I Paid $22.38 For This

This is a virtual good, called a Rare Pepe. I blogged about it a few weeks ago.

Hawkeye tweeted this at me a couple days ago:

And I liked it so I went into the Rare Pepe directory, found the card, and offered 1000 Pepe Cash for it.

1000 Pepe Cash goes for $22.38 right now in the cryptomarkets.

So I paid $22.38 for a virtual card that has no utility other than I can collect it (on my computer or phone), I can send it to someone else, I can sell it, and I can blog about it.

But the one thing I do know is that these are “rare”. There are only 391 issued right now. And that is verified on the blockchain.

Something to think about as it relates to digital media/digital art/digital music/etc which has been suffering from no scarcity value since the invention of the Internet.


Comments (Archived):

  1. Steve Poland

    “391 issues right now” — can they release more? That would eliminate scarcity.

    1. fredwilson

      I believe there will only be 391 but I am not 100% sure which is why I wrote what I did

      1. Majid Malek

        Is there any mechanism to ensure that more are not released in the future or is it just left to the originator to determine how many they want to release and when?

        1. Theo Goodman

          There is a mechanism that ensures that no more will be released. Part of the work of the Rarepepefoundation is to check that these mechanisms are in place when the cards are added to the Rarepepedirectory.com TAG

      2. MyBitcoinWeighATon

        They are locked on xcp chain there can never be more issued. Only destroyed

        1. Steve Poland

          “only destroyed” — that’s interesting as well. Something could have 10k versions, but then you own 9800 of them and destroy all but 1.

      3. Theo Goodman

        Always and forever. There can only be 391 of that token issued ever. TAG

  2. Steve Poland

    So those special limited vinyl releases are coming to the digital world?Love the idea of scarcity. I wonder what this concept leads to (you know, beyond frog memes).

  3. awaldstein

    I hope someone digs into this at the conference.Scarcity and local currencies is nothing new. Security and control on the blockchain is and I get that.But if i take all the projects I advise/work and imagine them as token economies with an 80% failure rate of startups, where does that leave me?There’s an answer. I’m more convinced then ever that this has legs is some future iteration.But still in the dark in my thinking.

  4. obarthelemy

    It has no gold in it, nor diamonds, so I’ll pass, thank you.

  5. icopaolo

    Fred – you say “digital media/digital art/digital music/etc which has been suffering from no scarcity value since the invention of the Internet.” But is scarcity value good? I’ve heard the argument that it helps to support creativity, but I would argue that it tends to stifle creativity and leads to an increase in inequality. Has creative digital media really suffered since the invention of the Internet?

    1. Theo Goodman

      It leads to increase equality with putting more power in the hands of the artists to control their creations. TAG

  6. jason wright

    zero marginal cost of distribution has gutted the value proposition.ugly looking frog. reminds me of Picasso.https://www.oneonta.edu/fac

    1. Daniel Olshansky

      This is oddly intriguing.

    2. Twain Twain

      I love ‘Guernica’ as a work of art. It’s about the distortion and distress of war.

      1. Susan Rubinsky

        It does capture that mood beautifully.

  7. Noah Driggs

    Interesting. I wonder if the new, tokenized Internet will try to enforce things like copyright laws/norms (including open source) by protocols rather than by takedown notices, litigation, etc. Seems like it would be very challenging to ensure scarcity for things like books, even when scarcity is blockchain-secured, because there are still many ways to copy. If the network required cryptographic proof to access, view, send books, maybe it works. But I’m not creative enough to think of how you could make that totally un-circumventable.

    1. thinkdisruptive

      We’re already well down the path of automating enforcement. See Microsoft’s new patent: https://anonymster.com/micr… It’s not hard to see this being applied more widely and using token info instead of tagging.

  8. mtwk

    This might work well with collectible card games like hearthstone or magic the gathering. Rare digital cards would be as valuable as the physical ones!

  9. jason wright

    “But the one thing I do know is that these are โ€œrareโ€. There are only 391 issued right now. And that is verified on the blockchain.”sorry, i don’t get it. there are 391 of the exact same card you purchased, or 391 different card designs?

    1. Theo Goodman

      There are only 391 of this card issued ever. TAG

      1. jason wright

        that’s the maximum supply… ever, 391?

  10. William Mougayar

    A user called Pepe Museum wondered if I would accept a Rare Pepe of me, in exchange for entrance to the Token Summit. Should I accept? https://twitter.com/Pepe_Mu

    1. aweissman


      1. William Mougayar

        barter economy !

        1. Vendita Auto

          will he define rare as a one off ? then is worth the timeline memento.

    2. bsoist

      Um, yes. Duh.

    3. Kent Karlsen

      Unfortunately I can’t come to the Summit. Would it be an idea to offer video download of all Token Summit sessions? And even a hackaton challenge howto pay with Tokens for video downloads (technical and creative solutions to create network effect etc). Please send me 1 token for the idea if you do it ๐Ÿ™‚

      1. William Mougayar

        it’s taken care of:1/ event is professionally video taped for later publishing on youTube2/ being livestreamed via Periscoped too – check @token_summit for details.thanks.

        1. Kent Karlsen

          Nice! Thanks. Good luck with the Summit.

    4. MyBitcoinWeighATon


    5. Ross Hill


    6. jason wright


    7. kevando

      In 20 years Pepe is going to be on the cover of a history book.

    8. ZekeV

      In a couple years, this will have the collectible value of a pets.com stock certificate! ๐Ÿ™‚

      1. JLM

        .Or a pet rock?JLMwww.themusingsofthebigredca…

        1. ZekeV

          Naw, dot-com stock certificates are actually pretty cool to have. Hanging one on your wall proves that you were there. Anyone can paint a face on a rock. ๐Ÿ™‚

          1. JLM

            .I collect Chinese stock certificates and bonds. They are mostly 100 year instruments issued at the turn of last century or before.The coupons after 1949 are intact. Why?Because the Chinese Communists repudiated the debt.These certificates are lovely art. Now, they serve no purpose other than art. But, they have lovely engravings and pictures.Why am I telling you this story? Timed and graded exercise. Starting now.JLMwww.themusingsofthebigredca…

    9. Twain Twain

      So we’re all going to be ‘The Hulk’ color! Yes, let him in and check what shade of green his skin is — lol.Best of luck for tomorrow’s event! https://uploads.disquscdn.c

      1. jason wright

        omg. he really is sick.

    10. JamesHRH

      NO IDEA!

    11. Chimpwithcans

      Listened to your interview on unchained podcast yesterday – made me wish i was in NYC for the summit! Best of luck.

      1. William Mougayar

        You should have! It went very well .

  11. kidmercury

    We all are experiencing this (since the experience is consuming a visual representation), in much the same way that if you streamed an MP3 you own the rights to we would all experience for free, so in my opinion the scarcity “problem” persists here also

    1. falicon

      I agree – since the card was shared via a blog post, we all *have* it now…especially since ‘owning’ it really gives you no extra utility or power (other than *maybe* the ability to sell it, assuming you can find a willing buyer).I’ve always loved collectable cards and have longed to build a digital game around it…so I enjoy the idea as much as anyone…but it’s (digital cards) a hit-driven business built on top of (games) a hit-driven business IMHO.As an aside, and not to be knocking it, but the only thing the Blockchain is doing here is proving ownership and *maybe* scarcity within the system…but a centrally-controlled system would/could *also* do these things (along with helping to drive/set the value AND connect buyers/sellers and engagement within the ‘game’).

      1. LE

        we all *have* it nowBut the ‘it’ that Fred paid $22.38 for is as follows:1) Content for a blog post2) Control of an asset that someone else would possibly pay more for. “We” don’t have that.With #1 hard to say whether he would have done this if he wasn’t blogging. But see #3.3) Desperately seeking Susan. Needing to justify, learn and experiment with the blockchain. Big motivation.

        1. falicon

          I believe value, like beauty, is often in the eye of the beholder…so absolutely agree Fred likely gets/got more out of this asset than he does the average $25.But I stand by my ‘long shot’ stance as all of this relates to the average person…That being said, I do really like what @nickgrossman:disqus mentioned above about how/why the blockchain adds value here…worth thinking about more for sure!

          1. JamesHRH

            eye of the beholder sure, but there are some things that a lot of eye behold relatively the same wayโ€ฆlike Fred’s apartment, versus Fred’s PepeBasquiat.

