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Firstly, if you’re looking for a basic overall explanation, we have an article on NFTs: https://elixistechnology.com/?p=6511 and not much has changed since that article, except for more stuff entering the NFT market, including things by big corporate brands. For the simple explanation, know that NFT stands for “Non-Fungible Token”. Essentially, this is a token (usually representing art, but sometimes other things as well) that has blockchain technology attached to it, making it ‘unique’. Where Bitcoins and other forms of currency are fungible, these images are not. In an ideal NFT environment, only a limited number of copies (or even only one) of each image with blockchain attached exist, even though the image could be replicated digitally as many times as you want.

Realistically, if you don’t care about the blockchain, then the only thing preventing you from right-clicking on the NFT and saving it to your own device is that you probably just wouldn’t want to. Most popular NFT art just doesn’t look that much like art, a bizarre mishmash of modern cartoon art and pop-art made by people who are savvy with NFTs, not artists, and purchased by people who want in on the NFT craze, not people who like art. As a result, most of the NFT art circulating is weird, pixelated/zombified/pirate monkeys and other such easily mass-produced but theoretically still unique art. Good stuff is mixed in… but there are a lot of those monkeys. I could go on about NFT art, but I won’t, because Neopets (a browser game from the 2000s) had an NFT event go very poorly, and that’s much more tangible.

Neopets

Neopets is a browser game from the 2000s. The game lived quite a long life, aiming at primarily children and pre-teens with bright colors, small games, and highly customizable pets, the Neopets themselves. Neopets was one of the largest websites to exist in the 2000s, raking in billions of page views, only declining as the primary audience aged out. Surprisingly, though, the game itself still works, even after Flash was discontinued and everything on-site had to be converted away from it. Sure, some games broke in the process, and the website itself was always sort of buggy, but it’s remarkable that it’s still functional at all. It’s nearly 22 years old, having first arisen in 1999. In internet terms, that’s ancient.

Fan Sites

Of course, being so old, the website has gone through quite a bit. It’s buggy. As Polygon puts it in their article on the unconverted sprite black market (more on that later) when fans want something fixed, they do it themselves – the Neopets team has their hands tied by the website they’re forced to work with, so everything still running is running on essentially coded duct tape and prayers. Patch fixes by players don’t work for everyone, and general patches on a site as old as the Neopets site might genuinely take a full overhaul, bottom to top. The game just doesn’t have those resources. So, fans do the majority of the Neopets cataloguing. Fans make browser extensions that fix broken games and textures. Fans make fanpages for lore, for backstories, for each species, for every possible combination of items and accessories – fans do everything to make the Neopets site more than the 22-year-old jalopy it is. It’s understandably frustrating when the manufacturer decides to upsell this jalopy to outsiders without understanding a critical part of why anybody is even still using it.

The NFT – and Announcement

Anyway, the NFT announcement was a dumpster fire. The NFT team (which went by Neopets Metaverse mere weeks before Facebook rebranded) was partially created with another outsider team, and the team that keeps Neopets social media running wasn’t informed that this was happening. If they were, they weren’t given a date – pictures surfaced of the primary Neopets team’s Twitter account saying, cautiously, that the NFT twitter account may be a scam when asked. They later had to confirm that the NFT team’s twitter (and partnership) was legitimate… but it wasn’t a good look. To fans, it appeared that an outside team was pairing up with upper management for Neopets to make a quick buck, and they couldn’t even be bothered to coordinate something as simple as a company-wide announcement.

After that, things continued to decline. The announcement promised 20,500 algorithmically generated Neopets for sale. Neopets are highly customizable – you can change their hair, their colors, their species, their accessories – almost every aspect of a Neopet can be altered. If factored out for every possible combination, you’d end up with hundreds of thousands (if not millions) of possible Neopets combinations. NFT artists (especially the monkey and lion guys) commonly use templates as well, so this didn’t sound too outlandish.

However, the biggest difference between the Neopets NFTs and the animal ones is that you can make exactly the Neopet you want on the Neopets website, and you can play games with it. You can even screenshot it and make it your profile pic if you want. Additionally, because the NFTs were all “algorithmically generated”, the designs were more often ugly than not for lack of human touch. And the backgrounds sucked. As many have said before me, the NFT only has value when people give it value – and Neopets fans did not believe the NFTs had value.

Fan Impact

But… outsiders did. Outsiders didn’t mind them being absolutely hideous even by non-player standards. A screenshot from the Neopets Metaverse Discord channel showed someone referring to one of the Neopets animals as a T-Rex – there are no T-Rexes in Neopets. The closest things in-game are called Grarrls. The person was looking to invest in Neopets NFTs, but didn’t know something as basic as the name of the species they were looking for.

 In Youtuber Izzzyzzz’s video on the matter, she shows screenshots of NFT bros actively arguing with fans about the value of the NFTs the Neopets team was about to launch.

