Last week, I was one of the few lucky winners of Twitter's surprise NFT giveaway. Just a day later, I accepted a $15,000 USDC bid for the piece. I effectively was betting that the price would only go down from there. The party on the other end of the bid - an account named "NFT Flipper" - clearly disagreed. So did many of the other winners of Twitter's NFTs.
So who's right? Was this a historic drop whose value will be clear for years to come? Or did I pick the right time to cash out on a flash-in-the-pan drop?
This post will lay out why I thought $15,000, and an excellent price to accept for a piece in Twitter's "140 Collection."
The Drop
In a flash marketing stunt on June 30th, Twitter revealed twenty editions of seven NFTs they had created as part of a series they called "The 140 Collection." (That adds up to 140 total editions, by the way - the traditional number of characters allowed in a tweet.) The NFTs were minted on Rarible as ERC-1155 tokens.
Twitter distributed the pieces via their own Twitter account by engaging with users who commented on the announcement. Editions were awarded seemingly at random to some users who requested one.
I happened to be one of those lucky commenters who received one. After commenting on my reply, @Twitter DM'd me, asked me for some personal information (I assume for tax or KYC reasons), and then sent over an NFT to the wallet address I supplied them.
Twitter sent me an edition of Furry Twitter - a looping image of the Twitter logo done up like a stuffed plushie you'd hang on your rear-view mirror. (As far as the art goes, I think it's pretty decent! I appreciated the understated, realistic animation of the bristling fur. I'm not so sure about the tag on the tail showing the Twitter logo - besides being redundant, it seems to add a 2D element into a 3D image. But overall, they could have done much worse for a first NFT outing.)
I was, of course, delighted to have won! It seemed like everyone on NFT Twitter, including some big name artists, were begging to own one of these. I quickly spotlighted the new trophy on my Showtime profile, looking forward to reading the comments as they came in.
But, of course, just as soon as the nifty hit my wallet, I headed over to OpenSea to check its value on the secondary market. That's when I saw that an edition had already sold for 25 ether (about $52,000).
Was I really holding a $52,000 image in my digital wallet? I was not convinced of that, but nonetheless, I listed it for 25 ETH in case someone was inclined to disagree. 😜
It was at this point that I started to consider the value of this nifty. What was the quality of the art and the technical execution? What was the broader significance? What would I have paid for it? What would I expect excited collectors to pay for it? Did I think it was likely to increase or decrease in value?
I determined that it was probably worth a few thousand dollars. Any amount over $10k was certainly an overvaluation. And therefore, I would be happy to trade around that price.
Here's how I decided the Twitter NFTs were overvalued.
The NFTs were officially created by a corporation. The crypto space broadly, and much of the NFT community, comes from an anti-authority, anti-centralized perspective that sees large corporations as untrustworthy and often immoral. Given that political and cultural context, I could easily imagine that in a year, Twitter's NFT drop would look more like a cringey publicity stunt from a corporation trying to capitalize on a trend and less like a historic, forward-thinking evolution of a beloved brand.
The NFTs were not officially associated with artists. The NFT art world thrives on communities and cults of personality. It values artists for their personal contributions. Though the artists were publicly shouted out on Twitter by an employee, they were not officially connected to the project. The elevation of a profit-bearing entity over creative individualism seemed like another red flag that I believed the general NFT community would point to in the long run.
The NFTs would never be more exciting than the week they launched. As a surprise coordinated campaign, this drop was built on hype, and I figured that it would need continued hype to thrive. As attention faded, so would values. I couldn't imagine a reason that any of these pieces would naturally increase in value over time.
The value of these NFTs was in novelty, not in the art itself or any utility. This drop was pretty run-of-the-mill. The most notable parts were that it came from a social media company, that they were given away for free, and that Twitter did not enable resale fees (meaning that Twitter would not take any cut when the items were resold). As ERC-1155 tokens (a sort of batch version of NFTs), these aren't even terribly unique NFTs.
$15,000 is a lot of money. We can argue able proper value all day long. But $15k in the bank today is worth infinitely more than a hope of higher value to come. And more importantly, I now have a chance to reinvest the proceeds into many NFT projects that I strongly believe will hold or increase their value over time, rather than one uncertain basket.
Having decided that, I started to keep an eye on the bids, and checked them regularly over the next 24 hours to see how the market was reacting. The bids kept going up, reaching a high of $15,000 USDC on OpenSea. For most of the day, there was a comfortable ladder of supporting bids in the same neighborhood.
But then I noticed the ladder disappear, and suddenly the next highest bid was around half of that USDC offer. That told me that many of the supporting bids had probably come from a single account, a potential indication that there wasn't a lot of demand from a large pool of people; and that one holder now had a short-term opportunity to take a decent bag of cash.
Since the price was well over what I valued it for, and since there was now a time-sensitive opportunity to accept this bid, or one much lower, I decided to accept, and did so.
Now, key to my decision was my sense that there was no ongoing mechanism to sustain or increase the value of these pieces, no community to rally around the collection.
But as soon as I sold, a funny thing happened: the other winners started connecting and organizing on Twitter. They talked about the value they saw in the pieces; made promises not to sell soon; and closed ranks to lock in the price of the art. They followed each other and formed a private Discord server. (I, of course, asked to join the club given my status as an original winner, but was politely told that the server was open to holders only. I find this response to be both ruthless and extremely fair! 😆)
And here's the thing - their approach may be a viable way, maybe even the only way, to sustain and grow the value of The 140 Collection. By keeping the NFTs visible in the community; by touting their value and historic nature; by coming together as a cool kids club and making communal decisions - these holders are forming exactly the sort of invested community who has the incentive and the ability to protect the value of their prizes.
Now, I feel as though they and I are on opposite sides of a bet: I made my wager that the value of Furry Twitter wouldn't go much higher than $15,000. They bet that the minimum value is much higher. I look forward to tracking the collection price and seeing who turns out to be right.