    2. Theo Goodman

      Sure it persists but the ownership is vaildated with a certificate of authenticity in the form of the token. You are also free to take a picture of the mona lisa and share it on facebook. There is still only one. TAG

      1. kidmercury

        sure, though i question the demand for such a certificate of authenticity. consider music. you can buy an official album, you can buy fancy limited edition stuff (which are generally physical, a huge difference in value proposition) or you can just stream/download illegally or pay a streaming subscription fee for convenience. for the most part, people have spoken and are choosing the convenience or illegal option. i don’t think this changes that decision.

        1. thinkdisruptive

          Or, you can own high resolution music files that are several times the bit depth and sampling frequency of music recorded on CDs, which are the audio equivalent of RAW image files. Essentially you’re buying an exact image of the original recorded sound as it was captured. It certainly makes sense for this to be encoded with my ownership and associated rights to protect everyone.

          1. kidmercury

            people can do all these things — but for the most part, they don’t. instead, people tend to accept the imitation as being good enough, provided it is cheap and accessible enough. i doubt this changes for most people.

          2. thinkdisruptive

            It doesn’t have to change for most people. Some people will always prefer ownership; some will always prefer rental. That will change over time depending on costs and other externalities. We went through a cycle where there was a dramatic sacrifice of quality because of the portability benefits of new technology (iPods and expensive storage created the need for mp3 files. People are moving back up the food chain and demanding better and better quality, and home audio systems are not well-served by streaming quality or Bluetooth, and higher resolution makes a big difference. There will always be a high end that demands the best and is willing to pay for it. There will always be reasons to own.

        2. Theo Goodman

          It doesnt matter, this is not trying to change the decision of people that want to stream illegaly. The issue of ownership however is clear. If you want to own it, with the right to sell it for example then you would indeed need the certificate of authencity. In your example with music one application would be that the token is not only this certificate but also doubles as an entry key into artist applications that are exclusive to token holders. Maybe a Band snapchat clone that is only reachable with the token. Sure of course you could record the snapchats ect, it doesnt matter just doing so doest not mean you own them.

          1. kidmercury

            sure, though now there are artists who already sell premium access and do so through priced membership communities. i have seen the light on ethereum and am a true believer now, though i don’t think the application discussed here is particularly novel or compelling. i acknowledge it may appeal to those who value ownership, as proven in this sort of cryptographic way, though i don’t think this type of ownership matters to most people. in my opinion, most people just want the experience and don’t care about ownership. if ownership was valued, mp3 purchases would be the dominant form of consumption rather than streaming.

        3. Theo Goodman

          If you have : pepenation, eggplantpepe, threerare, djpepe or droppepe then you get a bonus audio track only unlocked when you have that token.

          1. kidmercury

            sure, i guess i don’t understand the difference between that and paying $X for a bonus audio track.

      2. thinkdisruptive

        That’s not quite true. As the owners, The Louvre does not generally permit photographs to be taken since they license images from the gallery to make money. The painting itself is in the public domain and the rules in Europe are a bit weird, such that if you have a photo from before 1995 of a painting that is in the public domain, it is protected by copyright, but newer images are not. However, since you don’t technically have the right to take the picture without the owner’s permission, that can be a moot point, even if the artwork itself is not protected. But because of these rules, if you find a photo that is not copyright protected and is a legal image, you are free to share it. Otherwise, no.There is a legally shareable, not copyright protected image of the Mona Lisa posted on Wikipedia, so in this case, if you copied that image, you’d be fine, but I don’t think it is generally safe to assume that you are allowed to take photos of art in a gallery and share it without the owner’s permission.Ownership and rights management is a problem domain that is screaming for a blockchain based solution for art, music, publications, and all kinds of media, and probably soon 3d printing files. Without it, IP law is likely to implode as it becomes possible to share design specs for virtually any product and let you print it yourself.

        1. Theo Goodman

          Yes rarepepe cards are an application of ownership rights. Yes I can just use a picture of a picture and have the same effect and say I own this picture of a picture.

          1. thinkdisruptive

            Actually, no you can’t. Not without the owner’s permission, and with the blockchain, he has proof of his rights, and you do not. In the not too distant future, Google, Microsoft, FB, TWTR, Instagram, Pinterest, et al are highly likely to check ownership rights automatically, and you will be blocked from using something you can’t prove you paid for.

          2. Theo Goodman

            Yes of course it would be without permission, so I could but it would be without their permission. That is what I mean, you can use it for private, to look at but you are not allowed to sell it or “share” . This goes for rarepepe cards as well. The thing is, he would not have proof if I blockchianed it first. That is why we have the rarepepedirectory.com . – You mean I cant post something I dont own on istagram or facebook in the future? Like a picture my favorite band? That doesnt make much sense imo.

          3. thinkdisruptive

            It makes perfect sense. What doesn’t make sense is the DMCA, and big sites taking down things you own because some idiot files a takedown notice indiscriminately and without merit. We will have automatic tools where you “register” your ownership and associated permitted uses, and that becomes embedded in the file. Enforcement will become automatic because it has to. It’s the same idea as registering and receiving an ISBN unique identifier for a book.Here’s what happens in the real world now: I pay for original artwork for my website. I put it up on my homepage, with copyright notice included (although I don’t technically need to do this), and within days, other people find it and lift it for commercial use or to put in a blog without my permission, without pointing back to my site, and/or for personal use, and without paying. Of course, when they re-post with no attribution, it soon becomes a tagged Google image that has no connection to me, and dozens or hundreds of people think it’s free to use, and would find it impossible to trace ownership even if they tried. This despite being part of my corporate identity. Exxon or Google can chase after this kind of casual theft, but it is absolutely impossible for a small business, or an artist or photographer or musician or writer — anyone who is either an owner or creator to control how things they own are used.Free sharing of content is an anomaly of a short window of time when we had no way to manage it. That will not persist.

      3. thinkdisruptive

        No, you aren’t. You would need the owner’s permission to do that.

        1. Theo Goodman

          I could do it anyway. If it was a pepe then I could check if it was in the rarepepedirectory and approved by the body as being owned by that artist.

  12. ThatOtherOtherGuy

    As my wonderful old Steel Magnolias southern neighbor would say in her sweet as pecan pie drawl, “Well, my dear, as long as YOU believe that.”

    1. JamesHRH

      See Mookie Wilson quote above,See also, Snoop Dog as Lightning the Blood Hound in Racing Stripes:” Like Momma used to say, you can put your boots in the oven but that don’t make ’em biscuits.http://www.quotes.net/mquot

  13. Mike Zamansky

    For some reason this reminds me of the old traders sardines joke

  14. Fraser

    This is one of the more interesting experiments in a while. If you’ve ever collected anything, you can probably understand why.”Yeah, but in a digital word we can copy this card an infinite number of times” Uh huh. And the more the digital copy proliferates, the more valuable the scarce/verified version becomes.

    1. Nick Grossman

      yes, that’s rightif you look at this article (https://medium.com/@coin_an… there is also another really interesting aspect — the one I can’t stop thinking about:”InteroperabilityFinally, the potential of rarepepe model doesnโ€™t end with simple digital asset collection and trading. Whatโ€™s even more remarkable about this token model is that third party developers or projects can bring external value and use cases to pepe tokens thanks to their open and permissionless nature.Interoperability and permissionless nature is what differentiates tokens on the blockchain from closed proprietary systems or private blockchains whose essences are control and permissioned. Whether you like it or not, as long as itโ€™s on an open and public blockchain people will create unexpected use cases and synergies that even token issuers cannot imagine sometimes. In my opinion, this is the biggest advantage of using tokens on a public blockchain and this type of cross collaboration has started to emerge already with Pepe.For example. the Rarepepeparty project is developing a trading card game with some RPG element utilizing rarepepe tokens and user created memes. If you own those cards in your wallet and prove its ownership, you will be able to play your dank pepecards within the game.”

      1. 404 File Not Found

        there are a few rare pepes at rarepepewallet.com that already have bonus content only accessible by holders, the most popular being exclusive music for holders of DJPEPE

      2. Twain Twain

        https://uploads.disquscdn.c…The Chinese virtual goods market is 7 times bigger than the US’s and it’s not just about scarcity, it’s also about volume.Imagine being the designer who created this hongboa sticker on WeChat and getting $0.01 every time it was shared.https://uploads.disquscdn.c

    2. thinkdisruptive

      This is no different than the Mona Lisa being reproduced in millions of books, post cards, cartoon images, posters, etc. All of these uses make the original painting more valuable.

