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If you're scratching your head at the deluge of Gorillaz-style monkey avatars everywhere on the web, congratulations! You've just had your first encounter with the Bored Ape Yacht Club, and it might make even less sense than you imagine.
NFT Avatars in a Nutshell
Before we can even touch what the whole Bored Ape thing is about, you need to know a few fundamental things about NFTs or Non-fungible Tokens. We'll go over the least you need to know for it all to make sense, but you can check out our NFT explainer for the complete rundown.
NFTs are cryptographic tokens on a blockchain. A blockchain is a public record of transactions that can't be altered. Blockchains are usually decentralized, which means that no one owns or controls them.
A "token" on a blockchain is a unique string of numbers that can be assigned to a "wallet", which is in turn controlled by someone. NFTs are non-fungible tokens because each one is totally unique. That's as opposed to a dollar bill, which can be exchanged for any other dollar bill without changing anything about its value. Gold, money, and bananas are all fungible.
The avatars you see online aren't the actual NFTs! Instead, each of those images is associated with a specific NFT. A third-party entity, such as the OpenSea marketplace, maintains a record of the images and which token represents them.
The last thing you need to know is that NFTs can be traded, or sold for currencies such as US dollars, Bitcoin, or Ethereum. The last one is pretty important because NFTs are generally "minted" on the Ethereum blockchain.
So What's Up With The Monkey Business?
The Bored Ape avatars are a type of NFT image known as a "generative" image. There are various takes on this and NFT pioneers Larvalabs, famous for their similar Cryptopunks avatars, are possibly the earliest example before the boom.
Essentially, an outfit like Larvalabs will generate a set of avatar images using a random generation method that mixes and matches character art elements almost like a video game character creator. This ensures that every image is unique. You can look at it as a set of trading cards, but there's only one copy of each card in the set.
Once the initial run of NFTs is purchased from the creators of the set, the monkey-trading begins. Owners of these NFTs can put them up for sale and see if there are any takers, and boy have there been some takers. Bored Ape Yacht Club NFT sales have totaled over 1 billion dollars alone. The current record for a Bored Ape NFT is $3.4 million, although more typically they sell in the hundreds of thousands.
OK, But Why Are They Worth Anything?
The simplest answer to this is because people say they are worth something. This might sound a little trite, but the truth is that value is subjective. Humans tend to value things that are scarce or unique more than things that are commonplace and plentiful. We have irrational attachments to certain things too. A perfect replica of Elvis Presley's white jumpsuit might be worth a few hundred bucks, but the one that Elvis actually wore is worth more than a million dollars.
The real-world examples of things that have little intrinsic value (e.g. Issue 1 of Action Comics), but then sell for insane amounts. NFTs are worth what people are willing to pay for them, the hard part was convincing people to buy them in the first place, which is easier if you have a little help from a famous friend!
Celebrities Are Going Bananas for Bored Apes
Whether we like to admit it or not, celebrities and other influencers have an effect on how we live our lives and, in particular, how we spend our money. This is at least partly because of the "halo effect" where one positive trait (such as being a beautiful actor) makes us think of someone as having other positive traits, such as intelligence or trustworthiness.
It's hard to tell if a tweet like this one by Gwyneth Paltrow or a weird interview between Jimmy Fallon and Paris Hilton are the result of sincere enthusiasm or cynical profit, but they provide the social proof members of the public who are confused about NFTs need to take an interest in them.
Celebrity involvement in NFTs, especially the Bored Ape Yacht Club, also makes sense thanks to extra perks that come with Yacht Club membership. For example, there's an exclusive Discord server, and you might get invited to exclusive parties where you might run into famous Bored Ape owners such as Eminem (who spent $462 000 on his Bored Ape) or Snoop Dogg
Why Are NFTs Exploding?
Whether it's a Bored Ape, a Crypto Punk, or a Lazy Lion, there's no denying that NFTs like these are white-hot right now. It's easy to fall into the trap of assigning a single reason why that might be the case, but in the real world any trend usually has multiple drivers. We'll probably never know what's behind the perfect storm that blew up NFTs into a mainstream, late-night TV topic, but there are a few likely factors.
For one thing, in world of mass production, owning anything that's one-of-a-kind---even a string of charaters on a computer!---has a certain allure. Some people encrust their iPhones in diamonds, too.
Being part of an exclusive club is also a potent motivator. A crypto yacht club is ultimately the same as a real yacht club, and it seldom has anything to do with yachts.
Lastly, NFTs are a goldrush. Just as with cryptocurrencies, people want to get in early and make their fortunes from those who are late to the party---a party which they now have the required ticket to join.