We’ve talked about the ups and downs of managing your own investments and how easily you can buy stock with apps like Robinhood.
With the ever-expanding role cryptocurrency is playing in wealth generation, it’s time to talk about NFTs and the pros and cons of the latest trend: degen.
What is degen?
“Degen” used to refer strictly to “degenerate gamblers” who made bad bets. But since the beginning of the pandemic, the idea of a “bad bet” got turned upside down with the meme-ification of different assets – think Game-Stoppers and the Dogecoin phenomenon. In the context of NFTs, degen refers to investors who are buying up NFTs or non-fungible tokens without regard for their underlying value. In short, it’s used to describe someone who doesn’t care if NFT has value, and they’re really, really proud of their purchases, so they flaunt it.
You might be asking, if there’s so much risk…
How are degens making money?
Just like the art world at large, the success and popularity of NFTs seems pretty arbitrary, based on nothing more than hype and evolving trends. But because NFTs are digital assets that can be traded or sold like any other asset, there’s a few different ways degens are making money.
First, they’re buying low and selling high.
Just like with any other asset, degens are trying to buy NFTs when the prices are low and selling them when the prices are high.
They do this through speculation and by tracking the featured page on OpenSea and coordinating strategic buys with other degens.
Placing bets
Second, degens are also using NFTs to gamble. There are a few different ways but the most popular way is through prediction markets. In these markets, degens can bet on the future price of an NFT (or any other asset). If they predict correctly, they make money. If they don’t, they lose money.
Make passive money
Third, degens are also using NFTs to create new games and collectibles. By creating them, degens can attract other players who are looking for something new to play or collect. NFTs can be rented out as a form of passive income for the game play and if these games and collectibles are popular, degens can make a lot of money.
With great risks come great rewards… and losses.
What are the risks of degen?
While there are many examples of degens going all-in on NFTs like the Ape Project and making bank, there are are also cases where NFTs never rise in value and NFT buyers (not just degens) suffer serious losses. For the really wealthy, financial losses to the tune of thousands or hundreds of thousands aren’t a big deal. But for every day investors whose retirement hinge on stable growth over 20-30 years, this could wipe out your portfolio.
Unlike the stock market, there is no SEC regulation. Unencumbered by regulation, degens can work together to inflate the value of specific NFTs and dump them at the top. We don’t hear about that though. Degens are notorious for focusing on their financial gains, so it’s rare that people speak to the number of NFT scams and losses.
If it’s such a good thing, why are so many degens anonymous?
A lot of degens are using pseudonyms when buying and selling NFTs, because it allows them to remain anonymous and avoid being targeted by scammers or hackers. Additionally, this keeps your IRL identity and your online identity separate where instead of a picture of you, you’ll represent yourself with an NFT.
In fact, the focus of losses in the degen community is on the idea of selling too early with apps like Paperhands which notify users of “missed opportunities.” This feeds right into degen culture.
What is degen culture?
Degen culture is a term used to describe the culture surrounding high risk NFT investments. It’s often characterized by people who are willing to spend large amounts of money on NFTs that have no inherent value. Most don’t care how much they lose. They flaunt their NFT profile pics on Twitter, connect on Discord, and play on Twitch. Meanwhile, others work strategically around the clock to maximize their gains.
But it’s more than that. To use their language, they’re “aping” into “signals” and “FOMO”-ing into “pumps.”
Additionally, degen culture can often be quite toxic. This is because people within degen culture are often more concerned with making money than they are with supporting the artists and creators who are actually making the NFTs. This can lead to a lot of drama and conflict.
Some celebrities are driving up the price of NFTs with their endorsement. Here are some of the most famous people in the culture:
10,000 ‘Snoop Avatars and a really popular Twitter later, Snoop Dogg recently became the owner of a $7 million artwork of the famous NFT meme “Right-click and Save As guy” by XCOPY.”’
Paris Hilton is another degen who loves to flaunt her wealth. She is often seen carrying around designer handbags and wearing expensive jewelry. In 2018, she even released an NFT called “Paris Hilton Crypto Currency” but has expanded her projects and launched “Paris: Past Lives, New Beginnings” in 2022.
Grimes is a degen who is known for her unique style. She often wears outrageous outfits and posts pictures of herself doing strange things. In 2019, she released an NFT called “Dead Girl” which was a digital file of her face that could be used as a 3D model.
How to degen
So, you want to be a degen? Well, there’s no one surefire way to become a degen in the NFT world. But there are certain characteristics and behaviours that will make you more degen than others.
For starters, degens tend to be risk-takers. They’re not afraid to put their money on the line in pursuit of potential profits. This can lead to big wins – and big losses. But degens are often willing to take those risks, knowing that the rewards can be well worth it.
Another trait of degens is their FOMO – or Fear Of Missing Out. They hate missing out on a good deal, or a hot new project. This can lead them to make impulsive decisions, without doing their due diligence first. But again, degens are often willing to take those risks, knowing that the rewards can be well worth it.
So if you want to be a degen, embrace your inner risk-taker and FOMO-er. And don’t be afraid to put your money where your mouth is. The rewards could be well worth it.
The pitfalls of degen
While degen investing can lead to quick profits, it is also highly speculative and risky. Degen investors are often the first to lose money when the market turns, as they tend to hold onto their investments for dear life rather than sell when prices are falling. This can lead to heavy losses, and in some cases, financial ruin.
So, should you degen?
That depends. If you’re the type of investor who is comfortable with high levels of risk and can stomach the potential for heavy losses, then degen investing may be for you. However, if you’re more risk-averse, it’s probably best to steer clear.
There are downfalls to buying NFTs. For one, they can be very expensive. This is because the supply of NFTs is often limited, and demand can be high. Additionally, there is no guarantee that an NFT will retain its value over time. In fact, many NFTs have already lost a significant amount of their value since they were first introduced.
Overall, degen culture is a risky investment. You could end up spending a lot of money
Related Reads
How to Avoid Getting Scammed Buying NFTs
Why You’re More Susceptible to a Con than You Think
Buying Crypto for the First Time
Crypto and the Great Currency Exchange Fiasco
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