Earlier this week, I was attacked by penguins.
Not the real ones, mind you. It was the Pudgy Penguins: a bevy of Twitter accounts with cartoon penguins as avatars, descending on me with messages like “Welcome to club pengu!” and “Enjoy the meeting!” As the answers scrolled by, I saw penguins wearing sunglasses and penguins wearing hats, penguins wearing bow ties, and crested penguins. Dozens of penguins became hundreds; soon my mentions were swarming with bulbous, beaked interlopers, all congratulating me on joining them.
What had I done to deserve this welcome car? Well, a few minutes earlier, I had acquired my own chubby penguins, marking me as the owner of one of the internet’s weirdest new status symbols.
For months now, the crypto-obsessed have been talking about the rise of “community NFTs,” or non-fungible tokens, a kind of digital collectible that combines the get-rich-quick appeal of cryptocurrency with the exclusivity of membership in a country club.
If you know anything about NFTs, you probably know that they are unique digital objects: cryptographic tokens, hosted on the Ethereum blockchain, that correspond to a digital asset, such as an N.B.A. highlight a video or a piece of digital art. The most valuable NFTs, including the column I sold as NFTs this year for over $500,000, attract buyers for the same reason Renaissance paintings do: because only one of them exists.
Community NFTs, by contrast, are group projects. They are published in sets of unique but thematically linked images that can be bought and sold individually. Purchasing a community NFT usually entitles you to certain benefits, including membership to a shared Discord server or access to a private Telegram channel, where you can talk with other owners. (The biggest advantage, though, is changing your Twitter profile picture to your NFT, marking you as part of the crowd.)
I decided to join the Pudgy Penguins because… well, it’s August and I’m bored. But I also wanted to explore a more serious background. For years, technologists have been predicting the rise of the “metaverse,” an all-encompassing digital world that will eventually have its own forms of identity, community, and government. Mark Zuckerberg, the CEO of Facebook, recently said that the social network would become a “metaverse company.” Epic Games, the creator of Fortnite, has also bet big on the metaverse, raising $1 billion to build its own version of digital reality.
Metaverse enthusiasts believe that our digital identities will eventually become as significant as our offline selves, and that we will spend our money accordingly. Instead of putting art on the walls of our homes, they predict, we will put NFTs on our virtual Zoom backgrounds. Instead of buying new clothes, we’ll splurge on premium skins for our V.R. avatars.
Pudgy Penguins and similar NFT projects are a bet on this digitized future.
“The way I describe it to my family and friends is like, people buy Supreme clothes or buy a Rolex,” Clayton Patterson, 23, one of the founders of Pudgy Penguins, told me in an interview. “There are all these ways of telling everyone that you are rich. But a lot of those things can actually be faked. And with an NFT, you can’t fake it.”
Mr. Patterson, known online as “mrtubby,” is a computer science major at the University of Central Florida. He started Pudgy Penguins with three classmates this summer after seeing other NFTs in the community take off. They chose penguins as their theme because the birds seemed approachable and friendly, and decided to use an algorithm to generate 8,888 unique penguins with different combinations of clothing, facial expressions, and accessories.
“There was a lot of meme potential in fat-looking penguins, so we decided to continue with that,” Patterson said.
The first community NFT was CryptoPunks, a series of 10,000 pixelated characters that sold starting in 2017. They became a luxury status symbol, with individual images selling for millions of dollars, paving the way for other NFTs. community, including Bored Ape. Yacht Club, a group of 10,000 cartoon primates that now sell for more than $45,000 each.
Mr. Patterson and his co-founders hope that Pudgy Penguins will end up joining the NFT pantheon. The original collection sold out in 20 minutes, and more than $25 million has changed hands overall, according to NFT Stats, a website that aggregates data on NFT sales. Earlier this week, it was still possible to get a penguin for a few thousand dollars, but penguins with rare features, like different colored backgrounds or gold medals around their necks, can cost much more. The most expensive was Pudgy Penguin #6873, which sold for $469,000.
I messaged Mr. Patterson on Tuesday, asking if he had any tips for getting my own Chubby Penguin without breaking the bank. (The New York Times spending policy, unfortunately, does not cover bird JPEGs.)
“Wait, maybe I can do something,” he replied.
