Welcome back to Collector Conversations™, where we dive deep with some of the most interesting collectors and investors in the NFT/digital art space. For better or worse, yours truly is under the microscope today. In episode 1, NFTier was in the hot seat, and today he’ll return the favour and be my interlocutor. Let’s do this!
NFTier: Pete, it is an honor for me to do this interview! We have known each other for nearly a year and you have guided me through some difficult personal and professional circumstances. A lot of our discussions have centered on our shared love for collecting NFTs so I am excited to hear more from you around that front and formalize some thoughts. Unlike myself, you have been collecting traditional art for multiple years. When and how did that journey begin? Was it a familial tradition or strictly a personal venture? What was the first piece of art you collected?
Pete: My parents have always loved art and so they regularly took my younger brother and I to museums and galleries, not only locally but on our family trips around the world. My mother is an architect so she has more formal training in the world of art and design, as such she’s long been my mentor when it comes to appreciating fine art, industrial design, and of course architecture. Growing up, most of our fine art exposure was to later 19th and early 20th century painting, basically from the Impressionists and Modernists through to Picasso, because that’s what my parents appreciated and understood the best. The post-war art world wasn’t really part of my knowledge base until I was into my 20s. At home, my parents collected memories of travels and family heritage more than “Capital A” Art. So we had small Inuit carvings from the far reaches of the Northern Canadian Territories next to Pysanky Ukrainian painted eggs next to African masks next to Mexican bird sculptures next to posters (no, not prints!) of Kandinsky and Matisse. None of it was really valuable in the commercial sense – I don’t think any of it cost more than a few hundred dollars at the absolute most – but it all told the story that we were citizens of the world, and that we should comport ourselves as such. The first piece of art that I bought that cost more than a poster was a painting by a Costa Rican artist that I purchased when our family was volunteering in the Central American country one Christmas break during University. It cost about $250 but after I took it home and hung it up, I never really jived with it. It was in a cluttered cubist style that I ultimately found too jarring to live with. But I kept it in my apartment for a few years and eventually gave it away. The first piece that I’d say I actually “collected” was in 2017 and it was a landscape painting by Jim Stokes, a relatively well known artist on the Canadian Prairies, where I live. It still hangs over our couch in our living room.
NFTier: ‘Citizens of the world’ – such a beautiful message. When you collected the Jim Stokes work, would you say you were in a fairly ‘comfortable’ financial position? I ask because there is a stigma that collecting art is an endeavor only for the wealthy. Surely, one can discover artists and collect art ‘cheaply’ so is there any truth to that assumption?
Pete: By almost any measure of “comfortable,” yes, I was already pretty comfortable by that point. That being said, at that time I was still very, very obsessed with the idea of opportunity cost and I kept my spending on material goods to an absolute minimum so that I could invest every penny possible in the hopes of much greater returns down the road. At the time – and this is only slightly starting to change now – I didn’t see physical art as an “investment,” so I made myself mentally write it down to zero the second it came home with me. I still think that this is largely the correct mental approach because the transaction costs for physical are are absolutely brutal and the market size is really quite tiny. As such, I’ve never sold a piece of physical art and I’ve always purchased it with an amount of money that I won’t miss even if I could’ve 10x’d it by hodling crypto instead. So maybe this is a contrarian position, but I really don’t think that the stigma around cheap art is unwarranted. Art below a certain value absolutely cannot double as an investment vehicle unless your surname happens to be Gagosian or Glimcher, which mine certainly isn’t.
NFTier: Never sold a physical art piece! Talk about diamond hands! Not seeing any purchase as an investment is a difficult concept for some to understand, but for a true art appreciator, like yourself, it is most fitting. We will come back to traditional art in a bit but I want to transition for now. You were an early adopter of the crypto promise land (I think you bought your first bitcoin in 2011?). What was your rationale behind the purchase? What percentage of the decision was ‘Hey, this is something unique and innovate so why not?’ vs. ‘Wait, I think I can vaguely see a future where this IS the future?’
