Cover photo

Punk6529's Non Fungible Thesis

Or why you're not bullish enough on NFTs

I have enjoyed Punk6529’s interviews and content for over a year. I took the opportunity of his appearance on Bankless’s podcast to try and sum-up, his views.

He's got tweetstorms and podcasts appearances, but those aren’t format most people can “grok” quickly. I’ve often wished there was something I could point them to so they can quickly get the gist and have more resources at their disposal.

So I made an attempt. It took the Bankless Podcast Episode 158, ran it through Whisper TTS and then re-cut it to get as close to a short article written in Punk’s own words as possible. This isn’t exhaustive, and it’s re-ordered so it’s easier to follow along, but I tried to keep it as verbatim as possible. And I added timestamps so you can find roughly where the content is in the podcast.

Table of Content

  • Why we need Crypto

    • We have built a world where network effects lead to centralisation

    • Centralisation leads to the erosions of freedom

    • Crypto could win for the same reasons

  • Why such a vocal NFT lover? A Multi-Part Theory

    • It’s the first real consumer app for crypto

    • We need to move while it’s new

      • It’s a blue-ocean, not heavily regulated

      • Incentives are aligned with others

      • Regulators don’t actually want Facebook to own 50% of the economy

  • It’s not Invevitable

  • (NF)Advice from Punk6529: I found out by trying, and you should too

  • Related content for thinking about this further

Why we need Crypto

We have built a world where network effects lead to centralisation

between 09:46 & 14:49

A world that digitizes and is structured on databases actually ends up centralizing and what people would think of as back-end technology choices that nobody in the social, political, sociological field has thought about for one second, actually end up reshaping the contours of society.

We are increasingly reliant on Trusted Third Parties. Your life is organised and intermediated by thousands of centralized Databases - Bank Accounts, Email, Uber, Airbnb, Messages, Twitter, Hotel Bookings, National Identity.

Centralisation leads to the erosions of freedom

between 25:55 & 36:20

What is happening is a progressive erosion of freedom that is happening very quietly, very much in the background, without anyone particularly thinking about it.  And it is being driven, it's the technological equivalent of “the medium as the message. And the medium in this case is large-scale, big data companies that have network effects. And then, secondarily, in some countries, governments.

And so, if you violate their terms of service, but honestly, if the CEO of Uber wakes up  and says, I don't like the look on that guy's face, you're off the platform. No due process, no what have you, because something that was decentralized in the physical world - hailing a taxi - is now fully centralized.  It is now becoming centralized with a centralized chokepoint. And sometimes the government might lean on private chokepoints.

The second bucket that has gone along with this is post 9-11, the U.S. has put an incredible amount of effort into AML and KYC. We have gone from a point where cash was viewed neutrally, to cash is now viewed with suspicion. There is no chance cash could have gotten launched today if it didn't already exist. And so the net effect is being shaped by the technology stack. The point is, this trend is showing no signs of stopping. It is not dramatically changing from day to day, but every day of the last 20 years it's going in one direction only. 

And what happens at the end, the end state of this, is you will have X firms (where X is a number between 20 and 50, or 100 max) and Y government services (where Y is less than 10), which might include CBDC, and all of those very large databases will intermediate everything. And once that choke point exists, once that honeypot exists, there is a danger it will be exploited.


And if you can shut down transactions, you shut down everything else, right?

There are no other constitutional rights in substance without freedom to transact

And this infrastructure that is getting set up bit by bit, and it's getting set up not because business leaders of America are evil, that's not why it's happening. It is an artifact of the technology that is available to us, and that technology - the internet - leads to network effects.

Crypto could win for the same reasons

 39:42 - 40:30

(...) “And so, exactly in the opposite way, if crypto survives, all crypto has to do is survive.

If crypto survives, its own network effects, its own technology architecture, its own way it shapes its social environment will be a huge counterweight to this.

The fundamental permissionlessness of the architecture will lead over time to significant, different, and in fact the opposite of what I'm worried about, social structures around it, and that's very, very good, and that's what I believed before NFTs, right? The freedom to transact stuff was a pre-NFT theory.  It does not involve any NFTs, and I think it's really important, to be honest.

Why such a vocal NFT lover? A Multi-Part Theory


I think NFTs are our best shot, or if not our best shot, an equally good shot as everything else combined, at achieving this decentralization.

It's the first real consumer app

  1. Until now we were re-product market fit, Because you're just talking about the technology. But the whole discussion in the NFT space is at the quote-unquote application layer. And this is a truism in technology: When you start talking about the application, not the technology, you are at the beginning of the consumerization.

  2. Unlike every previous form of cryptoassets large organizations have an incentive to get involved in the NFT space.

We need to move while it's new

It’s important we do it while people think it’s a joke. For 3 reasons.

1 - Because it’s a blue Ocean, and not Heavily regulated


The metaverse in a decade is going to be your all-encompassing ambient digital environment.

