Yahoo reported last week that ApeCoin ($APE), a cryptocurrency launched by the creator of one of the largest non-fungible tokens (NFTs), peaked five minutes into its first day of trading before falling as much as 80% then fluctuated between $6 and $8 for the rest of its first day.
For ardent cryptocurrency traders, this is timely and relevant news. But what about for the rest of us? While we may come across a passing story here and there on the Doge and Ape and other animal coins of the world, what do we really need to know about them?
ApeCoin is what’s know as an ERC-20 token, which means that it is built on the Ethereum blockchain (hence the “E” in ERC). The supply in circulation for these coins is fixed. For ApeCoin (part of the BAYC or Bored Ape Yacht Club and related non-fungible token collection) the run is limited to one billion tokens. Think back to these old Olympics coins we used to collect. Imagine one billion of them minted at the same time with no more ever to be made — you would then have a sense of the ApeCoin drop.
Some of these ApeCoins go into what’s called the DAO treasury. Some go to something called the Ecosystem Fund, and the rest are airdropped, which is a marketing ploy where coins are sent to some people’s wallet so that awareness and buzz gets generated around the new coin. Pretty smart, when you think about it.
While some in the NFT industry have said APECoin is bad for NFTs, Joseph Maresca, a long term BAYC holder, doesn’t agree:
“APECoin is not only a good thing for those invested into the Bored Apes (Yuga Labs) ecosystem. APECoin is helping to bring new investor money into NFTs. Up until recently, new investor money was stalling to enter into NFTs so any early adopter should see this as a positive for the industry.”
Yet while it might be positive for the industry, this type of investment is not for everyone. Roy Konray, a lawyer at Team Law, cautions anyone investing in ApeCoin or any crypto asset to follow a foundational rule:
“As with any cryptocurrency, discretion is the better part of valor. In other words, invest money that you are perfectly comfortable losing. From a legal perspective, crypto investment has few if any of the key safeguards of traditional investment, so buyer beware when it comes to ApeCoin or any other cryptocurrency vehicle.”
For the people with whom ApeCoin resonates, what they’re attracted to might begin with making a significant capital gain quickly but it certainly doesn’t end there. There is a sort of intellectual game that appeals to people such as Maresca. Mastering a rapid learning curve presented by new tokens is exciting, as are new opportunities to push certain crypto verticals forward.
That kind of challenge might be familiar to traditional investors who have never heard of ApeCoin or NFTs. Maybe today’s NFT is what investing in fine art was to another generation’s investors. Maybe ApeCoin is the new Forex trading, which in itself was the new commodities trading. The fundamental idea being that some investors get a rush off being on the ground floor of “what’s new” — even something they don’t at first fully understand.
One important reason why it’s good for all of us to learn about new things such as ApeCoin and non-fungible tokens is because of the fungible nature of investments. The law understands this as well, as highlighted in a National Law Review article this week.
In hypothesizing that these “ground floor” token opportunities exist daily, we live in an era where technology frantically outpaces the law’s ability to keep or catch up. As the Law Review authors opine, some of what’s happening in the token space “might be seen as ground-breaking as if Apple had acquired Microsoft in the 1990’s.”
So while many people will continue to let new cryptocurrency and technology concepts elude them, more and more people literally each week will find things such as BAYC interesting, different, and worthy of their time and attention.
Written by Aron Solomon
Aron Solomon, JD, is the Chief Legal Analyst for Esquire Digital and the Editor of Today’s Esquire. He has taught entrepreneurship at McGill University and the University of Pennsylvania, and was elected to Fastcase 50, recognizing the top 50 legal innovators in the world. Aron has been featured in CBS News, CNBC, USA Today, ESPN, TechCrunch, The Hill, BuzzFeed, Fortune, Venture Beat, The Independent, Fortune China, Yahoo!, ABA Journal, Law.com, The Boston Globe, NewsBreak, and many other leading publications.