Let’s go down the line on why this was a low-value move:

1) Children do not buy NFTs for themselves, just in general. They’re too pricey and complicated for that to be a viable market even though lots of children like collectibles.

2) Adult Neopets fans understood how the site worked, and made their Neopet exactly as they wanted it. They didn’t want a poorly made render of one they didn’t personally make or like, just because it was NFT.

3) Of the fans who did like the art, they would have had to re-make their purchased token in-game in order to play with it in-game, and the NFT website (Solana) would not do that for them. But they didn’t have to buy the NFT to do that – they could assemble it from the preview pics or other people’s tweets. So why spend money to recreate the character you liked if you could do it for free? Solana doesn’t own the art it’s using, Neopets does!

4) Adults who didn’t care about the art, who didn’t care about the game, and who didn’t care about NFTs weren’t going to buy it. Outside the NFT-sphere online, many people are skeptical of NFTs.

5) Adults from #4 who like NFTs too much instead are the last remaining viable market.  

When I say ‘too much’, I mean that this was clearly a poor investment and they wanted to own one anyway, and not because they liked Neopets. This is the misunderstanding – if the fans don’t want the NFTs, eventually, the NFT-bro Neopets market will run out of people to upsell these to because better art NFTs exist, rarer NFTs exist, and Neopets players have better substitutes elsewhere. The market was pretty much only people hoping to exploit Greater Fool Theory.

NFTs are contentious, though. As I have stated before, some people believe NFTs to have value just because they’re NFTs. Instead, I’ll compare it to a tangible, collectible item with no blockchain or other fluff: a band T-shirt. Imagine a band releasing really ugly merch, the fans hating it, but outside collectors arguing that the shirt still had value, and the fans are stupid for not blowing forty dollars on a t-shirt with a missing sleeve and a misprinted graphic on the front. Not because defects are rare, no – the entire batch came like that, collectors just believe (or pretend to believe) that shirts are inherently worth a lot of money, and that their worth only goes up.

However, while this works for some items that don’t have an approximate substitute or do have a very excited, cash-flush market eager to be ‘in’ on something, it stops working when one of those two things flips.  

To continue the metaphor, fans are already used to making their own shirts for free, and many will make you a nice one too if you commission them to, even though it won’t have the band’s name on the tag. New shirts are constantly in production elsewhere, by other bands you like. Even the main band itself is offering more shirts that were made correctly this time, although you can’t say you got them from the night of the big concert anymore, so it won’t have the same tag as the flawed shirt either. If you don’t care about the tag, you can make something identical to the product you would have had to pay for, or something better. Collectors don’t know this is part of the band’s fan culture, because collectors who bought in are not fans – the collectors who are fans stayed away, understanding the rest of the fans do not want the shirts for the same reason they don’t.

Still, the collectors continue to buy and trade the poorly made shirts. They then only have other collectors to sell to, and they all swear up and down that someone on the outside finds this shirt valuable… and it will be the next fool’s problem to find that someone, all while the asking price goes up and up each sale.

The Unconverted Sprites Market

What’s especially bizarre is that NeoPets had it’s own NFT system already built in: unconverted sprites! There’s already a thriving gray market for the old-school sprites that were allowed to stay in the system after a major website update, which both introduced new pets and allowed those new pets to wear accessories. Players with certain pets who didn’t want to update were allowed to keep their pets unconverted. The update made some pets quite ugly, and some changed species altogether, so if you were sentimentally attached to your Neopet, being unable to customize them was a small price to pay for keeping them unconverted.

However, no new ‘unconverted’ pets could be made by average players, only admins had that power, and they used it very sparingly. If you wanted an unconverted pet, you’d have to organize a trade or purchase to get one. The website actually almost did something right for these fans by allowing direct trading – the old system meant putting the pet into the Neopets pound and praying the right person snagged it before anyone else did. If they didn’t? They didn’t get the pet. The new system allowed for direct trading, a much safer and easier method that also enabled the underground market to ask for bigger prices now that risk was eliminated. That new trading system indicates the Neopets team understood, for a very brief second, what their audience wanted, and actually successfully implemented a feature that most people who were still on the site liked.

For people who don’t respect NFTs and what they stand for, this was the closest anyone could get to a digital item being legitimately scarce. You could copy their image, but you couldn’t play with that copy – you had to actually possess the Neopet to use the sprite.

Stolen Assets

The team making the Neopets NFTs had the entirety of the Neopets library at their fingertips. Theoretically, their algorithm shouldn’t have needed anything from outside sources, as they had permission to use every visual asset in the game to make said NFTs. However, hardcore Neopets fans noticed that the spots on a specific cat-like breed of Neopet were the wrong color, and the Neopet itself had white outlines in strange places. (Unfortunately, Izzyzzz’s video on the subject is the only place I could find the original NFT image – it seems very few people recognized this for what it was before someone got a screengrab, so only a few pics of the glitchy Kougra exist. This image is taken from that video, linked below in sources).

