFTs attract people interested in art, music, sports and culture

We are now seeing new stories attracting new people into the cryptocurrency space who don’t care much about money and finance. It turns out that there are more people in the world who primarily care about art, music, sports and culture. And stories about art, music, sports and culture are often more interesting and relatable:

Beeple has been honed for over 13 years to create digital art that people love. Last year, he began tokenizing his culturally aware artwork on Ethereum, which is now worth more than $100 million. His "EVERYDAYS: THE FIRST 5000 DAYS" work recently sold for $69 million at Christie's auction. More and more people believed Beeple's story.

Robbie Barrat was an early pioneer in using generative adversarial networks (GANs) to create digital artwork. His open source code was copied and used by a prominent group and sold for $432,000 at a traditional art auction. But the real implementation of his code is AI Generated Nude Portrait #1 on SuperRare. Robbie is a true artist who has largely stayed away from the recent NFT hype, but for those deeply interested in art, he has a compelling story.

Cryptopunks is known as the OG NFT project. Matt Hall and John Watkinson launched it back in June 2017, based on an 8-bit retro design, before NFTs were popular. They minted 10,000 minifigures with various traits and gave them away for free. Cryptopunk 7804 recently sold for 4200ETH, and the cheapest punk you can buy today is about 21ETH (about $38,000). As time went on, more and more people believed the Cryptopunks story.

3LAU is an independent electronic music artist who has built a career in the music field for over 10 years, doing shows and releasing music on the Internet. This is an interview we did in October 2020. He has since released an NFT-based album, which has sold for over 11 million. His authentic way of communicating with fans coupled with his good music has made more and more people believe in his story.

NBA Top Shots allows basketball fans to collect on-court video highlights (“moments”) of their favorite professional basketball players. Basketball is a hobby for millions, and NFTs give fans a deeper connection to the game. I'm personally most excited about real NFTs created directly by creators (such as those mentioned above), but Top Shots has proven that there is a market for IP-based NFTs too. Belief in these stories also seems to be growing.

There have also been countless scarcity-based stories that have attracted new people to the cryptocurrency space over the past few months, thanks to NFTs, which is beautiful.

Ethereum-based NFTs make it easy for anyone to create value from stories and scarcity. You may recall the initial coin offering (ICO) craze in 2017 that first attracted mainstream attention to Ethereum. The permissionless nature of Ethereum and open standards for launching fungible tokens (ERC-20) allow engineers and opportunistic businessmen to raise millions based on story and scarcity.

However, there are some problems with the ICO wave in 2017. An ICO is a public sale based on a promise of the future, rather than a direct sale of a specific product. That meant most were clearly unlicensed securities, and regulators reacted quickly to stop them. Within the U.S. regulatory framework, this is not a sustainable way for people to create value through stories and scarcity. ICOs are also not easy for the masses to create - you need to know how to code (or have access to coders) to make it happen.

NFTs solve both problems. NFT is a concrete product (digital commodity), not a promise about the future. This fact alone makes the NFT boom more sustainable than the ICO boom. Also, creating an NFT is much easier than launching an ICO. You don't need to code - anyone can use OpenSea's creation tool and mint an NFT for free. Millions of scarce assets based on stories can now bloom on Ethereum for as long as people want. You may be wondering by now, what makes people want them? If millions of NFTs can come to fruition, why should any NFT have enormous value over time?

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Desire to imitate can give great value to story + scarcity

René Girard's theory of imitative desire believes that human beings are imitative animals, and all human desires are based on the desires of others. Thinking about cryptocurrencies and NFTs in this context locks in why a scarcity-based story has enormous value. We want to have what other people want to have.

Think about the last big purchase you made. I'm guessing, you don't really need to buy it. More likely, it's a decision based on the desires of others. You can tell yourself that you buy a new watch or sneakers because of their quality, but the main reason you think they are high quality is because other people do - that's the human mindset.

When Bitcoin was first launched in 2009, few people wanted to own it. It's practically the same product now as it was back then, except that more people crave it now. When more people desire a truly scarce asset, the value of the asset tends to increase, making more people desire it. Bitcoin, more than any asset in history, has benefited from the desire to imitate because it is universal and the world is more connected than ever. The more connected we are, the stronger the desire to imitate.

So, how should the long-term value of NFTs be viewed in the context of the desire to imitate?