(Not financial advice. I didn’t realize until after finishing this article that Mirror doesn’t have spell check. Please forgive errors. Do a search for “TLDR” to skip to the recap.)

In this article, I will argue that Rare Pepe NFTs will become a currency with the scarcity and security of Bitcoin, but the dankness of a frog jpeg.

I know that this article will use a definition of “currency” that will annoy big brained stable coin people. In this article, I will look at Rare Pepes as a whole, focusing on their cumulative value to the NFT space. If this value holds and NFT adoption grows, then each card should stabalize around a preset denomination based on its scarcity, historic relevence and perceived dankness (which is an unknown that throws an admitted wrench in my thesis).

I make this argument because it’s a fun thought exercise and also because maybe it’ll be stimulating for jpeg lovers. (Think of the trickle down to your Lunatic Llamas and Krazy Koala pfps bros!) And also, I own a bunch of Rare Pepe jpegs, just a disclaimer of my bias.

But before I get started on the jpeg bullishness, allow me to explain why I believe people like to buy Bitcoin and why an NFT collection could become a Bitcoin adjacent asset.

We like Bitcoin because it is more fungible than gold. Sure, it’s more secure and it’s easier to store (assuming you have a keen eye for phishing lures) but mainly, when broken down to their purest forms, Bitcoin is more fungible than gold bricks.

We need cash, we earn cash, we save cash, but we also need to diversify out of cash. Today’s world proves this more than ever. Sure, stonks are a great hedge, but what happens when the economy recedes and printing slows?

Earnings look a bit less bullish, p/e ratios go to shit and cash to allocate to risky assets (tech stocks are the OG shitcoin) becomes more scarce. So stonks go down. Maybe even real estate number go down too (due to lower wages/employment during the recession and/or rising mortgage rates to combat the printing inflation). So, stonks aren’t safe and real estate isn’t (as) safe. So, what do?

Hmmm… Cash losing value and stonks are a bit risky. Where to turn? Pepe ponders…

Well, in the past you could just park your cash in bonds or CDs or something of that sort. In exchange, the government would pay you interest that typically out paces inflation.

But now, not so much. With geopolitical drama and pandemic drama, the cost of living is entirely up in the air. I recently learned from Arthur Hayes (read his articles pls) that your real cost of living can be calculated by the cost of oil. If the cost of oil is up 20% in USD value and it stays up there for an extended period of time, then your cost of living is likely up 20%.

Forget whatever the Fed tells you. Everything requires oil. We need oil to plant and harvest grain. Grain feeds cattle, grain makes bread. We need oil to ship meat, we need oil to ship bread. We need oil to ship our body to work, we need oil to ship satelites to space which provide us the internet for our work. We even need oil to ship oil! It all trickles down from oil. (Is oil starting to look like a weird word to you? Oil.)

Oil prices were $62 per barrel in December of 2021. Today, on March 3rd, 2022 the price of oil is $112. Inflation at the pump is so bad in the USA that they’re still buying hundreds of barrels of oil from Russia every single day, even though they’ve locked down every other sector in Russia due to the war in Ukraine.

Does locking your funds in veUSA for 2, 10 or 30 years sound good to you? No? But bro! Come on bro, please! They’re paying a whopping 2.27% if you lock for 30 years bro! It’s a good deal, seriously bro.

So, bonds aren’t going to keep pace with inflation. Stonks are risky with a possible recession on the horizon.

Recession? What recession? Covid is over ser.

Well, the Fed is claiming that it’ll raise rates to combat inflation. Who knows if they keep their word. But if they do, let’s look at some figures.

A hike of 4-5% popped the dotcom bubble. A hike of 2-3% popped the real estate bubble in 2008. And finally, a mere hike of 1% in rates sent the USA into a mini-recession in 2018/2019 before the Fed rolled rates back down toward 0. (I’m spewing these figures from memory, pulled from the recent Arthur Hayes article on rates/inflation. Read it.)

Notice how those rate hike numbers started high and wound up low? The USA economy is too used to free money! Tiny changes in rates create tremendous ripple effects. (Again, read the Arthur articles. Pepe Monster is a macro larp, Mr. Hayes isn’t.)

If the Fed is serious about tackling inflation, how much will they raise rates? How much will they cut printing? How much til a new bubble pops? What bubble will it be? Keep in mind that it took 10 years for the Nasdaq to regain its ATH after the tech bubble and it took most markets 5-10 years to regain ATH after the 2008 real estate bubble.

But Pepe Monster ser, what about Bitcoin?