And if that is a centralized firm that controls that digital space, getting kicked out of  that digital space is like being cast out into the darkness.

And eventually when the hardware works, if these are backed by a centralized company, what you're going to have is not only everything we discussed so far, but biometric data, field of vision data, all streaming to one place. Once you have that honeypot, someone is going to abuse it.

And so my view is we have a moment in time. That moment in time is two to three years. It's right now.  And it is while people think this is a joke.


We're going to have a lot of digital objects. Our economy is not going to get less digital. It's going to get more digital.

The network effects for metaversy type stuff are not built yet.  Nobody has figured it out yet.  And so we have a period where the underlying technology or platform or API that will be  the network effect is up for grabs. So it could be, just to simplify, it's not exactly right, but to simplify, it could be  that everyone issues their digital objects to NFTs or everyone issues them as digital  collectibles on the Facebook Horizon API.

Right now, Facebook has not won this technology shift.

These things happen. Technology shifts. You have a new scramble, usually another firm wins. Here we have an opportunity to actually win a technology shift.

We have an opportunity that the default way to issue a digital object is an NFT.

Is it an open question where you can store the database of arbitrary non-financial digital  objects?


It's an open question.  It is an opportunity.

It is an opportunity we can win, not to have like 0.1% market share as we do in like payments and banking, but 70% market share.

An in-game sword on polygon in some blockchain game, is that something that today there's a huge federal apparatus to regulate the in-game objects in riot games?


So is there some huge federal apparatus to check what galleries in New York are selling and make sure the buyers don't buy overpriced Andy Warhol prints?


You don't have a very heavy regulatory infrastructure.

So my view is, to summarize, it is possibly our first true consumer application.

2 - because the incentives are aligned with other players


it is possible you can tip over the large organizations to say, it is in our business interests, we will make more money issuing this digital wearable as an NFT than running  it through Facebook.

And one and two will work in tandem with each other.

3 - because regulators don’t actually want Facebook to own 50% of the economy

And it is in a part of the world that is not as threatening as to the state, right?

What here you get to say instead: “look, do you really want Facebook extracting 50% of the digital economy for the next 50 years?”

As a regulator, as a politician, does that sound like anything?

Maybe Facebook shouldn't own everything for the next 50 years, right?

It's an easier sell, right?

And possibly, possibly, question mark, possibly, we can actually have some productive relationship with the regulatory state in this regard.

It's not inevitable!


I don't think it's inevitable.  Nothing in life is inevitable. Bad decisions get made by society and society goes back 30 years, right?

between 56:04 & 58:21

Legislation could make crypto in general unusable. 

And so bucket one, I think there's a pathway contingent on, we don't end up with legislation  that makes crypto in general unusable.  Legislation that's going to come into place in January 1st, 2024, arguably makes crypto  unusable in the United States, right?  If you do a transaction, more than 10,000, it is a felony if you don't report, if you  do not report your counterparty's KYC information within 10 days, right?  It's absurd.  It passed the infrastructure bill last year. 

It's the transposition of the cash requirement transaction to crypto, but it is written extraordinarily aggressively.

And I don't see how you could use actually a DeFi exchange if that comes into law, right? Like you don't know what the counterparty is.

It's a little bit more survivable in NFTs because what will happen is OpenSea will KYC or something so you can sell NFTs that are more than 10 ETH.

And do the reporting for you because like if they don't do the reporting for you, everyone's going to go to jail.

I mean, doing this report to counterparty in 10 days or it's a felony is a very, very strict rule, right?

They don't need to send everyone to jail, right?

They just need people to pull back, right?

People do not like committing felonies, right?

Saying like, oh, you're committing felonies is bad for adoption.

If you buy your, you know, whatever nice generative art online, you've now committed a felony, it's very bad for adoption of crypto, right?

But it also means like when you're on the other side of an exchange where you don't know at all what the counterparty is, and you have more sense of what the counterparty is than an NFT, then you're doing it in a decentralized exchange, right?

Decentralized exchange, if this continues as is, are finished, right? 

But they will have to become completely CEDEFI, KYC, blah, blah, to be compliant.  Anyway, so everything I’m saying here is contingent on crypto does not becoming unusable.

(N.F.)Advice from Punk6529: I found out by trying, and you should too

between 15:18 & 16:18

I have this general approach to technology that when you're not sure, you should just try it. Most errors on the technology side, like most people that start missing changes in technology, is because they try and read about it and figure out by reading about it if it makes sense.

And my experience is that just doesn't work. You can't read about, in summer 2013, about Bitcoin and say, oh, does Bitcoin make sense?

You have to download a node and send someone a Bitcoin, maybe on the other side of the world. And then you do it and say, oh, wow, that was amazing. I can't believe that just happened, right? 

People use PFP avatars. Let's use a PFP avatar and see what it feels like, right?

Related content to go further

#crypto#use cases#thesis#resources