      1. Twain Twain

        Except Da Vinci isn’t around to collect tokens and payments on his original work of art. All the value of the ticket prices for viewing accrues to the Louvre.Meanwhile, tokens enable living artists (musicians, digital artists, film-makers, programmers, etc) to establish a chain of digital rights and rewards to their work.On the owner side, they have proof of provenance that’s logged in Blockchain ledger.

        1. thinkdisruptive

          The trail of ownership has some value (especially if I am insecure in my tastes), but the real value of the token is proof of ownership and uniqueness, and in that regard, it doesn’t matter whether it’s the Louvre or the original artist. The owner gets to control the property and ensure that only the rights that were sold are exploited. For example, the artist might specify that the artwork cannot be used for advertising, or displayed on a website, and that would be enforceable in perpetuity. As the owner, the Louvre may not wish the image to appear in books unless they are compensated (maybe so they can get more value from it by making t-shirts + posters + sketchbooks with the image.At this point in time, I don’t think Da Vinci is too worried about collecting tokens.I wonder what Da Vinci would have thought about Duchamps artwork, which was created by scribbling a mustache and the letters L.H.O.O.Q. (which if pronounced is a play on words that sounds like the French expression “she is hot in the ass”), on a postcard of the Mona Lisa that he purchased in the gift shop, and whether he might have prohibited such derivative works if the blockchain existed 500 years ago? Interestingly, Duchamps’s work also hangs in a gallery. https://uploads.disquscdn.c

        2. Chimpwithcans

          This is v. interesting Twain – do i understand correctly: Scarcity problem is solved in that you can trace all copies of a piece of art back to the bonafide original? Can you then also link every copy with a token of payment to the creator, for any use of those copies?

          1. Twain Twain

            The hashing works similar to how bit.ly can shorten links and still maintain identity integrity. So we click on the short bits and it still unpacks to the right and original hyperlink source.In the same way, Blockchain hashing can provide unique property ownership and payment identifiers for every asset.

  15. JLM

    .Questions spring to mind:1. Why do you like it? It’s ugly.2. Since it is digital, both you and I can see it in its native environment. So, what IS the benefit of ownership? The ability to sell it is the only thing I can think of.3. If I can take a screen shot of it what exactly is SCARCE about it?4. Is this the killer app?JLMwww.themusingsofthebigredca…

    1. JaredMermey

      Does first part of (2) and point (3) make it more marketable? Especially bc blockchain allows us to verify who owns the piece, therefore promoting demand for something in limited supply in its “original” form?

      1. JLM

        .”More marketable” than what?If I have an identical visual experience what is owned? << Resist the temptation to respond. This is one of them “rhetorical” type questions.FOR THE RECORD:Jared and I entered into a wager on the outcome of a recent basketball series. The Spurs v the Warriors. He won. I lost.We wagered $100 to be donated to a charity.Jared notified me at 1:08 AM of the status of our wager. [He did NOT gloat though he could have.]I retired the obligation 120 seconds later by making a $100 PayPal contribution to Jared’s requested charity, an Alzheimer’s benefit.Others who make wagers and lose on this blog are advised to pay up. Gentle reminder.Jared owns this scarce digital record. I hope it remains scarce. I’m glad Jared didn’t make me contribute to Planned Parenthood. Thank you, Jared.JLMwww.themusingsofthebigredca…

        1. JaredMermey

          Is the value in the “experience” or in the “ownership?” Can these two things be decoupled?Is there asset value in the version that can be traced back to Fred who owns it?I can own a print of a Picasso yet it will not be as valuable as the original Picasso.————————————————-I appreciate your donation to helping figure out Alzheimer’s.I’ve made counter to Fisher House Foundation.

          1. Theo Goodman

            As discussd in an eariler discussion. The token provides a certificate of authenticity. Anyone can take a picture of some big red car or the mona lisa, it doesnt mean that they own it. TAG

          2. JaredMermey

            Then there is value in owning the token and pepe image connected to it.Distribution of replicas promotes the image but if someone wants the authentic version, they will have to pay for the certificate. The replicas act as a marketing tactic to drive value of token,Some who see replicas will agree with @JLM:disqus — they’ve seen something they feel is practically equivalent to the original.Some who see replicas will want the token and therefore become the market for it. More in the market drives up value.

          3. thinkdisruptive

            Both. Ownership gives you additional rights — right to sell, right to not share, right to destroy, right to reproduce, right to use for marketing (e.g. to write blog articles that use it).The print is less valuable because it isn’t guaranteed to be unique. If only one print is made, and the original negative or screen or print block (or however it was made) is destroyed, then the print is as valuable as an original because it is one.

          4. JaredMermey

            Is value only in scarcity? Or does the fact the original can be traced back to Picasso who made it while the print cannot ensure the latter will not ever reach the value of the former? (Even in the case where we are limited to one print.)

          5. JLM

            .Value is defined by what the market says it is at an instant in time.JLMwww.themusingsofthebigredca…

          6. JaredMermey

            I agree with you more than you agree with yourself.This is worded more succinctly than I could ever put it.

          7. JLM

            .Catchy. May steal that phrase.JLMwww.themusingsofthebigredca…

          8. JaredMermey

            Hard to steal something that is borrowed from you in the first place ๐Ÿ™‚

          9. thinkdisruptive

            In our world, value is driven by scarcity. That’s basic economics. Price is the fulcrum that balances supply and demand, and things are only worth what someone is willing to pay. The more scarce things are, the more the person who needs or wants it most is willing to pay. Whether price is set by auction, or fixed arbitrarily, it is almost always a reflection of scarcity. Price is an allocation mechanism that is only needed because of scarcity.Consider air as an example. It is essential for life, but nearly infinitely abundant, therefore the price is free. Or Daraprim, the 60 year old generic drug that Martin Shkreli acquired and promptly raised the price from 13.50/pill to $750/pill, which he was able to do because the company he purchased was the only remaining US maker. By taking the drug out of distribution channels, other pharma companies were not able to get supplies to create and prove biosimilar equivalents, which meant if you needed the drug, you had to pay his price or die. By creating and enforcing an artificial scarcity, he was able to set an exploitative price, only stoppable by government intervention. The same drug, by the way, is less than $1/pill in the UK.In the case of art, it’s kind of like money. We first have to have a consensus about which artists are “good” and whose work retains value. After that, scarcity of “good artists” drives price.

          10. JaredMermey

            There are two curves — supply and demand.If something is in limited supply, but there is no demand (measured as a function that contains both number of people who demand it and how much each individual who demands it requires it) then there is no value.This is why many startups die.

          11. thinkdisruptive

            Most startups die because they create things that engineers think are cool without considering what the market needs, and whether they can create a solution that a customer will pay more for than it costs to make. If you don’t understand who your target users are and what they hope/need to accomplish by using your product and how much they value the result, you will fail. Caveat: some lucky startups succeed by accident.This is CBinsights data from a presentation I use. Note that about 40% of the reasons can be attributed to need for product, including the top one on the list. Demand is usually unmeasurable for anything truly innovative a priori. However, you can capture need and how much it costs to solve the problem. Not enough entrepreneurs ever do this. https://uploads.disquscdn.c

          12. JaredMermey

            I think we are agreeing loudly.

          13. thinkdisruptive

            Sounds like it, but I think it’s important to understand why there isn’t demand. Usually it’s because you were pleasing yourself rather than addressing a need. Often there is surprisingly large demand after small tweaks to the business model, pricing, missing critical features, etc — all of which can be known before you start.

          14. JaredMermey

            Agree until last point. Sometimes (maybe most times) you need to throw it into the market to understand where tweaks need to be made. Thankfully, it is cheaper than ever to get things to market for said testing.

          15. thinkdisruptive

            This is a blindspot in the Lean movement which is about formalizing experimentation/trial + error rather than working in areas where they have domain knowledge. It’s true that trivial apps were cheaper than ever to get to market over the last 5-10 years, but that is rapidly changing as all the easy stuff has been done and the barriers to entry/table stakes have been raised. However, you absolutely can know the most important desired outcomes beforehand if you’re doing it right. Implementation details may need to be worked out in the field (the how, not the what), but that’s ok. It will still be better than what they had before. If you are trying to address needs of too broad an audience at the outset, then I’d agree with you (because you can be receiving mixed signals), but not if you are focused on must-have users.

          16. Lawrence Brass

            Nice chart, thanks.

