This article first appeared in Capital, The Edge Malaysia Weekly on January 24, 2022 - January 30, 2022

During a recent powwow over non-fungible tokens (NFTs) and how value may be severely inflated by wash trading, one young man interjected and confessed his desire to work towards a Rolex. His investments probably include cryptocurrencies and perhaps NFTs, this luddite concluded and bemusedly flagged the fact that there is a waiting list for popular Rolex, Patek Philippe and Audemars Piguet watches — not to pour cold water on such enthusiasm and goal-setting, of course.

He may well be one of the people who would one day buy, nay, invest in a virtual watch. Instead of a Rolex Daytona to adorn one’s actual wrist, there is the option of buying digitally rendered sought-after timepieces, or rather their spoofs, in the burgeoning NFT horological market.

Jesus Calderon — a 29-year-old crypto-enthusiast and motion graphics designer from Chicago who designed and sold 3-D watches as collectibles under Generative Watches — last year sold 68 Rodex Daitonas for 0.2 Ethereum (ETH) or US$700 each (US$47,600 in total) when 1 ETH was about US$3,500, according to a Hodinkee article carried by Bloomberg.

While the same price tag would be US$640 (RM2,680) each, with 

1 ETH hovering near US$3,200 at the time of writing, Calderon’s model looks a lot more scalable relative to another recent internet sensation, Sultan Gustaf Al Ghozali. The 22-year-old Indonesian computer science student became an instant millionaire this month after digital rights to expressionless selfies he took over five years sold for more than US$1 million worth of ETH on OpenSea, an NFT trading platform, which takes a cut of sales and this month raised US$300 million to give it a US$13.3 billion valuation.

Are we surprised that demand for those “Ghozali everyday” photos reportedly shot up after a celebrity chef bought and promoted them on social media? It’s probably also just a coincidence that they hail from the populous Southeast Asian archipelago that big techs are eyeing, right?

If the giddy prices for NFTs, cryptocurrencies and the like made you think of Tulipmania, you’re not alone. After all, Tulpenwindhandel (1634-1637), the speculative frenzy over tulips happened during the Dutch golden age when tulips were a fashionable status symbol and prized collectibles for wealthy merchants and artisans.

Any similar frenzy would naturally be on steroids today relative to back then. Not only is there a whole lot more spare cash to spend on “stuff” among the super-wealthy globally today (thus the long waiting list), but the world is also instantly connected online, offering a global audience to influencers perpetuating the bubble. Add to the equation the world’s mega billionaires — whose mere tweets can cause spikes in prices and have serious money in the game — this “bubble” may well blow on for a long time. That’s despite reports of many yet to make money from the NFT secondary market and wash trading — basically, the seller also being the buyer to create the false notion of excess demand — being easier and less costly for virtual collectibles versus actual art pieces and memorabilia that the ultra-rich have long put money into.

Traditionally, to know whether something is a bubble, one may ask if prices are going up because the intrinsic value is being recognised or are people betting on there being enough “greater fools” willing to pay even more tomorrow. Yet, with so much spare cash floating around, especially after years of ultra-low interest rates, every asset worth holding is probably well over-priced by historical valuations. It’s little wonder that reputed institutions serving the well-heeled are positioning themselves to cater to a rise in demand for these esoteric tokens and collectibles.

If it is all spare cash that’s going into the “bubble”, banking regulators should still eye everything closely but probably needn’t worry as much as the taxman should.

For his part, that ambitious young man who wants a Rolex will presumably have enough forced savings with the Employees Provident Fund by the time he retires, since the fund is already working with policymakers to remain relevant to a changing workforce as the nature of work changes.

Not particularly motivated by Rolex-type pursuits, or exclusive social gatherings for avatars, this old-fashioned luddite finds NFT fascinating but will probably continue to leave the investing to go-getters and dreamers with cash to spare.

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