Why Did I? Invest in NFTs - The State of NFT

In this series of blogposts, I will be writing about the reasons why I had chosen to act upon certain decisions in the past, present or for the future. This series will help me to analyse my decisions on hindsight, reflect on the mistakes and success that I have made, and understand the reasons why I came to do certain things. My hope is to learn and immortalize my actions for my and my reader's benefits and perhaps be the subject of some social research in the future. Hmm...

Why I Invested in Crypto NFTs in 2021.

When blockchain technology first exploded in the early 2010s, speculations on the potential of this new technology swept across the world. People were talking about using bitcoin to purchase this and that, and social media were picking up stories about people getting rich from their participation in this new ecosystem. Blockchain technology's intended aim was for the decentralisation of transactions, to cut out the middleman that for so long had plagued almost every kinds of transaction. In a world that was still grappling from the 2008 financial crises and mistrust against financial institutions running high, blockchain technology promises to be a nobler alternative.

The cryptocurrency crash in 2018 as a result of clampdowns by governments and hacks that resulted in hundreds of millions of dollar stolen brought into light the risks and negative elements of blockchain technology. The clampdowns from governments should have been anticipated. After all, the idea of decentralisation of transactions also means deregulation of transactions and governments find it next to impossible to impose taxes on otherwise taxable transactions. Without tax revenue, a government cannot raise funds to pay for public goods like roads and schools. Deregulation also opens up opportunities for money launderers and transaction of illegal goods such as narcotics and military arms. In essence, it appears that the world is not ready to welcome blockchain technology and much research or trial-and-error has to be done to understand the humanistic implications of this new ecosystem.

It is during the pandemic of 2020 that the second resurgence of interest into cryptocurrencies happened. During the crypto winter following the crash in 2018, blockchain technology adopters created new forms of utility for the technology, namely in decentralised finance (deFI) and Non-fungible Tokens (NFTs). During the same period, supporting infrastructure for the mass adoption of blockchain technologies has been slowly building up in the form of safer digital wallets and the creation of crypto-exchanges that connects to the existing traditional financial ecosystem. deFI allows people to raise funds quickly and create investment products through blockchain technology in the form of tokenisation. Essentially, a person is able to create digital tokens for a specific purpose and people can invest in these tokens by purchasing them. These purposes range from altruistic projects such as saving endangered whales, to gaming projects, to projects that aim to create marketplaces for artists and entrepreneurs. As cryptocurrency developed hype again, an interesting phenomenon emerged which is the creation of memecoins such as Dogecoin and Shiba Inu. 

This development, in my opinion, represents a major setback against a fundamental belief behind blockchain technology which is that the centralisation of traditional wealth can be decentralised. With prices of memecoins skyrocketing, a parallel reflection of the reddit-backed US stock rallies a few months prior, cryptocurrencies became the plaything for people with wealth who, just like in traditional finance are able to manipulate the market in their favour. One's initial capital once again rule supreme in the deFI space. An even bitter pill to swallow is the fact that unlike traditional finance that have centralised checks in place to reward projects based on the attractiveness of their utility to the world (creating cars, building factories etc), the cryptocurrency projects that garnered even greater amount of investments had no actual utility. Billion of dollars was injected into dogecoin when there were absolutely no plans for its real-world usage. It is like buying yourself store credit but not being able to use the store credit because nothing is for sale. It is to no surprise that a bubble formed that resulted in the crash of the crypto space in May 2021.

Looking past the mindless hype-generated fervour of the cryptocurrency world in the first half of 2021, I do believe that the space is evolving into one focused on utility. To explain how I came to this conclusion, perhaps I have to explain the other phenomenon that took place shortly after the May 2021 collapse; the development of the NFT space.