          17. thinkdisruptive

            You’re welcome. I have lots more. ๐Ÿ™‚

          18. JamesHRH

            The interesting point here is that those startups have to get started, in order to fail.The easier it is to start something – say, an online service in 2017, the easier it is to pop a fad.

          19. thinkdisruptive

            More than 90% fail, and that’s an improvement over previous decades. We haven’t really learned much about what works and what doesn’t and why, and my point is that this is a largely fixable problem. If you start with solving a known problem for a known customer and have a unique value proposition, you can eliminate more than 75% of the failure that is attributed to “wrong product”. You can’t eliminate management screw ups, or running out of cash, or a prolonged recession or a 9/11, or a competitor who is better resourced that releases the same product at the same time, but while these things do happen, they represent a small minority of the reasons for failure.Of course you have to get started to fail, but the point is to maximize probability of success, not to ignore that failure is the most likely outcome because we keep repeating the same mistakes. Lean is an improvement, but it doesn’t fix this — it just gives you a few more tries before you run out of time, and a more systematic method of discovering a problem to solve when you didn’t start with one.

          20. JamesHRH

            Its pedantic maybe, but the #1 rule of investing applies:Risk determines reward.Most startup founders are dreamers hoping that their big idea is a hidden home run of epic proportions.Most auto body shop owners follow your model.

          21. thinkdisruptive

            Actually quite the contrary. Auto body shop owners are not innovating — they are using an established business model and a known product or service. Big, big difference.Taking on big risks doesn’t mean stupid risks or venturing into areas you know nothing about. Any enterprise that sets out to create something new has large elements of risk that they can accomplish the goal, that they will implement the idea correctly, that they will be able to find the right people and keep them happy, that they will get the business model right, and if the idea depends on inventing or applying new technology, there’s a risk there as well. There are many large risks, for which success will be well-rewarded.None of that suggests that you should not have a good understanding of the problem you are trying to solve, or unique insights into your target users and why they will buy something. Taking those risks is dumb.

          22. JamesHRH

            You are talking process followed by people.I am talking people who have a personal ‘process’, which is almost never a step by step problem solving or gated new product development process.Most founders are solving for X, when the equation is I WANT X.I give you jack Dorsey, 2x monster consumer product company founder, culture shifter for 1/10 of the planet and totally non-linear, narcisistic, non-problem solving person.Jack Dorsey is a political animal, intuitive feel based person who doesn’t solve problems for others, only himself.So are most business owners.New auto body shops aren’t founded by people with a desire to change the worldโ€ฆ..they are just trying to solve the problem ‘how do I get to own my own shop’.Problem solving engineers are the vast minority.Hell, Bill Gates wants interesting work to do. The benefit to others is just how he keeps himself from being bored.

          23. thinkdisruptive

            Twitter still doesn’t know what it wants to be when/if it grows up, and that could very well be its undoing. There are some very interesting JTBDs that Twitter’s plumbing could be used for, but no one at Twitter seems to understand that, and if they don’t soon figure it out, Facebook or Snap will have taken whatever market was there.I’m not arguing against platforms, or general research into interesting technology, but successful companies must understand and target real needs. Those that fail to do so become good ideas with unrealized potential (i.e. failures).Square couldn’t be more different. It solved a real problem in a unique way with some cool tech. Now, it just has to become consistently profitable.Founders who spend their own money can work on whatever they want, and take their time to accomplish it. Not so much if it’s other people’s money they’re burning.

          24. JamesHRH

            I know someone who owns an ATM network.He gives people their own money in a form they need in a place that they need it. His business is likely worth $1B – $500M for sure.Is convenience a version of scarcity? I think you are right.People buy expensive things for two or three reasons – one of which is that people know the thing is expensive.Is status a version of scarcity? I think you are right.Fred owns that PepeBasquiat. Do people envy him? Maybe. The only thing he has over them is technical ownership ( that I understand).Millennials have figured out that ownership is not that great a thing. They have decided that they would rather have the benefits of ownership, without all the requisite hard work and responsibility.As an aside, the model for this is the political foundation – now, apparently, an accepted thing (Clinton, Trudeau, Obama). Totally insane and unethical in my books, but, you can’t fight the tape.Is ownership in decline? Is it a scarcity? Or is it the dumb move in a world of abundance?

          25. thinkdisruptive

            Millenials are not the first generation to increase renting for flexibility, despite the media storyline, and they aren’t abandoning ownership. More often they are delaying it, or choosing to own where it’s important and rent where it suits them better to not own. Millenials, by the way, are now the largest segment of both first time home buyers, and of home buyers overall — hardly what you’d expect of a generation that has “figured out that ownership is not that great a thing”.What you also have to remember is that there are many major differences in demographics and economic circumstance that are driving the trend to less overall ownership. Millenials took the financial crash of 2007-8 hard on the chin. Many lost jobs. Many lost their first house. Many needed the flexibility of not owning a home in order to be able to relocate quickly for a new job. Many more live in big cities where not owning a car is an option, particularly with new services like Lyft and Uber and Zipcar that didn’t exist 10 years ago. Millenials are carrying twice the student loan debt that their parents did, and many are still paying it back even as their kids enter college. This trend isn’t entirely about choice, in other words, but much more about necessity and opportunity. When given the choice, and it is an affordable option, millenials still see benefits in owning things.What you also need to consider is that these trends are big sweeping pendulums, and they do reverse. The cost of rental housing is getting beyond absurd, and is much higher than the cost of buying in many areas now. If you need the flexibility, it might still make sense to rent, but if you don’t, it will cost less to buy and you will be building up equity. If you live in a big city, it’s conceivable that you will never need to own a car today, but that isn’t true if live in a smaller city or rural area, or even a city like Atlanta where you literally need a car to visit your next door neighbor. In many cases, millenials are choosing to own less because they don’t have the means to own more. Or because they are deferring having families to much later in life, or because they are prioritizing experiences. Whatever the reasons, you can expect them to change over time, and the pendulum to swing back in the other direction, at least for some things. Lack of ownership will be rewarded with excessive rent-seeking behavior on the other side, and that will make people reevaluate.Scarcity manifests in many ways. It doesn’t always look like an obvious shortage of materials or goods. Monopoly control of an industry is a scarcity of supplier choice which drives up prices. It can also be seen in really poor service (you don’t have the choice to go to a different electric company, so they don’t need to treat you like a customer). You are seeing the results of scarcity in our unfriendly skies. You are a seat mile or a load factor, not a customer with the end result being people’s heads being cracked open, brawls erupting, flight attendants threatening passengers. Whenever you see a general feeling of anger or antipathy between customers and customer service, or extremely high prices, or extreme inconvenience, or an industry oligopoly/monopoly/cartel, these are all strong signals indicating a scarcity problem.

          26. JamesHRH

            Don’t agree with you.Markets are pendulums, generations are not.Millennials are exactly like their Baby Boomer parents, when you look at their drivers: they are the ME era, but reductive. LGBTQ is their Civil Rights / Gender Equality ( feel bad for them). Work needs to be more than work for them, except the employer has to provide that (which is only superficial perks), which leads them nowhere.They want to fight the power, but the power is their parents, who have not ever actually controlled them. Their path will be skewed or warped given how their parents are hoarding work opportunities and investment capital, but the path will hit the same milestones.Of course they are the biggest purchasers of houses, their parents aren’t buying and they are the next biggest demo. Duh.They are putting off things until their folks die and give them the $ IMHO. Then we will see the Baby Boomer Bubbles phase (stocks, early stage stocks, RE) again, but with different superficial trappings.Scarcity in the air is artificial but required: planes, cell providers, etc.Scarcity online is artificial only.Big diff.