Pete: I first heard about Bitcoin in 2011 in an interview by Russ Roberts from Econtalk podcast with Gavin Andresen from The Bitcoin Foundation, but the whole “digital currency” thing really didn’t click for me until about 18 months later in early 2013 during the run-up to $266. When I first heard Gavin explain “BitCoin” in 2011, Bitcoin was worth almost exactly $1, which was tragically deceptive because I mistook it for a PayPal competitor, which it clearly wasn’t. Gavin was too much of a technologist (and later CIA operative)i and not enough of a salesman in his pitch. But I could still only blame my immature brain! So time when on and I kept reading whatever interested me (mostly economics, philosophy, and history), but it was really after reading David Graeber’s Debt: The First 5,000 Years and Nassim Taleb’s Black Swan that I was so much better prepared in early 2013 to seize the opportunity before me. While flipping through the Apple Stocks app on my phone one day at work, I read an article entitled “10 Things You Should Know About Bitcoin,” and inside I saw this crazy tech asset with an apparently fixed (and logarithmically decaying!) supply shooting up in price 10%+/day for the last 3+ consecutive days. As a kid in early grade school, while my brother would be reading the sports section and my dad would be reading the comics, I’d be poring over the finance section to see how the tech stocks on the NASDAQ were performing. I’ve always been obsessed with markets and why they move, and in all my years I’d never seen ANY tech stock increase 10%+ for three consecutive days without a retracement. I was transfixed from that moment forward and I didn’t sleep for the next three weeks as I studied 20+ hours per day everything I could about asymmetric cryptography, peer-to-peer networks, triple-entry accounting, the Byzantine’s General’s Problem, and the decentralised future revealing itself before our very eyes. After that first couple weeks, I wired $1,000 to Mt. Gox, which took another week to get there, and in that time the price of one BTC had increased from $150 to $200 but I could’ve cared less and I market bought immediately, which just so happened to be the day before the price of one Bitcoin hit $266 and then promptly came crashing down immediately thereafter. No matter. I was sooooo hooked.
So I started wiring larger and larger sums to exchanges over the coming weeks as months as I gained more and more confidence. Attending the Bitcoin Conference in San Jose in May 2013 was a big boost for this confidence because it showed me a world of people who were weird like me! Conversations about who was your favourite Roman Emperor while wearing “toe shoes” and doing burnouts in a loaner Dodge Challenger SRT8ii was all the convincing I needed to go all-in into Bitcoin. Of course, recognising that this was still very much the Wild Wild West, I started using exchanges other than Mt. Gox (like Bitstamp) to manage my risk in case any of them went dark and the “machine ate my coin,” as it were. Over that summer, I completely liquidated my savings accounts and all my investments in $AAPL that I’d bought with my bar mitzvah money (and held for 14 years) and YOLO’d basically all of it into Bitcoin, with a little sprinkling of a buncha scamcoins like Litecoin, Feathercoin, Chinacoin, and some “ASIC Mining Stonks” that mostly went to zero. It was a rough and dirty education in the new frontier of finance and technology. I was also quite the Apostle for Orange Coin, starting local meet-ups and basically trying to get all my friends and relatives to invest. I’m happy to say that everyone who invested made money, but of course many just thought I’d lost my marbles and politely declined, much to their later chagrin.
NFTier: What a fascinating story! For those keeping track at home, $AAPL has increased roughly ~1,000% since when Pete sold in summer of 2013 vs. ~6,500% for BTC. When and how did you discover the NFT space? Considering that you were early to catch onto crypto, were you early to NFTs (of course, on a long enough horizon, we are all early and WAGMI etc.)? You are probably the most avid reader I know and you always have your pulse on the ‘big things’ so if you weren’t ‘early,’ I am curious as to why not?