NFTs are an evolved form of tokenisation. It is the tokenisation of unique digital and/or physical assets. Essentially, anyone is able to tokenise an asset like an art piece, a car, or even your time. Anyone can then list their assets in the many marketplaces that have emerged such as OpenSea or Raribles and anyone can purchase these assets. As the value of the asset is based on what people believe the asset is to be worth, the price of the NFTs can fluctuate depending on people's opinion of it. The early NFT art works that were successful and have real value that can be sold for thousands if not millions are those that have a story behind them. An example would be Beeple's art piece '5000 days' that sold for $69 million. The artist had, over the course of 5000 days, drew one picture every single day until his collection grew to 5000 pieces. Artists that have done paintings for years and years and did not get recognition in the art world but have massive social following suddenly found an avenue to earn income from their art. NFT digital art marketplaces became a new economy of its own. That economy evolved however, with the influx of mediocre and amateur artists that just started painting or drawing for the very first time listing their works in these marketplaces. The value of the assets being listed becomes blurred. One can find an amateur painting being listed and sold for $15,000 and the average layperson would have no idea what the actual value of the painting should be. The culprit to this horrendous development is a new form of NFT projects that emerged during the hype of NFTs. Before you label me something negative for condemning this culprit, I am here to point out as well that the culprit eventually also gave rise to the optimistic development that the blockchain technology space seems to be gearing towards - utility.

That culprit is CryptoPunks, everyone's beloved generative NFT art. CryptoPunks, for the uninitiated, is the godfather of limited generative art. Basically 10,000 art pieces were created from a pool of traits such as background colour, eyes, and hair to name a few, which was then randomised and combined such that no one art piece has exactly the same combination of traits as another. When I first looked up CryptoPunks, I was disappointed. The quality of art was dismal, the kind of art that I could have done myself. I was equating art with something like the Mona Lisa, or Beeple: something to admire and inspire. In CryptoPunks I witness the price of an amatuerish looking piece of art going for a million dollars. The idea of CryptoPunks, however, was original, and being the first of its kind definitely warrant some of the value the art pieces was commanding. These generative art filled a void that the traditional art scene had always had. People love art, and people wants to own art to show them off. But people also wants to show off their art which other people also prize. Most people cannot afford a Picasso, so the generative art scene creates a similar experience to the traditional aficionado bourgeois-dominated art world, one which more people can participate in. After all, the initially $50 CryptoPunk one bought is now worth $50,000 and one can, with gusto, tell one's folks that they own a $50,000 piece of art. One can call themselves a neo-aficionado.

As with successful projects or movements, new players will emerge in the market attempting to replicate the same success. However, people fail to realise that most of these projects is doomed to fail. With so many generative art projects being introduced every few weeks, which projects is worth something at all, and who would want to pay $50,000 for, let's face it, an amateur piece of art at the end of the day?

The Rise of Utility

A few months after not visiting OpenSea and checking up on the digital art scene, I popped into the OpenSea website and discovered the Bored Ape Yacht Club (BAYC) generative art project that had developed quite an impressive hype and community support. Other than just being a piece of art that has some incredibly fine detail and 'pop-ness' to it, it also has some utility. The utility is a sort of community-centred utility. By investing into the project and purchasing a BAYC NFT, you are in a sort of a club that gains you access to features to a site that have activities that you can do with other BAYC NFT holders. It is an exclusive club and it is an interesting concept that merits the value the NFT may hold in the market.

During the time of BAYC, you can already find dozens of generative art projects mostly without utility and these projects just died off. It seems now that in order to get people to buy into the project, you need some form of utility attached to the project. One such project was Fucking Pickles that sort of promise (or as pickle holders put it - promised absolutely no such thing) a lot of utility with their superior website and Discord community. Another is the DeadHeads project that is a generative art project that also promises to create an animated series behind each of the NFT art pieces. Finally, there is Super Yetis that promises to develop a game out of the NFT art pieces in the form of a Yetiverse. These projects are successful to a limited degree but a characteristic of these projects is that almost all of the NFTs eventually became worth less than its original mint price, and a possible reason for that is that the target base for these projects are always the same groups of people, who would have only so much capital to inject into each project's economy. The spirit and idea behind these developments, however, are certainly something positive to think about. More and more projects are now interested in longer term utility to catch the attention of investors and to delve outside of the same target group. The next big thing in the NFT space is definitely something which is creative and useful, and it could be right around the corner.