          27. thinkdisruptive

            Neither markets nor generations are pendulums. The trends you speak of are the swinging pendulum, and the main differences that affect its sweep are externalities. Wars, depressions, inflation, relative cost of education and healthcare and taxes. No demographic ever makes decisions based on what others in the demographic are doing, rather individuals evaluate what they need to get done and why, and what the available solutions and opportunities are, and they choose what best serves their needs at the time. People make choices as individuals, not groups, and they have different needs — it’s that simple.You are wrong about boomers buying houses. They are buying fewer because they already own them, but people over the age of 50 still buy 36% of homes sold, almost almost as much as millenials (42%), and in fact are competing for millenials for the same scarce property types. The main thing that’s different from earlier generations is that boomers are living longer and choosing to stay in their houses longer and they have more money to make those choices. Many boomers are downsizing so they have less to worry about, while most millenials are buying their first, which means they’re both looking at housing in a sweet spot of 1500-2000 sq ft. Unfortunately, the majority of building is still targeted at more expensive and larger houses, and part of this is driven by municipalities and zoning rules which penalize modest affordable building.The other thing to note is that these are long slow sweeps of history that we’re talking about. 63% of people own their own homes. That is the same level as 1965, a time of rapid household formation as many boomers were buying their first homes. It is down from a peak of 69% in 2007-8 — you guessed it, the beginning of the crash and resolution of liar loans and giving mortgages to people that couldn’t afford them. The major thing affecting ownership is financial wherewithal, and the difficulty many have securing loans in the tighter credit environment and with stricter qualification guidelines. After many had their homes foreclosed on, and the market went flat for several years, they have only recently recovered enough to have a new downpayment and sufficient financial stability to get back in the market. You talk like there is a massive attitude change, but there really isn’t — a small percentage of people are doing things differently, and that looks like a big trend.In the long run, economics will take care of ownership. Control is a big deal — the right to do what you want in your space — and you don’t get that with rental. I don’t have to moderate how loud I play my music or at what time of day or whether I crank my home theater system or whether I do woodworking in my basement or whether I cook all my meals on a barbeque. I don’t have to wait for a building owner to decide it’s time to repaint, or to force me to pay for painting that I don’t think needs to be done, or to change my roof, or to install solar power. I don’t have to ask permission to change wall colors or renovate my kitchen or to rip out carpeting and replace it with hardwood. I can put nails in the wall and hang artwork. People will always value control — the question is whether they can afford it, and what other sacrifices they need to make. Control and the extra rights you get applies to all types of ownership (including Fred’s digital art). Besides, someone has to own the property, and I don’t think millenials desire serfdom any more than prior generations.And, when rental exceeds the cost of home ownership and yields no long term capital appreciation benefit, it will also become an unwise economic decision for those who don’t require the flexibility to pull up stakes on no notice. There are also new services springing up to address the problem of relative illiquidity such as this: https://www.opendoor.com/ which will make you an online offer to buy your house and close in 3 days. Costs a bit more, but it guarantees you can move if you need to. The market is a wonderful thing: where there are problems, there is always someone motivated to create a solution.People generally don’t wait for other people to die to make decisions, unless death is imminent and predictable. All things being equal, I will live 30 years longer than my grandparents, and no one has any idea when exactly that will happen, so waiting on it and deferring your own life seems more than a little foolish.Interesting perspective that parents are “hoarding work opportunities and investment capital”. Is the implication that it is unfair or unreasonable of them to want to eat, contribute, keep their minds active, accomplish more, pay for their healthcare? There are as many work opportunities as there are people, and in truth, probably more. I am never able to get all the things done that I want to, and I doubt there are many who feel they have nothing left to do. If you want to make crazy generalizations, why not throw out the ‘slacker’, ‘entitled’ epithets to describe millenials? If they want those jobs that their parents are hoarding, why not go out and take them, or create their own, just like every generation before them?Scarcity is never “required”. The goal of every successful innovator is to mitigate scarcity and create relative abundance, and to capture some of the economic surplus for themselves. The problem is when a market player squeezes out competitors and creates a market imbalance, and uses that to control supply and raise prices (create artificial scarcity). It’s why we don’t look kindly on monopolists — they break free markets, and ultimately diminish popular support for capitalism.The number of planes that can fly is limited by airspace and hours in the day, but carriers have also taken a couple of thousand planes out of service that are still flyable and parked them in the southwestern desert. They fly fewer planes and try to stuff all of them to capacity, exacerbating scarcity unnecessarily. They can do this because it’s essentially a cartel industry now with no real competition.If a good is digital, then scarcity is usually artificial — if that’s what you mean, then this is true, however, not everything transacted online is digital, and there are online scarcities that are not artificial — there are a limited number of spots available on the first page of Google results, and there always will be. Only one buyer can win the auction for the top Adword placement based on their keyword choices, and only so many of those ad buys can show up on the first page. There is a scarcity of attention that online content providers and advertisers are all vying for — that too is real.There are many online scarcities that are not artificial, and often the solution to one problem creates others. Google was a response to the inability to find the best sources for information that you knew existed somewhere (a scarcity). It’s existence created a scarcity of pages optimized for search, and of knowledge about how to get your pages ranked, which led to the formation of a new marketing industry. And so it continues.

          28. JLM

            .I agree more with you than you do with yourself.There is one other factor that impacts renting v owning homesteads.The quality of apartments in the US is equal to or better than starter homes. An apartment today is constructed of materials only found in custom homes ten years ago.I used to be an apartment developer/re-developer (amongst other real estate developers) and there was a precise formula for every element of a unit from the doors to hardware to appliances to countertops, etc.Every dimension was worked out and the formula was perfect. It became a spreadsheet in which the only variable was the rental rate.NEW quality apartments are as nice as custom homes and there is no reason not to take advantage of the convenience of having somebody else worry about the maintenance and the roof leaks.JLMwww.themusingsofthebigredca…

          29. thinkdisruptive

            Agreed re: custom apartments or condos. I’m approaching that stage myself (and I’m not a millenial) where I don’t need the hassle of maintaining a property, and get no extra value — kids don’t need a yard to play in anymore, I don’t garden, etc. Of course, I might have to turn down my stereo and not enjoy the wall-shaking sound effects with my home theater quite so much. Would lose the joy of bbq too. There are some very nice units, and I’m tempted precisely because maintenance is more of a headache now that I’d prefer someone else take care of. On the other hand, I will always own my own vehicle, and I will buy art because I like it, etc.But I think we agree that this is about the needs of a life stage and my ability to afford what I want, and which alternatives best satisfy those needs. I could care less what anyone else is doing or thinks, and I certainly don’t make decisions based on what others in my demographic are doing.

          30. JLM

            .Limited number prints are a “thing” for exactly the reasons you have elucidated. [Vocabulary word. Extra credit.]JLMwww.themusingsofthebigredca…

          31. thinkdisruptive

            I think it would be unwise to engage in vocabulary turf war with you. Extra credit conceded.

          32. JLM

            .Puzzle me this –Back in the day, I used to go to and from Italy to buy stone for my high rise buildings. A very fun time was had by all.In the Italian countryside, I used to dine at a small inn which was next to a sculpture studio. After lunch, I’d wander over to the studio and look at the work.This was all statuary white marble from the Carrara region. The students would be working on replicas of things like an excerpt of David and a life sized David. My personal favorite was The Rape of the Sabine Women which is on display in the square of Florence.The Italian art mafia required that student works derived from actual treasures be destroyed upon completion.My stone guy invited me to a party at which three works were ceremonially destroyed. I knew they were replicas but I could not perceive the difference.What was the quality of my “experience” looking at the duplicates? BTW, I could touch the replicas but not the original. I liked touching them.Take the same notion and apply it to a print of a painting printed on a canvas — quite possible today.JLMwww.themusingsofthebigredca…

          33. JaredMermey

            To take your words from above, “beauty is in the eye of the Beholder.” similarly, value is in the eye of the buyer.You as a “beholder” or ‘buyer’ did not value duplicate differently than original. Others do.To further take your words, “Value is defined by what the market says it is at an instant in time.” If in an instant of time there are enough Others (preferably with money they are willing to spend), then there will be a market for originals.

          34. JLM

            .I think you are avoiding the difference between experience and ownership. My experience, touching the replicas, was superior to the same experience with the originals.JLMwww.themusingsofthebigredca…

          35. thinkdisruptive

            But you didn’t experience ownership. If ownership is of no value to you, then it doesn’t matter.

          36. JamesHRH

            Randolph Hearst only valued ownership. Bit of an issue.

          37. thinkdisruptive

            Non sequitur. And besides, what you’re saying is that Hearst would have gladly paid more to own.

          38. JamesHRH

            Hearst nearly bankrupted himself because he could not bear to stop owning things – papers, objet d’art etc.The owning was the experience that mattered to him. Not saying Fred is like that, but it is a driver of value for some people.

          39. thinkdisruptive

            Obsessive owners drive the economy. We need more people like that, especially ones with the ability to generate more income and keep on paying for it.

          40. JaredMermey

            I am not avoiding them. I am decoupling them and assigning each their own value.

          41. Lawrence Brass

            Amazing story.It is Carrara signore Jeff.

          42. JLM

            .Haha, spelling error. Well played.JLMwww.themusingsofthebigredca…

          43. JamesHRH

            This is a great question.Digital assets merge these ideas and I do not think anyone has an airtight understanding of the valuation impact of digitization.