Pete: After nearly a decade of being a Giant Bitcoin Maxi with my head in the sand like an ostrich (a psychologically protective mechanism that was arguably necessary to survive the brutal 2014-15 bear market, but also quite a prudent approach to this often-all-too-scammy space), I started to hear rumblings about “digital art” from guys like Anthony Pompliano, who I listened to occasionally at the time. I found Pomp’s September 2020 articleiii quite intriguing, so I wrote about it on my blog – attempting to refute his thesis – but I had a lot on my plate personally at the time so didn’t have much more of a chance to dig in too much deeper. Though I did have the presence of mind to start asking around my meatspace network that fall, especially with kids in their early 20s who are supposed to be paying attention to this kind of shit, and I just got a lot of blank stares. But then a few of my younger brother’s friends – all huge sports fanatics but not really serious investors – started to get really excited about NBA Top Shot in February 2021. I’m admittedly not much of a sports fan – I prefer to spend my time learning about cars, watches, crypto, philosophy, economics, psychology, history, marketing, art, design, fashion, etc. – but I gave Top Shot a look after I heard about a couple six-figure sales. Sure enough, within a few days of research and exploration, I got hooked and went down the rabbit hole at the tail end of the only price boom that now-flooded market has ever seen (and may ever see), but it opened my eyes to the world of digital collectibles, for which I’m eternally grateful to Roham and his team. During that month of TS mania, I started watching a YouTube programme called “Club Top Shot” which included a cast of friends including certified DeFi degen Andy Chorlian (andy8052), and they started talking more and more frequently about Cryptopunks on the show. After a little more exposure, and a quiet return to Twitter after six years off the platform, I started to correctly assess that the Top Shot market wasn’t going anywhere positive anytime soon, and that it was time to switch gears to focus on beanies, chokers, headbands, tiaras, hoodies, VR, 3D, zombies, apes, aliens, etc etc. That was March 2021. So not super super early, but pretty good timing all things considered.
NFTier: I was surrounded by early 20s kids on a college campus in 2020, and didn’t hear a whisper about digital art, so you’re not alone! What was the first NFT you purchased and why did you purchase it? Did the true value proposition of NFTs hit you then or was it a gradual process?
Pete: After buying a couple of cheap packs on the Top Shot platform, the first BIG NFT purchase was a LeBron James Top Shot moment. It was maybe $1,000 at the time, which not only felt pretty ridiculous for an otherwise “free” video clip but was also ironically about the same bet size that I first threw into Bitcoin eight years earlier. And yet the Top Shot purchase felt even crazier somehow. Maybe because I’m only a passing basketball fan and would never even consider buying a jersey or other league merch/memorabilia worth that much, yet soon enough I was making spreadsheets, (shamefully) playing with “value analysis calculators,” and hunting for “good” deals well into the wee hours of the night. I hadn’t been that excited about anything since 2013! And since we now know that the 2013 adventure turned out pretty well by all accounts, I knew to trust my gut and follow my passion in 2021 as well. So what if I didn’t get as much sleep as usual? Isn’t that what black coffee was for? Of course, Dapper Labs was more focused on “proof of fandom” than I had interest in, so it was straight to Cryptopunks from there. My Punks Thesis was definitely an organic extension of my Top Shot Thesis, but arguably represented an even larger psychological hurdle because it meant eating my words as an anti-Ethereum Bitcoin Maxi. Thankfully, I was still young enough and open-minded enough to get out of my own way – but just barely! – and the rest is history.
NFTier: The next time you throw $1,000 into something, kindly let me know, I will throw my delicate discipline out the window! You have some absolutely legendary NFTs in your collection (top notch Fidenzas, Chromie Squiggles, Meebits), but your CryptoPunks definitely steal the spotlight. What was your thinking in making such HUGE purchases? What made you confident that the opportunity cost – assuming that was a consideration – of investing in archaic blockchain artifacts would be worthwhile?