Minutes later, two Pudgy Penguins, #3166 and #5763, appeared in my cryptocurrency wallet. One was an image of a penguin wearing a rag and sunglasses; the other wore an igloo baseball cap and what looked like a bomber jacket. They were a gift, Mr. Patterson said, in appreciation of my willingness to learn about the community. (Since I ethically can’t accept gifts, I’ll be sending my chubby penguins to Mr. Patterson after this column is published.)
I then joined the Pudgy Penguin Discord server, where I was greeted by a throng of other owners who were excited to see me, mostly because they thought getting attention from The Times would increase the value of their own penguins. (After receiving my images, I received offers to buy them for thousands of dollars.) The co-founders of Pudgy Penguins earn royalties every time a penguin is sold, but other owners will only benefit if they can resell their penguins for more than they paid for.
Like any good crypto cabal, the owners of Pudgy Penguin have developed their own language and customs. Penguins are “pengus”. The owners are “snuggles”. “Plumes” are a rare and valuable type of mantled headless penguin, while “flats” refer to cheaper, more common varieties.
Several Pudgy Penguin owners told me that while they expected to make a profit if the price of penguins continued to rise, they mostly saw it as a social opportunity. Pudgy Penguins claims to have over 4,000 individual owners, and their Discord server, which you don’t need to have a penguin to join, is a hyperactive flurry of penguin memes, new purchase celebrations, and strategies on how to get crypto-celebrities. to join the club. (The group scored a coup on Tuesday when Alexis Ohanian, one of the founders of Reddit, showed off his newly acquired Pudgy Penguin on Twitter.)
“The people in the community are great,” said Christopher Aumuller, 29, owner of Pudgy Penguins of Queens. “Everyone is more or less vibrating and sharing penguin memes.”
Tiffany Zhong, an entrepreneur and cryptocurrency investor, said that part of the appeal of penguins was that other popular crypto tokens had become too expensive.
“The average consumer has been locked out of those projects,” he said. “And so people who are trying to get into this think, what’s the next big project that I can be involved with?”
To the uninitiated, chubby penguins may seem fundamentally useless, and in a way, they are. But I wouldn’t bet against them for the same reason I wouldn’t bet against the continued appeal of blue checkmarks on Twitter or O.G. Instagram Usernames. Humans are status-seeking creatures, always looking for new ways to rise above the pack. The first iteration of the Internet tended to flatten status distinctions, or at least make them harder to pin down—“on the Internet, nobody knows you’re a dog,” the proverb went—but newer technologies, including NFTs, have allowed further. obvious types of signaling.
Packy McCormick, the author of the Not Boring newsletter, argued in a recent essay that community NFTs were behaving like a kind of social network because they gave people access to status and social connection, as well as a potentially lucrative investment.
“Powerful things happen when you combine money, status and community,” McCormick wrote.
It is true that people who buy Pudgy Penguins or other community NFTs can end up losing tons of money if the fashion goes out of style. But it’s also true that, like Reddit users gleefully jacking up the price of GameStop and AMC, fans of these projects don’t seem to mind the risk. (In fact, some days NFT traders and meme stock speculators seem to be the only people still having fun on the internet.)
And while I personally wouldn’t invest my retirement money in Pudgy Penguins, I find the most common objections to them pretty unconvincing.
Are NFTs bad for the environment? It could be said yes. Running the Ethereum blockchain requires a lot of computing power and energy, and NFT transactions certainly contribute to the overall carbon footprint of the network. But they are still a small slice of the overall cryptocurrency market, and their environmental impact is a drop in the bucket compared to the hundreds of thousands of regular Bitcoin and Ethereum transactions that take place every day.
Are they a rich person’s toy, a waste of money that could be better spent elsewhere? Sure, but the same could be said for sports cars and designer handbags.
Is there something morally indefensible about people buying and selling blockchain collectibles for many multiples of the US average annual income? Probably, but at least they’re not hurting anyone. (Put it this way: One of the least damaging things I can imagine a young, mostly male, group of extremely online people doing in their spare time is exchanging pictures of cartoon penguins.)
The worst thing that could be said about community NFTs is that they are encouraging people to overpay for what amounts to digital bragging rights, and that fools will inevitably end up holding the bag when the bubble bursts. But I doubt many fans will be deterred by the plot.
I told Ms. Zhong, the crypto entrepreneur, that I was still confused by the appeal of Pudgy Penguins, who didn’t seem to do much more than attract attention.
“That’s half the point,” she replied. “Nobody knows what’s going on, but it’s a lot of fun.”