    2. Nunya Bidness

      On 3. If you tried to sell me your screen shot as the original I would validate it against the blockchain and would probably find the following:1. it’s not the correct resolution2. you gave me a jpg and the original is a .pngEither one alone will return a hash that is different than the originals hash so I know it’s fake. The hash is a serial number of sorts.

      1. JaredMermey

        The question is what % of the world thinks like you and what % of the world sees two things that look the same and don’t care to own originals tied to blockchain. (Adding more complexity, some people may fall into the latter, but understand there is enough people who fall in the former to form a market and therefore assign value themselves. These people essentially are in the former then, albeit perhaps temporarily as speculators.)If enough think like you and those people who think like you care enough to have the original and enough of those people who think like you have enough disposable wealth to spend on this and care to do so (only takes 2 people to drive up a price) then you have an asset with value on a private market.The more people who fall into that category and will stay there, the more likely the asset will keep its value over time, especially given a constant supply of originals.

        1. JLM

          .I know a very good, young paintress. She paints incredible beach scenes of the SC coast. Her work is brilliant.Her originals sell for much less than the cumulative income of her prints.You can buy a print to be printed on a canvas which captures the shadows of the brush strokes. Mounted, it looks like the original. From 3′ nobody can tell the difference.What business is she really in?Beauty has always been in the eye of the beholder.JLMwww.themusingsofthebigredca…

          1. JaredMermey

            It is not “nobody can tell the difference.” It is either “not enough people can tell the difference” or “people can tell the difference but do not value the difference enough to pay for the original which is less in supply.”

          2. JamesHRH

            As Jerry Seinfeld likes to say, ‘ Its Show BUSINESS. ‘Your friend is in the business of low end reproductions for who knows what exact market.Her talent is painting though.

      2. JLM

        .Why would I ever sell it? It’s a “fabulous” pic, right? And, even better, it’s digital.JLMwww.themusingsofthebigredca…

    3. fredwilson

      Your ugly is my beauty. Obama is the perfect example of that

      1. JLM

        .Haha, you seem to be regaining your sense of Presidential humor. Bravo.The only thing ugly about Obama was his policies. As a person and a speechifyer, he was loveliness incarnate.He has a decent chance of becoming a credible “former” President. I never knew I loved a word as much as I do “former.”JLMwww.themusingsofthebigredca…

        1. Lawrence Brass

          @fredwilson:disqus @JLM:disqus THIS is my rare Pepe. Both of you talking to each other after six months.Bravo.

          1. JLM

            .”Behave yourself, Brassy,” said the AVC.com bete noire.JLMwww.themusingsofthebigredca…

          2. Chimpwithcans

            Worth its weight in blockchain verified digital gold.

      2. LE

        Oh my fucking god! Hits it out of the park!!!!!!!!

        1. JamesHRH

          Based on yesterday’s post, Fred either ground away on that for an hour, refining it or it just popped out of him.I say it just popped. You?

          1. LE

            Like a baby in the 9th month, for sure.

      3. JamesHRH

        Hey!What about those of us who think that somewhere there exists a perfect combination of the two?I feel left out of the fun here.

    4. LE

      Is this the killer app?See below. The killer app with the blockchain is enabling various forms of tulip mania. (@wmoug:disqus , that’s a bad joke…)So I paid $22.38 for a virtual card that has no utility other than I can collect it (on my computer or phone), I can send it to someone else, I can sell it, and I can blog about it. But the one thing I do know is that these are โ€œrareโ€. There are only 391If Fred paid market price the value of the entire collection is, say $8750.Assuming he quietly goes along buying up these cards and even paying more once word gets out that he is buying them then the market price will rise allowing him to dump his collection and make a profit. He can even buy from people who buy from him and offer higher prices (not as Fred of course in stealth).Of course that is not what he is or will be doing. But I can definitely see a way to profit with this.How much should he try to buy of the worthless product? Well it’s not 100% and it’s not 1 card either it’s somewhere in between.This is all very dutch tulip but w/o the perish-ability and open ended supply.https://en.wikipedia.org/wi…I am not sure ‘ugly’ applies though. The brain has a way of finding beauty in something when it is trained to do so or motivated.For example both of us can appreciate the beauty in a well designed building even the HVAC system. Can most people see beauty in that? I don’t think so. I remember the beauty of the first printing press coming off the ship all glistening with oil (for the sea journey). God it was orgasmic, really. (My brain said ‘money’ when I saw it..)Obama is a better looking guy than Trump for sure.

  16. Jim Peterson

    You probably bought nothing – thin air. Except there is lots of value in the discussion around this. Worth every penny in your case.

  17. curtissumpter

    I am so concerned about the alt-right implications for this. Especially in this climate. Risky. Risky.

    1. Nick Grossman

      that was my first reaction as well. it’s certainly interesting in a cryptographic sense outside of that, and frankly i like that we can have a conversation about it outside of that context, but still I agree

    2. Kirsten Lambertsen

      Could you elaborate? I’m an obsessive resister, but nothing comes to mind for me here to be worried about that’s beyond the potential for bad presented by any other new technology.

    3. Theo Goodman

      I would check out this video about rare pepe to get a bigger view of what the frog means. https://youtu.be/lyEQCYnYbyU TAG

    4. Kirsten Lambertsen

      Oh, are you thinking strictly in terms of Pepe, itself?

      1. curtissumpter

        Sure. Image matters. If you exchanged Pepe for a more controversial symbol it would be painfully obvious how obvious this pain point is.No politician or reporter would be caught dead posting pictures of this anywhere near their name.Bad news.

        1. Kirsten Lambertsen

          I guess I had taken Rare Pepe to be a play to also rescue poor ol’ Pepe from the clutches of evil โ€” rehab him, so to speak. Do I have that exactly wrong?

          1. curtissumpter

            No. I could see that. But why rescue him? If the underlying technology is the real selling point then why not pick something with a much lower image-based risk metric? Pepe just clouds the conversation.

  18. MyBitcoinWeighATon

    Hey Fred, If u owned a DJPEPE (169 total) u could unlock music unable to find anywhere else. https://uploads.disquscdn.c

  19. Girish Mehta

    The relationship between value and scarcity is a delicate one.I much prefer scarcity that is a result of value/quality, than value that is the result of artificial scarcity.The highest quality talent is scarce. It is scarce because it is the highest quality. It does not become the highest quality because it is scarce.But I realize that the second type – value driven by artificial scarcity – exists in the world.p.s. Separately -The idea of Money is unique. It does not need to have any intrinsic value in order to have value. But few things except for money are money.

    1. Theo Goodman

      “Value/Quality” are highly subjective, one myight even say “artificial. TAG

    2. thinkdisruptive

      Artificial scarcities exist, but they are the easiest to undermine. This is the focus of much disruptive innovation (“your margin is my opportunity”). Patents, copyrights and trade secrets are artificial scarcities that have the force of law behind them, and even these are under daily assault.Money is artifice. It only has value because we agree it does. If I refuse to accept your dollars or bitcoins in exchange for food, and no one else will take them either, then your money is valueless. After a nuclear holocaust, I will be much happier possessing food, water, weapons and some property than money.If Fred and others value the image and the fact that few others have access to it, this is as real as the Basquiat that sold for $110M, which has “artificial scarcities” including the artist’s signature, the fact that he is dead and can’t make any more, and its original creation with non-digital technology (a scarcity that may soon be eliminated by high resolution 3d scanning and printing).

      1. Girish Mehta

        Saying the same thing about money. Money does not have intrinsic value, its value is so long as everybody agrees that it has value.Things that have intrinsic value have played the role of money at different times in history. But money does not need to have any intrinsic value.

        1. thinkdisruptive

          The only thing that has true intrinsic value that can’t be replicated is your relationships to other people. You can buy or create virtually anything else.

        2. Lawrence Brass

          Gone are the days when money had “real” value backup, gold or any other form of bullion.These days where crypto currency is so much in vogue, I am beginning to see no difference between fiat currency, which is largely just numbers held in data bases with lousy backups, compared with what a crypto token can be. Safer and more trackable.