The Nascent Project

During the NFT market evolution, there was a project that had been nascent in the background that had all the traits for a mega-successful NFT and deFI project. For two years since its inception in 2018, the game grew slowly and organically from a few hundred to a few thousand active users before eventually seeing a parabolic increase in the number of active users somewhere around June 2021. That project is Axie Infinity. Axie Infinity portrays itself as a Play-to-Earn crypto blockchain game that promises to reward players on the amount of time they put into the game. Decentralisation and play-to-earn seems like a hard concept to mash together but the more one thinks about the economy of the game, the more it makes sense as a deFI multi-level marketing product.

Regular players of the Axie Infinity game have to invest money into the game initially to start playing, and the initial investment is not little. One has to put in about $1000-$3000 initially and the amount is used to purchase 3 NFTs called Axies and some AXS tokens. However, with that amount invested, the player will be able to play the game and earn another in-game token called SLPs that they can use to multiply their assets. i.e. create an altogether new NFT which they can then sell to other new players. This is decentralisation in the gaming industry at its finest because the players are selling to other new players while the developers only takes a small cut of the transactions which they use to maintain the game's economy (and reward themselves as well, I assume). The Axie Infinity economy is thus, something like an egalitarian multi-level marketing scheme and the bigger the game gets, the more people who plays the game, and the more existing players will earn. 

There are detractors that may see the platform as just a game that brings no real world utility. This argument would not hold a candle as we can compare Axie Infinity to the traditional multi-billion dollar gaming industry. The only difference between the two is that the monetary benefits from playing the game is spread across more stakeholders instead of just the game developers and investors. Axie Infinity thus represents an early form of amalgamation of the gaming industry with blockchain technology.

There are more and more interesting gaming projects that are being developed right now. Unlike other blockchain game projects so far that tokenised most aspects of their game, some of these newer games use blockchain technology in a small but integral aspect of the gameplay in creative forms such as skins. This means that the priority of the games are shifting towards the gaming experience itself. The success of a game design focused on quality gaming experiences will spell out a renaissance and economic shift within the gaming industry towards models that incorporate blockchain technology and spell out the possibility of the technology being incorporated to other massively popular traditional games such as FIFA or Fortnite.

Where to Next?

Digital art and digital games are the first steps towards incorporating blockchain technology into traditional ecosystems due to the nature of the products. I do foresee a greater integration of this technology into other aspects of our lives in the near future. Blockchain technology will take root in our society one way or another mainly because it has a very useful application; its immutable ability to process instantaneous transactions at possibly lower costs. It is a useful technology that can bring greater order and unity to a chaotic world and right now, it is at a stage where the technology is an idea, a belief at the back of people's minds. As blockchain technology spreads and begin to entrench itself into our societies, people will start to contribute more and more ideas about what one can do with this technology. It could be a carpenter, a farmer, a student, or a doctor that comes up with the next creative spark as to how one can implement blockchain technology utility into their work or daily lives. But one thing is certain. With more people participating in blockchain technology, be it they being aware that they are participating in it or not, the technology is here to stay and utility will be the key to unlocking the bridge between traditional ecosystems and the blockchain world.

Living in Pasir Ris - Suburban Singapore Town

I grew up in Pasir Ris. It is home to close to 150,000 people in Singapore. When my parents bought their house here in 1993, it was a new town built at the eastern-most edge of the island. All the HDB flats were new, and so were the shopping malls, roads and schools. Over the years, new condominiums sprouted out on vacant forest land, new sidewalks and bicycle paths were built, and upgrades were made to the many parks dotting Pasir Ris. As I begin to recount and re-live these numerous changes, my childhood emotions and nostalgia begin to resurface. It is a feeling of comfort, a feeling of home.

For most Singaporeans, when I mentioned to them that I live in Pasir Ris, an immediate reaction would be something like - "Wah, it's so far away." The statement seems a little overdramatic considering it takes only two hours to get from one end of Singapore to the other. But there is some truth in that. For a very long time, even to this day, our town's train station remains the last train stop to the east of our country's ever-expanding metro line (also called the MRT aka the Mass Rapid Transit). It can be inconvenient if one has to travel to the western-most end of the country where most of the top universities are, but really it is only an hour's train ride to the country's city centre.