Pete: Cryptopunks are by all accounts the safest investment in NFTs. They’re historically significant, have their own zero-fee trading platform integrated into the contract that can’t be blocked by VC overlords (I think?), they’re artistically crafted, have a perfect origin story, a devoted fan base that can survive any downturn, and now have an incredible marketing team with Yuga Labs at the helm. They’re really as good as it gets! As such, I see my Punks holdings as the core of my portfolio in the space – almost like the Bitcoin of NFTs – but with much more visual appeal obviously. From an asset allocation perspective, I started out mostly using Punks as an ETH-exposure play, almost like staking, hoping to earn a modest yield over time but in no way looking for a “grand slam.” Recall that I was coming from pure BTC, so trading 1 BTC for 1 Punk seemed like a lot but not totally unreasonable for this “staking” play. 10k<21mn after all! To be sure, given that the current going rate is for Punks is closer to 5-6 BTC for a floor, I think I nailed the timing. Relatedly, I still mostly denominate my portfolio in BTC because that was always the baseline of my opportunity cost for the last decade, so in that sense, even if some (or many!) of the NFTs that I’ve purchased in the past 18 months haven’t performed super well financially, they’ve almost all STILL outperformed just hodling BTC. Not to mention that Punks in particular but NFTs more broadly have also opened my eyes to exciting new forms of creative expression, encouraging me to expand my own creative horizons, allowing me to meet incredible people from around the world in all kinds of amazing locations, and generally just providing a platform for the most fun I’ve ever had in my life. If that’s not the point of investing, or life in general, I’m really not sure what is!
NFTier: We love the Punks! And on that last point, as your favorite influencer would say, ‘If you’re not having fun, anon, you’re doing it wrong.’ While further admiring your collection, I saw a mixture of works from 4 genres: 1/1 or Edition art (XCOPY), generative art (Artblocks), PFPs (CrypToadz), and photography (Twin Flames). Do these categories present differing propositions to you in terms of provenance? Which of them do you envision to be the most ‘sticky’ during market downturns? Suffice it to say that these categories come with somewhat unique propositions: 1/1 art allows you to profoundly connect with an artist, collecting photography empowers a genre which has comparatively less demand(?), and PFPs allow you to gain membership in large, talented communities. Which of these categories is your favorite to collect? In particular, regarding generative art, is there a bear case where this new medium fails to gain widespread recognition, whether it be due to an oversupply or other reasons?
Pete: I’m not sure that we’ve had enough market downturns in this space to really see what’s “sticky,” but I have to think that it’s wherever there’s the most genuine enthusiasm in the details and aesthetics of the artwork itself. Because when liquidity dries up and trading volume screeches to a halt, there has to be something to talk about in Discord! I guess my favourite to collect is PFPs. Maybe it stems from my lifelong love of the theatre (and halloween!). I mean, PFPs are just costumes and isn’t life just performance art? Who says that Marina Abramovic gets to be the only one having fun! This is why I also love fashion: it allows us to shift and evolve our represented forms, reflecting different aspects of our personalities to best signal within and mirror ourselves towards different contexts. At their best, I think that PFPs can do that too. Generative art is also going to be HUGE in my opinion. After all, Punks, Toadz, and Meebits are generative too! Which is to say that they’re algorithmically generated. Toadz of course being a special case because there were – if I recall correctly – about 28,000 Toadz generated by the algorithm, from which Gremplin and his co-authors hand-selected the canonical 6,969 minted. Of course, like in so many other domains, the first and best examples of a generative style will acrue the overwhelming majority of mind and market share, because once we’ve all seen Fidenza, every other flow field collection just looks like a worse version of it, which just drives comparison and investment back to Tyler Hobbs’ legendary set.
NFTier: Recently, many large collectors have come out with stances against ‘utility’ NFT collections. Why do you think there is such a pushback considering that the majority of the NFT adoption thesis derives from utility applications in the real-world?
Pete: Is there all that much pushback against “utility”? Are real-world applications really what’s driving the majority of the NFT adoption theses? Granting that your finger is closer to the pulse of the space than mine and that this is true, which I’m only to happy to grant, I think that real-world utility is still relatively important in a world where so many young people are so lonely. In our fractured, fragmented, atomised, individualised, swipe-left digital society, in-person events are a great reason to buy into a new community. Seriously, who doesn’t love a good party (especially when you’re in your 20s and 30s)? Of course, many of the large collectors are older – in their 40s and 50s – so their biggest partying days are in the rearview mirror, so if there’s any actual divide between the pro-utility camp and the anti-utility camp, it’s probably generational as much as anything! More mature collectors are also able to afford their own socks and fanny packs, thanks very much.