  20. Kirsten Lambertsen

    Once again this makes me think of how much I’d value this to allow me to buy once, consume anywhere. I use digital movies and tv shows as my example. If I buy a movie on Amazon, and at some point later Amazon loses the rights to that movie and it moves to iTunes, I want my purchased copy to move to iTunes without me having to buy it again. Same with music. Or, from a different angle, my unique identifier (that only I hold) now has access to that film no matter where it ends up being hosted.For anyone who hasn’t read it, Albert’s post on USV about Blockstack yesterday does a great job of bringing blockchain into focus. If you’re still struggling with “why,” it may be the post that allows you to level up.https://www.usv.com/blog/bl…For those not feeling the scarcity thing, think about your own identity. Right now, for most netizens, Twitter or Facebook (et al) is the keeper of their identity online. If *you* are the only owner of your identity โ€” you take it back in the form of a token and Twitter, FB etc., have to accept *your* form of identity in order to get your attention โ€” then its value increases to a non-trivial degree. Don’t think of scarcity just in terms of ‘goods.’

    1. Rob Underwood

      But some told me at the Consumer Electronics Show that UltraViolet would fix all this. You mean it didn’t?

      1. Kirsten Lambertsen

        Ha! Yeah ๐Ÿ˜‰ Obvs the studios have figured out that over the long term they can make us buy the same movie three, four, five… times without any cogs.

    2. Susan Rubinsky

      Your example about movies and tv shows is one I use all the time when I try to explain “ownership” and the internet to people. People ask me why I still buy DVDs and my reply always is that until I can own the digital version for the rest of my life, and pass it on to my decedents, then I want to have the DVD (a copy of a film). Of course, I don’t buy every film I see, but I do buy the ones I want to own and see over and over and over again. I also like them on my shelf. They are like a glimpse into a sliver of me.On the personal level, the value is in ownership of the copy, not renting.Take art as an example of an original, there are some collectors who personally love what they collect and put everything on full display (think about Frick, for example – http://www.frick.org/). Some just collect for value and put the art in storage. This is marketplace art collecting (example – https://www.nytimes.com/201….So there is the value of:1 – The Original2 – The Certified Copy (a DVD, a Print, Fred’s PepeBasquiat)3 – The Photo, Postcard, Screenshot, etc. 4 – The FakeWould love to see what happens with fakes. I bet there will be a whole underground market of fakes in the future.

      1. Kirsten Lambertsen

        As a fellow DVD collector, I completely agree. We have hundreds of DVD’s. And I would never put a piece of art into storage!With digital goods, the creator can also include extras and Easter eggs that can only be accessed via the original. A whole new level of fun.

        1. Susan Rubinsky

          One of my favorite parts of working in software back in the day was brainstorming ideas for and adding easter eggs. So much fun!

  21. DJL

    The last sentence highlights an example of what I would like to see from the blockchain – a method to authenticate “art” and its scarcity. I have been a photography collector for many years, and that would be valuable. I am still waiting for this technology to jump from crypto-currency trading to real-world applications.On another note – I am sitting in a Houston Starbucks this morning, and right next to me are three young people with a crypto-currency trading platform. Amazing.

  22. Luis Miguel Ruiz


    1. Theo Goodman


    2. JamesHRH

      Words fail me – the highest compliment I can give.

  23. ZekeV

    Deckbound/ bitbind.io is a lot cooler as a CCG platform, but no associated meme or currency (other than bitcoin).

  24. Steve Poland

    I can’t help but think of that Wu Tang Album that only 1 guy owns. Don’t know how you would ever contain a piece of music, digitally. And I hope that never does happen, but someone can own the only 320kbps copy I suppose and we all get the 192kbps versions? http://www.businessinsider….

  25. Scott

    Unfortunately 10% of that probably went towards transaction fees.

    1. Theo Goodman

      Fortunately it worked, is censorship resistant, and high fees go together with dank rare artwork as they need not be used to buy coffee.

      1. Scott

        Yes, but other networks like litecoin and ethereum can transact for far less than pepecoin’s bitcoin implementation. My dank rare Pepe’s are stuck in the mempool.

        1. Theo Goodman

          Yes, but if we just used mysql it would be faster and cheaper. Is this what we want? Faster and Cheaper or something that will work and is not forked by a central committee of vitalik when they do not like how things are going?

  26. 404 File Not Found

    The nuance here that most people miss is that the “rare pepe” is actually the token. The art is just what it looks like.

  27. Mark Luckinbill

    Now I have one, uncertified (due to the immeasurably easy screen shot form of digital theft I just employed..for illustrative purposes only) fur sure but still looks about 99% the same. While I am a huge proponent of blockchain I am not sure understand this particular application. As a testing platform, perhaps https://uploads.disquscdn.c

    1. Theo Goodman

      Sure you can do this with the mona lisa as well. However you do not have the certificate of authenticity that goes with this card that is the token.

      1. thinkdisruptive

        Arguably, you are buying the token, not the “art”.

        1. Theo Goodman

          Arguably the token is indeed a very important part of the art. Only both together is the work of art as the intentions of the artists expression are also in the name of the token the number of issue, if any have been “burned” or “airdropped” and so on and so forth. So indeed the token and the image are not seperate as a work of art.

      2. Mark Luckinbill

        You can’t do this with the mona lisa. You can do this with an image of her, which is way different. Here I am taking a virtual replica image of the purchased image. For currency, blockchain has greater applicability in my mind…for now. Still grappling. ๐Ÿ™‚

        1. Theo Goodman

          Yes you could also asign one token to one physical object.

    1. jason wright

      this is getting out of hand

    2. fredwilson

      i own it

      1. Twain Twain

        Very clever piece because the persistence of memory does become distorted in time’s warp and black hole.

      2. JamesHRH

        That’s even more awesome.ALL IN ANYBODY?

    3. JamesHRH

      That’s awesome.

  28. ThatOtherOtherGuy

    1000 Pepecash? How does that convert to REAL currencies like Beenz or Flooz?

  29. howardlindzon

    obviously there needs to be a marketplace to see what collectors are into based on digital and the genre, price ranges and than also make it a social place where you can connect with the collectors

  30. Pointsandfigures

    The last two sentences of your blog are really interesting to think about if you apply it to other sorts of applications that people would call “real world” and not just fun and games like collecting cards. Scoffers of this will say it’s just a bunch of bubble gum cards but we know the next great internet invention will start as a game.

  31. LIAD

    One can’t be a missionary about everything. Sometimes one must be a mercenary.I grok the ramifications of digitally scarce items secured on a chain, and we’ve known for a long time people are happy to pay for status based items which have little to no real economic value.When it comes to Pepe specifically for me, it’s mainly about the price being up 150% since Andy tweeted about it 2.5weeks ago.

  32. brandondiamond

    Unfortunately, the alt-right has co-opted the “pepe” meme and turned it into a symbol of hatred and antisemitism.I’m not one to by hypersensitive to this sort of thing — but seeing this character (even in a lighthearted post such as this one) kind of stings now. To me, pepe has come to represent willful hatred, cruelty, and ignorance: a mascot for internet trolls who choose to spread pain and anger as a way of coping with their own pain and anger.I would encourage you to avoid the pepe meme — if only because of what it has come to represent to so many of us.

  33. Luca Rosacuta

    Hey hi, im the creator of Pepebasquiat, i feel honoured to have my card featured on your blog!Many thanks.Please feel free to get in touch to get a complimentary card of your choice from my other creations

  34. Jesse Walden

    I was just tweeting this AM about collecting sports cards.If you collected sports cards, you might remember the Beckett Price Guide, a monthly subscription listing prices pic.twitter.com/VX1uu18BPdโ€” Jesse Walden (@jessewldn) May 24, 2017 <script async=”” src=”//platform.twitter.com/widget…” charset=”utf-8″></script>In the PEPECASH community, Rare Pepe Wallet is the card show where people trade, and Rare Pepe Directory is the Beckett Price Guide. But because Pepe is a networked social construct composed of many derivatives, the Pepe phenomenon might be bigger than Michael Jordan, and the cards might be worth more too.As more of us start to experience the financial (and emotional) investment of owning a part of the networks we use everyday, I think we can start to take the idea of owning a piece of a digital cultural network like Pepe more seriously. I wasn’t in this camp before hodling network tokens and I’m curious to see how I feel during a bear cycle.

  35. creative group

    FRED:It may be a rarity that you will post something that isn’t thought provoking or engaging. We really enjoy your MBA Mondays (Which we hope will either return on a permanent basis or at least repost some gems)You might rarely receive the following word in your professional career.On this PepeBasquiat Art thingy….No!Now back to regular programming. Much too much occurring in the world.To whom much is given much is expected.________Top ten collection crazes that ended in a big waste…..History often imitates and repeats.Remember these collectibles?Beanie BabiesCabbage Patch DollsBeatles chewing gum cards, circa 1963Precious Momentshttp://www.businessinsider….

