By Evan LaMontagne, Sarson Funds Analyst
The advent of digital currencies and Non-Fungible Tokens (NFTs) has dramatically reshaped the way we understand the digital economy. At the center of this transformative journey isn’t just the technology itself, but the thriving communities that provide support, expansion, and momentum to these burgeoning spaces. Just like passionate fan bases on the internet have accelerated the success of movies, video games, music, and sports teams over the years, community in the realm of digital currencies and NFTs serves as the cornerstone that establishes trust, promotes collaboration, and kindles innovation for these decentralized platforms and ecosystems.
Drawing parallels with traditional online fan bases offers a deeper understanding of the engine that drives progress and creativity within these digital communities. Consider the Star Trek fandom, also known as Trekkies, who have crafted an expansive subculture encompassing fan fictions, merchandise, conventions, and even a dedicated fan language, Klingon. Similarly, communities around digital currencies such as Bitcoin and Ethereum contribute to progress by deliberating on and deciding enhancements for their respective digital systems, advocating for broader acceptance, and enlightening newcomers to the ecosystem.
NFT communities function in comparable ways, revolving around specific digital art pieces and collections like Crypto Punks or the Bored Ape Yacht Club. Similarly structured to fan bases focused on a particular movie or TV series, these groups provide an essential platform for artists and enthusiasts to interact, share ideas, and collectively contribute to the appreciation of digital art. As these communities grow, the perceived value of their focused art piece or collection often soars, driven by collective demand and shared appreciation.
Active participation in these communities is frequently rewarded, further illustrating the perks of being part of these ecosystems. For instance, community members may be privy to ‘airdrops’, a process where tokens or digital art pieces are distributed, often for free, to wallet addresses of holders of that particular project or platform. Another form of community collaboration comes in the form of decentralized infrastructure. This can come in the form of participation, or sometimes even network growth. This not only fosters a sense of belonging but also provides economic benefits to participants, often attempting to align incentives with the platforms and its users. Helium (HNT) is a great example of this, allowing its users to create the network of IoT and 5G hotspots allowing the incentives to go to those who provide coverage for other users.
Moreover, communities can serve as an active participatory body for collective decision-making and governance. Many digital communities and NFT platforms are organized as Decentralized Autonomous Organizations (DAOs), where holders can vote on various aspects, such as changes to the protocol, allocation of community funds, or partnerships with other entities and communities. We have seen a prime example of this in full view of the wider ecosystem with the ApeCoin DAO’s voting on elected leaders within the Bored Ape ecosystem. This empowers community members in multiple ways, allowing them to shape the future of their respective digital ecosystems.
However, the influence of the community extends even beyond fostering growth and establishing value. These groups also play a crucial role in ensuring safety within their respective digital landscapes. Much like traditional fan bases serve as a line of defense against copyright violations or unauthorized exploitation of their favored media, digital currency and NFT communities act as guardians against fraudulent activities and market manipulation. By nurturing robust and engaged communities, digital currencies and NFTs not only pave the way for their economic growth but also fortify the safety and integrity of their ecosystems. In the rapidly evolving digital landscape, the significance of community participation is profound, and its role is irreplaceable.
Disclosures: Not investment advice. The Author, Sarson Funds, Inc. and its affiliated managers may hold positions in the projects mentioned. Talk with your financial advisor before making any investment decisions or have them contact Sarson Funds directly at [email protected]