NFTier: Utility gap = generational gap? Will have to ponder that one for a bit. Morale in the NFT space is arguably at the lowest it has been since NFTs became semi-mainstream. Are we in fact truly be dealing with ‘altcoins with pictures’ or can NFTs separate themselves from that label?
Pete: Cobie’s “altcoins with pictures“iv thing is a funny label because it’s partly true but really it’s mostly reductive drivel. Is a Matisse just some canvas and some oil paint? Of course it is, but that also elides its transcendence. Is the Torah just some words on parchment? Duh ya! Is the Parthenon in Athens just a big pile of rocks? You bet it is. But observing the gears of the mechanical clock doesn’t tell you anything about why it was built, why it’s important, and why it has value. NFTs are built, are important, and have value because they’re digitally-native culture. They’re our love letters to the digital age; to a future that’s better than today.
NFTier: You tell em! To add to the reductive reasoning, humans are just atoms with consciousness – go make your sudo pools out of that! Going back to traditional art, do you collect relatively less of it now that you are deep into NFTs? What percentage of your collecting portfolio do you allocate toward traditional art vs. NFTs? And does a 24/7 (il)liquid NFT market mean that art will increasingly be seen as a speculative instrument?
Pete: My physical art collecting still represents about the same percentage of my disposable portfolio as before NFTs entered the frame, so I’ve definitely continued to collect in the last 18 months. The size of physical pieces that I’ve collected have also continued to grow in physical size and scale, which is why I’ve spent this bear market year thus far renovating half a floor (5,000 sqft) – of a 1950s federal building to display my growing physical and digital collections. It should be ready for move-in by halloween this year. As to liquidity leading to speculation, I’m not so sure. As I intend to write about more soon, liquidity is the enemy of the pump, and the pump is the friend of the speculator! I think what’s moreso leading to art as a vehicle for speculation is accessibility. With digital art, it doesn’t matter if you’re too scared to walk into a commercial art gallery, you can buy from a laptop in your studio apartment without ever setting foot in a store.
NFTier: Allow me to kindly invite myself to your gallery; it is one of the few reasons I would skip Halloween! Now that you’ve been active in the NFT space for nearly 1.5 years, what are some of the biggest lessons you have learned? Broadly speaking, have you observed psychological/behavioral differences in NFT market participants vs. traditional markets?
Pete: The hardest lesson for me to learn is – and one that I’m still very much in the process of learning – is how to manage a diversified portfolio. Having come from over a decade of mostly just hodling $AAPL, then another decade of mostly just hodling BTC, I’ve now found myself in the position where I’m managing a huge variety of assets. They all fall under the umbrella of “digital art and collectibles” but even within that there are significant differences in terms of quality and therefore risk. As such, I’m slowly but surely starting to learn that not everything has to be a decade-plus hold, that there are indeed shorter trading horizons possible for certain things. Now just to figure out what those things are! So I’m slowly inching myself closer to a kind of “barbell” investment strategy, but instead of bonds or fixed income, the core of my strategy is Cryptopunks.
NFTier: If you don’t mind, I’d like to do some rapid fire questions (challenging – I know!). I know you love to write so this might be challenging. So in your opinion:
Most underrated artist: Mills on SuperRare. His best work gives me goosebumps and chills but he’s not very active on Twitter/Discord so there’s not much of a community around him. The only other big collector that collects him is Rudy Adler (rudya) so Mills flies wayyy under the radar. He feels like the kind of artist who would really benefit from a gallerist (ie. promoter)
Most underrated AB collection: Loren Bednar Phase, the visuals match incredibly well to Kanye’s Donda album. Would recommend.
Most underrated PFP project (not Punks): CrypToadz, they make me smile!
Most underrated twitter follow: Rabbi Zohar Atkins, no one on Earth better melds memes and Mishnah
Most underrated NFT collector(s): rudya, SOV, and TokenAngels.v
The ‘next big thing’ in NFTs (not music NFTs): *shrug emoji*
The one NFT you wish to own the most: Ooooh maybe Alien Cowboy Cryptopunk? He’s pretty much perfect imo.
Your favorite podcast: I’ll list a bunch because I LOVE podcasts. I listen to them for hours a day, pretty much every day! What started this passion for audio education was EconTalk, which I started listening to around 2008 (the series started in 2006). I’ve listened to almost every one of the 850 episodes. Russ Roberts is a Hayekian/Smithian economist, research fellow at Stanford and now President of Shalem College in Jerusalem. I found the podcast originally because he interviewed Nassim Taleb several times, and I used to be a yuuuuggge Taleb fan (before NNT became an old anti-crypto crank, that is). Other favourite podcasts include Proof (with Kevin Rose), Meditations with Zohar (Atkins), Conversations with Tyler (Cowen), Getty Art + Ideas, The Art Angle, Sinica, Bankless, Real Vision, Spike’s Car Radio, and Behind The Glass.
NFTier: Pete, it has been an absolute honor! I have learned so much more about you and am left curious and inspired. I know that some of the things we touched on have been discussed in your wonderful blogs but let this be a one-stop shop. I can’t wait to see the pieces you continue to collect and the artists you empower along the way!
Pete: Thank you so much. I was really looking forward to this and it was everything I’d hoped for and more.
Thanks for joining us for our second episode of Collector Conversations™️. Until next time!
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- It’s crazy to me that there aren’t more conversations about who the government operatives in the NFT space are. What, you think the CIA isn’t going to prop up another Pollock for their own ends? Or manipulate “web3” discourse with a couple small algorithmic flicks in a pro-USG direction? No? Lemme guess, you’re new around here. ↩
- I adore the Challenger SRT8. Dodge USA was actually gracious enough to lend me one to “review” while I was in the Bay Area for the 2013 Conference. We had too much fun in it! ↩
- Archived. ↩
- Archived. Also more eloquently refuted by CEBK:
Likewise, contrast anthropic worship with memetic ethics: you, as an embodied human, will tend to exist in societies which privilege as final goods their own visceral continuation, rather than those which ultimately prioritize universalist concepts like biomass hedons. Because anything complicated enough to seriously value—beauty, justice, etc.—necessarily touches on countless basic proxies for these goods, any abstract quantification or operationalization of such goodness necessarily involves picking one specific reduction to optimize on. In other words, to chart “happiness,” as in Scott Alexander’s “The Tails Coming Apart”, you must assume some preferred exchange-rate function, valid for every tradeoff between measured endorphin levels and self-reported life satisfaction, and material well-being, and progress along some cultural cursus honorum, and conversion into a group that successfully net-evangelizes from other tribes, and so forth. Can your algorithm decisively cast down judgment in each case where proudly achieving tough goals does not also deep-fry one’s pleasure circuits? Looking to people’s “revealed preferences” for guidance just means assuming we already live in the best of all possible worlds. (This rubric of fun must also adjudicate between one’s present and future pleasures, and between any two presently-contending pleasure-seekers, whereas revealed preference only shows how much less than selfishly your current self cares for its future incarnations, and only shows whether distinct entities using the same values-yardstick measure up the same, according to tick-marks they may value differently). So when purely rational arguments govern ethical disputes, the braided virtues get unwoven, and said governance rationalizes pridefully tearing down idiosyncratic virtuous kludges, without first understanding how these rules-of-thumb perhaps helped produce the substrate upon which this very same rationality depends; your heterogenous heuristics may be theoretically irreconcilable in extremis, but maybe that doesn’t actually matter for everyday use-cases, or else through the principle of explosion allows you to prove whatever needs proving, or….
- Rudy, SOV, TA: you guys up for interviews next? ↩
[…] priviledged? Well, shiny things! And amidst this sea of blindingly shiny things, of which “Altcoins With Pictures” are the certainly the most salient and fruitful example, we actually find some instances […]