However, when one were to ask about people's impression of Pasir Ris if they were to live here, generally, people would gladly agree that it is a quiet and calm place with many greenery and a lot less bustle than other parts of Singapore. It is a welcome treat to life in busy urban Singapore. Our closest neighbouring town is Tampines. In comparison to Pasir Ris, Tampines has three shopping malls built around their main train station - Tampines (Green Line) - compared to Pasir Ris' one. In fact, Tampines now boasts three train stations catering to their town alone, so much it feels like a mini city within Singapore city. 

A large part of the suburban feeling of Pasir Ris lies in its proximity to a beach, and acres of forested and farm lands surrounding the town. My parent's home, a 5 room HDB apartment, faces a small forest which itself is surrounded by fish farms, a military camp, and Pasir Ris Beach. The forest land itself is restricted land and is owned by the military thus occasionally, one can hear the sounds of live firing when the soldiers conduct their drills, though they are uncommon and certainly taking place a far distance from the civilian population. With these natural elements in our area, it is no wonder that the area is teeming with rare wildlife.

Just a ten minutes walk away from my parents house is Sungai Api Api, a small river stream that runs from Pasir Ris Beach deep into Pasir Ris. The stream houses a nest of majestic hornbills, water birds and swallows that scurry and fleet past you, a rare sight in Singapore. A five minutes walk away, you will come across dozens of wild boars that will appear around sunset and remain late into the night before disappearing in the morning. The authorities had created a fence between the forested land and the rest of Pasir Ris Town, essentially enclosing the entire forested land and making it unlikely for a wild boar to find its way on our streets or vice versa, for someone to enter the forested land. And did I mention chickens? All around Pasir Ris Beach and the surrounding residential areas near the to the beach, including my area, you will find chickens everywhere. The chicken population was actually pretty small initially. They may not have been part of the natural eco-system and may have been introduced to the area by one of the owners of the landed properties that line Sungai Api Api. Over the years, devoid of natural predators that would otherwise have been shunned by human presence when Pasir Ris Town was created, the population of the chicken grew. Other than chickens, one can also find green sunbirds that fly in the hundreds around the Elias Mall area, one-metre long sea otters and an enormous crane that lives on Sungai Tampines, and the neighbourhood owl that lives at the entrance of Pasir Ris Beach. The wildlife in the Pasir Ris area is amazing.

New Towns

The creation of New Towns in Singapore was actually an initiative of the Singapore government and are strategically planned. Each New Town has all the required necessities that a family will need to raise their kids. Grocery stores, schools, shopping malls, entertainment, restaurants, gyms, library, cinemas, just to name a few. Everything that you could possibly need can be found in the neighbourhood. Generally, new families move into new New Towns. As such, usually the first few schools that are opened in the New Towns cater to younger kids. As these families mature, new schools catering to older kids are opened and the older schools catering to younger kids may merge to cater to the changing student population size. Everything is systematic and well-run in Singapore and that adds up to the convenience of living in one of such New Towns. Essentially, the New Towns that we live in are self-sustaining and incredibly convenient and as we speak now, new towns are being created in phases all over Singapore.

Growing Up In Pasir Ris

Having lived in Pasir Ris, my schools had also been in the area. My parents sent me to a PAP Nursery and then PAP Kindergarten when I was four or five. These early childhood centers were directly affiliated with the government, although over the years early childhood centers in Singapore have moved towards the private sector. My nursery and kindergarten took place at the void deck of a couple of HDB flats right next to West Plaza, a small shopping mall just a ten minutes walk away from my parent's house. I remember singing the 'Good Morning' and 'Good-Bye, Teacher' song everyday, attending painting and drawing classes and bringing toys to the kindergarten to show off to the other kids. My mum who is a housewife would cycle me and my brother to the nursery and kindergarten every weekday and then fetch us back after. After kindergarten, I went to a local neighbourhood school, Meridian Primary School, which was the school that my elder sister went to two years prior. Meridian Primary School back then was an entirely new school. It was so new that my principal, Mr Eric Lim, was the composer of our school song that is sang to this day twenty years later. Everything in the school was spick and span new and even then it was further renovated during my time as well. I spent six years in that school and for my mandatory co-curricular activity, I was in Green Club, essentially a gardening club or environmental-advocate sort of club. I did not really have much of a say in the clubs or activities that I take part in when I was younger. My parents were strict and have this huge influence over my choices and decisions in my early years, thus they when they asked me to join Green Club, I didn't object. Eventually when I was in Primary 5, I was elected to be an Environmental Champion and started giving talks and speeches to the school assembly. After Primary School, like other regular Singaporean kids, I had to apply for a Secondary School. I was doing alright academically, scoring straight As for my Primary School Leaving Examination (PSLE). My parent's strict discipline certainly helped for sure. Thus, I had the option to pick any school that I wanted. I eventually chose Dunman Secondary School, which was, during my time, the highest ranked neighbourhood school in the east, which also happens to be the school my elder sister went to.