  36. creative group

    FRED:This continues to be our favorite of you. Have no idea of the author. https://uploads.disquscdn.c

    1. JLM

      .Looks like a Mexican bull fighter? I wonder if that’s ethnically insensitive or boorish? I admire Mexican bull fighters.JLMwww.themusingsofthebigredca…

      1. creative group

        JLM:One of our favorite movies despite the overt racism (We expect your normal objection) is Crimson Tide and the numerous business lessons and operational and leadership points.We already expect you will not understand how this applies to the defense of which is indefensible.—–Dialogue:You have to set an example even in the face of stupidity. Any intelligent person knows that Kirby Silver Surfer is the only true Silver Surfer. (sic)https://youtu.be/2n3xoii9ZAw

  37. PJ Kershaw

    The Decent protocol addresses parts of this. Worth a look. decent.ch

  38. Chimpwithcans

    When is the AVC community token going to be a thing? And what will it enable us to do? ๐Ÿ™‚

  39. Susan Rubinsky

    Did you all see this?Why Spend $110 Million on a Basquiat? โ€˜I Decided to Go for It,โ€™ Japanese Billionaire Explainshttps://www.nytimes.com/201…

  40. Theo Goodman

    First of all these things are real. The ablity to crate a limited editon of a digital item puts power in the artists hands.

  41. thinkdisruptive

    Artificial scarcity is very real, and has existed for a long time. De Beers has long controlled the price of diamonds by mining less than are demanded. Insulin and EpiPens (name your favorite pharmaceutical) are able to be priced beyond affordability because they have zero elasticity of demand and a government-protected monopoly (patent) which is an artificial scarcity — the cost to make these drugs is pennies, but the price to you is whatever they can get. College textbooks are made artificially scarce by adding a new paragraph or changing the problems at the end of a chapter causing all the page numbers to change and forcing use of the newer book at the higher price. Access to live in the US (or cross the border) is an artificial scarcity. Most useful innovation is about removing or reducing artificial scarcities.

  42. jason wright

    real = naturally occurring?

  43. LE

    Artificial scarcityArtificial scarcity is part of what gives things cache, value and free publicity. Porsche 918 Spyder [1] was limited to 918 units. They could have sold 1000 or 2000 (perhaps at a lower price point) or even 10,000 at an even lower price point. In fact Porsche’s philosophy is to manufacturer there regular line with 1 less (as an exaggeration) than the market requires. This is not a Ford F150 style product.And to many other products and services are marketed like this to even mention.for non-real thingsI think it’s a real thing actually. No less real than any artwork that is not represented as a physical product.[1] https://en.wikipedia.org/wi

  44. awaldstein

    While I agree my friend. Without humor and without bold and crazy shit to remake the world we are sunk.

  45. Lawrence Brass

    I would add to the list of ingredients.. “abundant capital”.

  46. JamesHRH

    My head hurts, but I think you are right.On a side note, I can’t watch CNN anymore. Its basically a DC gossip channel.Does anyone actually report verifiable facts anywhere anymore? Thought you might have an idea.

  47. Theo Goodman

    As in when a band releses a limited editon of 89 7″ inches. Art doesnt need to find a solution to anything. TAG

  48. jason wright

    ๐Ÿ™‚ naturally

  49. Girish Mehta


  50. LE

    Insulin and EpiPens (name your favorite pharmaceutical) are able to be priced beyond affordability because they have zero elasticity of demand and a government-protected monopoly (patent) which is an artificial scarcityI don’t want to get into an academic discussion but I don’t believe that is an example of artificial scarcity. (It is something but that is not what it would be called). If additional units of the drug are nominal cost there is no reason to constrain supply in order to charge as much as you can for the product. So for example if it costs me 5 cents to make a pill I can afford if I am selling that pill for $50 to not worry about waste and unsold pills.Likewise contact lenses are not artificial scarcity either. They will make as many as you will buy and sell them at $90 per x months supply. (Noting that daily wear lenses cost the same to manufacture but are way way cheaper..)College textbooks are made artificially scarce by adding a new paragraph or changing the problems at the end of a chapter causing all the page numbers to change and forcing use of the newer book at the higher price. Once again I don’t think that would be considered artificial scarcity. The book publishers will sell and print as many as they can at the price they can charge because the paragraphs have been changed.An example of artificial scarcity might be taxi medallions. But even that is not the best example because in theory there is a reason to have that scarcity even though the scarcity drives up prices for the medallions and the cost of the rides.Artificial scarcity (at least the way I see it as a non-academic) is deliberately limiting production in order to drive up the price of what is being sold. Where the cost of additional production (and the risks) approaches zero. It’s all a continuum of course. Which means that there can be combinations of factors that cause this to happen that aren’t always pure. For example a wine vineyard may only be able to produce so many bottles so is that artificial scarcity? I don’t think it is. Airline seats? No that’s supply and demand at work.In my other comment example the Porsche 918 was limited to 918 units. There are obvious reason publicity and marketing wise why they wouldn’t want to manufacture 920 units even if they could sell that many. So that is near the top of the artificial scarcity scale but not the very top.This is the problem with all academic discussions on business. Definitions don’t take into account real world circumstances that people actually use when making pricing decisions.

  51. thinkdisruptive

    It’s artificial because it is created via market control and patent laws. Were it not for that, there would be plenty of competition to drive down prices, because as Bezos says “your margin is my opportunity”. The companies that own these patents can only raise prices like this because the patients have no choice (buy it, or die). The companies make as much as is demanded, but because they constrain supply sources (artificial scarcity) they can charge whatever they want. Which is why diabetics who are insulin dependent or parents of children with peanut allergies live on the edge of financial solvency most of the time.You don’t have to limit production to make something scarce. You only have to limit source and have a product where the need is absolute, or if the need isn’t absolute, you simply provide less than is demanded — this is a straightforward profit optimization strategy of any non-competitive market. For example, if an evil corporation poisoned the air, and the same corporation was an exclusive supplier of a filter that made it possible to breathe, they have created an artificial scarcity.College texts absolutely fit the model of artificial scarcity. Were it not for needless changes, last year’s books could be resold to this year’s class, and only those who want to keep their books permanently or prefer new would buy them, forcing the price for new books down. As it is, students try to reuse old books, but when your professor says “please read pages 55-92 and complete problems 2,4 and 5”, that’s very hard to do if your book doesn’t match the prof’s book. When you have a choice of books to buy, the variety of alternatives keeps prices low. It’s the difference between constrained supply (artificial scarcity) and a true free market, and as a parent of college students and also a lecturer, I feel the pain and see how the industry operates from both sides.

  52. thinkdisruptive

    By the way, real scarcities are quite different in nature. Before insulin existed as a drug, there was a real scarcity of solutions for diabetics. There is a real scarcity of rare earths, and an increasing scarcity of helium, which we have wasted in balloons and other frivolous uses — when it’s gone, it’s gone, unless you can wait a million years for more of it. Real scarcities are commodities or resources which are finite in supply, with no means to manufacture more or find suitable substitutes.

  53. thinkdisruptive

    You put it in a category of fake news, deflection and things that aren’t real, which is why I responded. I get that you were trying to be humorous, but most people don’t realize that most scarcity is created to optimize profit, not because of a genuine shortage. In fact, this is what the whole deal is with the image/token that Fred bought — it has value because the creator is limiting supply, i.e. artificial scarcity.

  54. JamesHRH

    I like my news unbiased.No one does news anymore. I don’t buy the two independent sources – it doesn’t hold anymore in the social media age.Time for evidence. That’s just me tho.

  55. David Pethick

    I don’t (yet) understand blockchain, but could it be used for some sort of source verification scoring system? A journalists source would have their claims proven or disproven at some point in the future. This blockchain is used to “identify” the source and the veracity of the information they provide. Sources who only provide credible information have increasing value….Like I said, I don’t (yet) understand blockchain!Dave P.

  56. Theo Goodman

    You can indeed lick your computer screen, phone screen or a printed version of your pepe. All three of these items are “real” in the physical relm. You are confusing OPEC with the work of an artst and Fred was confused with some of the technicals. First of all there are not 391 issued “right now” there are 391 issued, period. So there is no way to issue more of this token. Second of all the ammount of issue is part of the work of art. Why 391? Why not 555 or 1938736 ? These numbers are also part of the entire work of art.