Well, bitcoin pumped hard throughout all this inflation, so logic stands that it might also see downside risk as liquidity leaves the markets. Gold didn’t pump at all, so it’s a decent bet. But can you trust paper gold to hold value? Is paper gold censorship resistant? Where will you buy/store/sell your physical gold? Are zoomers ever going to get behind gold for it to be a long or even mid-term play?

So, where we parking our cash fam?

Park it in deeze sweet cheeks.

Seriously though. Rare Pepes offer an incredible blend of security (they were minted on CounterParty, which is a protocol built on top of the Bitcoin blockchain) and fungibility.

Fungibility? Really? Who buys CounterParty NFTs?

Well, that’s the beauty of RarePepes. Like Bitcoin, they’ve been wrapped onto multiple blockchains. Mainly Polygon and Ethereum. The beauty of the Pepe wrapper (Emblem Vaults), is that if Ethereum or Polygon fails for some reason, you can always access your NFT on CounterParty. Pepes offer layers on layers of security and fungibility. (Edit: If there’s some catastrophic error on Polygon and no transactions can be sent, then unwrapping your NFT from the Emblem Vault would prove impossible.)

Obviously, the liquidity available to people using Pepe as a Store of Value is dramatically less than the liquidity available to Bitcoin users. However, my thesis is that the different Pepe cards with their differing rarity/scarcity and historical significance will slowly push each card into a default denomination. So then you wouldn’t necessarily need to find a buyer for your Pepe when you need liquidity, you could just send a Pepe to someone in exchange for their good/service.

Now, here’s the part that sets Rare Pepes apart from other collections. Beside their historic value (minted in 2016, which is very early in the NFT adoption phase, before CryptoPunks and EtherRocks even), they also have interesting “tokenomics”. But first, check out this cool chart about historic NFTs before I continue my ramble.

Alright, so I know I’m not using the phrase “tokenomics” in the traditional sense here. Rare Pepes don’t have an erc-20 shitcoin (afaik). Instead, they have many different cards spread out over many different series. Some of these cards are 1 of 100, some are 1 of 69, some are 1 of 420 and others are 1 of 69,420,000 (probably). Some of these cards were minted in 2016, some in 2017 and some were minted in 2018. The point is, the rarity of cards differ dramatically and historical significance differs as well. (2016 mint = before CryptoPunks, 2018 mint = after CryptoPunks.)

In my mind, Rare Pepe cards could become a currency of sorts.

Cards with 1 of 1,000,000,000 issuance become like a dollar bill. Cards with 1 of 10,000 issuance becomes like a $100 bill. Cards with 1 of 100 issuance will be like a $10,000 bill.

(Note: there’s around 150 different cards with 100 or less issuance. Some of these sets are burned/lost forever. Some have tiny supply like just 10, which obviously will thus carry heavier currency weight. Also note that I’m throwing out completely random dollar amounts here. Market will decide. I’m thinking of this in terms of increments that the market needs, coupled with gas prices. So maybe the $1 asset class will be more like .1e, the $100 asset class will be like .5e to 1e and the above referenced $10,000 asset class will be more like 5-10e. I think it depends on ETH value/adoption and how much we use ETH in our daily lives. Is ETH just for NFTs and paying gas fees or can we begin buying IRL stuff with it? Can we start paying for various world wide web/metaverse services with ETH? A lot of questions here surrounding Pepe denominations.)

[TLDR]
So anyway, there’s my thesis for an NFT based currency that doubles as an inflation hedge.

Over the next decade, markets could be rocky and Bitcoin will be volatile. Rare Pepes hold historical value within a monumental new era of arts and entertainment (The NFT Era). They’re secure (minted on your Papa’s Bitcoin blockchain). They’re fungible (wrapped onto many different blockchains and traded on Opensea, et al). The collection consists of many different variations in rarity, scarcity and historical significance, which allows for denomination of currency.

Thus, my thesis is that Rare Pepes will become an internet currency that you might not even need to buy/sell. One day, you might repay a friend for lunch with a 1 of 696,296,941 PepeCash card. Or you might buy a dank Pepe themed yacht with a 1 of 100 PepeAir NFT.

Obviously, all of this is just a thesis and not financial advice. I own Rare Pepes. Liquidity is king, so we’ll see what the market thinks in the coming years/decades.

With that, I leave you with a few beautiful pieces from the “Fine Art Pepe” set.

I just realized I can do an NFT insert link, so here’s PepeAir:

Actually no, this site doesn’t support Opensea. Based.

Here’s the old school link to PepeAir: