“Invitation to The Box Soho – World’s Most Expensive Champagne Launch, worth $2.5m.” As email subjects go, it certainly caught my eye. Surely there’s been a mistake? I write about savings, pensions, debt, Isas. My demographic is Joe Bloggs, not Jeff Bezos.
But no, this was a genuine invite from “luxury champagne connoisseur”, Shammi Shinh, to the launch of his new non-fungible token (NFT) at London’s hottest cabaret club. NFTs are digital-only assets bought and sold exclusively on the blockchain, a ledger which records crypto transactions.
This latest NFT is based on a real champagne bottle adorned with illustrations by the artists behind the ‘Bored Ape Yacht Club’ (BAYC), a collection of digital artworks on the Ethereum blockchain. BAYC has a cult following and celebrity fans include Serena Williams, Reese Witherspoon, and Bridgerton producer Shonda Rhimes.
The champagne NFT will sit on Ethereum too with a valuation of 2500 Ether. You can own the digital version or the real deal, but not both. Shinh expects the NFT to be traded a few times before someone decides to hold (or “HODL”) the bottle itself.
When that happens, the owner will have to “burn” the NFT – essentially, remove it from circulation by sending it to an inaccessible address on the blockchain. Although, who knows? Maybe the owner would prefer to hold onto the NFT and smash the bottle instead. Against a new yacht. Owned by bored apes!
You’ve got to laugh. I went to the launch, and it was all a bit surreal. Against a backdrop of rampant inflation and an imminent recession, it felt like the kind of outrageous parties thrown by Caligula as the Roman Empire fell.
Young men barely out of short trousers downed champagne and talked about the thousands they make from being crypto entrepreneurs. A drag queen, flanked by scantily clad dancers, paraded the famous champagne bottle down a catwalk, the curtain raiser for an eye-popping cabaret show featuring fire breathers, bondage displays, and acrobats.
We were then ushered into a downstairs nightclub that looked like a hall of mirrors. A metaphor, perhaps? There was a free bar all night and attendees partied like it was 2021, when crypto valuations soared to all-time highs. But it was a tad incongruous with the troubled outlook for NFTs now.
Recent NFT auctions, including artwork by Madonna and the first-ever tweet by Twitter founder Jack Dorsey, have flopped. The minimum asking price for Bored Ape NFTs has plummeted 75% since late April, from $400,000 to $100,000.
Celebrity backers of BAYC have been quietly removed their non-fungible avatars from social media. Then there was ‘NFT NYC’, the industry’s annual conference in New York last week. Whereas the 2021 event featured Quentin Tarantino, this year’s attendees had to make do with a Snoop Dogg impersonator.
Seriously, as analysts whisper about a “crypto winter”, you may have a loved one caught up in the downturn and wondering what to do. Far from being an elite milieu, the crypto space is thronged with young, inexperienced punters enticed by mass marketing and celebrity endorsements.
Now, they’re finding out many of the claims made in that promotional drive were hollow. Crypto currency would be a great hedge against inflation…before going on to lose $1.5 trillion once prices started soaring. The ex-footballer Michael Owen tweeted that his NFTs will be the “first ever that can’t lose their initial value” before his business partners conceded that you’ll lose money if nobody wants to buy them from you in the first place.
Terra was a ‘stable coin’ apparently pegged to the US dollar. That was until its devastating collapse showed that it worked more like a Ponzi scheme. NFTs seemed to offer unique commercial rights for their owners. Then copycats and unauthorised merchandise sprung up without any legal consequences, suggesting that paying thousands for a JPEG may be as daft as it sounds.
I wish Shammi and all crypto investors well. This champagne NFT might buck recent trends and be a huge success. I certainly wouldn’t want any of the nice, ordinary young people I met last Saturday to lose serious money. They were remarkably sanguine when I asked them about the sector’s recent woes.
“You win some, you lose some,” one told me. “I’ve made thousands, I’ve lost thousands. That’s how it is.” The consensus was that extreme volatility was par for the course. Investors just had to hold their nerve. As one of Shammi’s business partners put it: “Faith is the biggest currency in crypto.”
Judging by recent events, many crypto investors are starting to lose the faith. Whether they’ll ever regain it remains to be seen. Separately, the i money supplement is taking a break over the summer, but my weekly column will still appear on inews.co.uk/money every Wednesday.
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