No doubt that the rise of profile picture NFT projects was a big deal in 2021. $13B+ in transaction volume that came out of nowhere. The rise of Cryptopunks, Bored Apes and a tail of other profile picture projects (PFPs) has been tickling our collective imagination.

From my perspective, the concept of programmable digital ownership is the big idea that was unlocked by NFTs. A new use case for digital scarcity has been discovered and validated. This is a technological breakthrough, a new internet primitive.

These early PFPs, driven by generative art (an algorithm that lives on-chain), might have long term value, purely on the basis that these were the proof of concept that shaped things to come. Only time will tell us.

Now with that said, I wonder how much we might be missing the big picture if we just hoard these PFPs and keep them in our wallets. Now I know that some projects have attracted a community of like-minded people.

Can the utility possibly lie in the community layer and not the underlying token? Possibly, but community membership is not inherent to NFTs. Digital communities built around specific projects or missions are as old as the internet. They might reach new levels with NFTs as they provide a better and cleaner alignment of incentives.

NFTs are way bigger than art. If the PFP game boils down to collecting things, with some or no utility embedded in the NFTs, then I believe we’re missing the bigger potential of this novel technology, a potential that goes way beyond art. Art is simply the skeuomorphic phase of an early technology.What I think people might be missing is that NFTs are much more than art. They are much more than a collector item.

NFTs are a new primitive, such as websites (as explained by Chris Dixon in this podcast). They are composable, expressive and flexible in their very design. Yes they represent ownership of culture, but they also have the potential to become very useful tokens that can be used in infinite ways. Some obvious use cases include offering exclusive access to events or collections, lending/borrowing and generating yield, voting, etc.

When I see people sitting idly on their PFPs, I can’t help but to think this is a similar behaviour to hodling BTC. What can you actually do with these? Not much right now.

Today, the entire value of these assets are based on mimetic desire and reflexivity. As explained previously, I believe that for the Web3 economy to hit the masses and reach full potential, the assets have to flow, it has to change hands and it has to provide utility at the collective level and not just for the individuals who own the assets. Purely holding does not help build a future beyond the digital store of value.

Paradoxically, Web3 culture generally identifies with trailblazing, anti-conformism and financial revolt. Yet the PFPs collector game seem to be very much about imitating other collectors and seeking the new copycat project with little to no innovative value. The fact that NFT owner tend to copy each other and ape into copycat projects is a Web3 narrative violation.

Why use an expensive JPEG as your profile pic, other than to conform to the new social norms of Web3? To feel accepted in a permissionless world? You see the paradox here? It is wired in us to want to fit in. Our survival once depended on social validation.

This leads me to ask: are NFT collectors just playing a status game? What is different in terms of status-signaling between buying an expensive NFTs and buying expensive watches, cars, houses and physical paintings? I personally try to stay clear from these games, since status games are zero-sum games. They are finite games. Naval’s wise words on the topic ring true to me. I prefer to focus on wealth games and not status games. The difference is that wealth games are positive-sum, they rise the tide for others too. Or as Balaji put it, “Win and help win” is my modus operandi.

Instead of collecting, my time and effort is spent uncovering new use cases for NFTs than unlock novel applications, composability and utility. Besides collecting the actual NFTs, the really exciting stuff to watch happens at the border of what is deemed feasible today: I like projects such as Loot (bottoms up game design with NFT composability), NFTX (fungible NFTs), Fractional (splitting a NFT into fractional tokens), that push the enveloppe. Embedding more utility inside of NFTs, and providing the ecosystem with better picks and shovels, will be the next big unlock on the way to building a massively huge market by 2030.