That’s odd – if you assemble this outfit in the Neopets game, that doesn’t happen. Similar issues popped up with the Uni, a unicorn-like species: hats are supposed to remove its horn, but the Neopets NFTs didn’t do so for the algorithmically-generated Unis with hats.

Users who had been long term fans of the game realized that was because these assets had been stolen from a third-party Neopets game called “Dress to Impress”, a move that is both legally shady and morally gauche. They replaced these NFTs as they got the reports, but the question of why they’d even bother stealing from another game in the first place lead fans back to issues with the Neopets site itself. See, the website was still running after Flash was discontinued, but it wasn’t running well. Minigames were broken, many of the maps didn’t work anymore, etc. but one issue that many users had complained about was that accessories didn’t fit their pet anymore, or they looked wrong, or they wouldn’t appear on the character at all. Basically, some of these assets wouldn’t be available for the NFT launch unless they took it from somewhere else or fixed it in-game, and there were clearly no plans to fix it.

That being said, they kind of didn’t have to take the assets after all – according to one user who was there on the day of the launch (cited below, it’s a Tumblr post) they only used ten out of the 55 Neopets species currently in existence, and only 20 of the many, many colors available. If they were going to cherry-pick which species and colors they were going to use, why not avoid the ones with broken assets, and avoid roping in Dress to Impress altogether?

Sales

Despite NFT bros arguing on Twitter about NFT Neopets having intrinsic value, the Neopets NFT team cut down the amount of NFTs being sold from the original 20,500 to about 10,500 due to lack of demand before launch.

Just before the official launch time, for some reason, the NFT team started sales a few minutes early – leading to a bunch of NFT-thirsty bots purchasing the first thousand or so NFTs from the sale. The tokens had tiered pricing, and most of the cheap NFTs were sold in this gap, leaving real humans to get the more expensive ones. The way this sale worked is that people bought a token, not the NFT itself, and had to ‘mint’ it after the fact to see what they got – but when every single Neopet is randomly generated, that means nothing. Pricing differences will not determine how well put together the Neopet on the NFT is.

And then, regular launch happened, and people spend their cash. When minted, many buyers are vocally unhappy with what they got both on Twitter and in the official Discord channel, because just as the preview pics promised, most of them are ugly. 

But wait, there’s more! When the Neopets NFTs were first announced, scammers began assembling fraudulent websites. A handful of people went to the wrong site on the big day and had their crypto wallets drained by the scammers, which should never have been allowed to happen! There are ways to keep fraud sites out, bigger websites get imposters kicked all the time, but the team handling the NFTs was somewhat small and shady. Attracting too much attention from someone who could possibly regulate the fake pop-up sites might have been against Solana’s MO.

Sales ended, and only about 4,300 NFTs sold.

Bad Idea

Neopets promised to ‘burn’ the NFTs that didn’t sell. Some of the purchasers were happy about that, as it meant their NFT would become more rare – others saw it for what it was, a sign that demand was too low to resell any time soon.

The Neopets community was left embittered not only by the decision to sell these things in the first place, but also by the introduction of a bunch of NFT hawkers invading community spaces to try and either drum up interest for their NFTs or stir up some angry tweets to screenshot. It was a deeply unpleasant event for most of the people who just wanted to play the game, a clear sign that Neopets was no longer for children, after they’d made it clear adult fans were to sit down and stay quiet unless they wanted to spend money or give their labor to fix the site for free.

We’ve discussed what makes an NFT valuable. Most of the time, it’s the attractiveness of the art or physical object it’s attached to as well as the perceived scarcity of that art or physical object. Buying an NFT just because it’s an NFT isn’t how it’s supposed to work! Worse, complaining about the price insinuates that the NFT is not worth the money it took to buy it, so in a market that’s currently all vibes, no stats, complaining is the worst thing you can do if you ever want to get rid of what you bought. It’s why all the popular NFT marketeers call any naysaying FUDding, (Fear, Uncertainty, Doubt-ing), because implying or stating that the only thing holding up NFT values are vibes is really bad for business even when it’s provably true in some cases. Buyers complaining on top of not all of the NFTs selling (implying a lack of demand) combined with trading fan nostalgia for a quick, poorly done cash grab made this entire episode a disaster, nearly start to finish.

Sources:

https://www.nytimes.com/interactive/2021/11/03/arts/design/neopets.html

https://www.polygon.com/22334511/neopets-still-exists-black-market-cheating

https://cheddar.com/media/neopets-revamps-again-with-first-ever-nft-launch

https://www.neopetsmetacollection.com/

https://www.investopedia.com/terms/g/greaterfooltheory.asp

https://sawkinator.tumblr.com/post/667983573599518720/yet-another-neopet-nfts-update (caution, some NSFW language used in the post. This is also a direct link to a Tumblr post.)

https://www.youtube.com/watch?v=NwJM3Qqb5Ls (youtuber Izzzyzzz’s video)