Dunman Secondary School is not in Pasir Ris. It is actually in Tampines, the town right next to Pasir Ris. It is possible to cycle to my school from where I live and reach the school in twenty minutes, but there is also a direct bus that takes me there for around the same time. I spent four years in that school. During this time, I made lifelong friends along the way whom I still am in contact with. The school back then had such a homely environment. No bullying of any sorts, friendly and helpful friends and all sorts of characters. The class that I was in went on to break all kinds of academic records for our school for our O level examination. I did not get straight As, unfortunately. I had an L1R5 of 10 because I got a B3 for English and Biology. After Secondary School, I had the choice of going to a Junior College or a Polytechnic. My score did not qualify me for a prestigious junior college such as Victoria Junior College or Raffles Junior College, but I got in fairly easily into Meridian Junior College (MJC), a new junior college that was built in Pasir Ris right next to my former primary school, Meridian Primary School. 

I spent another two years in junior college. MJC was so new, it was still under construction when I was still studying in Meridian Primary School. It does not have the best reputation and its merger with Tampines Junior College a few years after I had left certainly did not help much. It is known as the school with out-going and lively culture and people, but with a lot of retainers (this means that the students are unable to move on to the next grade due to academic performance). I did not have the best of times there. I had depression around the middle of year 1. During that time, I broke up with my girlfriend (of sorts) whom I met and started dating towards the end of Secondary School, my parents and sister were fighting and shouting every single day late into the night at home for all kinds of trivial reasons, and I just could not bring myself to approach anyone else for support. At my low point, I met an incredible person, a classmate, a true brother, who came into my life and handed me the support that I needed to push me through this phase. I suppose his wisdom and kindness really did rub off on me and shaped me as a person. With his help, I graduated Junior College with decent results and qualified to study in a local university.

There are good and bad events and emotions attached to the Town that I grew up in. Thanks to the New Town policy that Singapore had, a lot of the activities of my childhood certainly revolved around Pasir Ris and its surrounding area. It is the place where I had my first girlfriend, the place where I hang out with friends after school at the local 711 and ordered tasty waffles, the place where I basked in the sun during my evening runs at the parks, and the place where I just go to buy my groceries or snacks or get a haircut at the barber. It is a typical suburban Singapore New Town life.

The fish farms are gradually moving out as the government is planning to lay new MRT lines and develop new towns in the area. There was an amusement park called Escape Theme Park that had closed and a shopping mall was built in its place. A water theme park called Wild Wild Wet opened a few years back with new rides being introduced every few years. A hawker centre and a public swimming pool finished construction near the Pasir Ris MRT station. Bicycle paths were created all over the town that helped to widen the walking surface for pedestrians and cyclists. No longer must a cyclist cycle on the grass to get around a pedestrian. Many condominiums were built around the area and the construction of the international school brought a lot of international students to the area as well. Even our old small bus interchange recently received a big upgrade and was expanded. There are always new faces you will see in the area and always something new to look forward to throughout the year, and it is really nice to see the changes and make the comparison of what the place was versus now.

Yes, it has been a little more noisy lately with more people around and a lot more activities and developments happening across town. But to me, Pasir Ris Town will still be the same in my memory. After Junior College, I spent a lot of my time away from Pasir Ris while serving my National Service and then spending more time away for the next four years while studying and living in a dormitory in NTU (Nanyang Technological University). If someone were to ask me what is Pasir Ris like, I still think I would give the same response as I did when I was much younger. I would tell them it is the place where I grew up in, and it is that 'far-away, quite ulu' place, very quite, very nice.