The Pattern Repeats
Bad people do bad things. I don't think anyone could argue with that. But if that's the reason bad things happen, we're helplessly waiting for the next bad person to do the next bad thing. What if there was a better question?
Scandal erupts. Villains are identified and punished. Everyone celebrates the system working as intended.
But that's only half the story.
The other half is what the system was doing before the collapse. What structural conditions made the outcome nearly unavoidable. Why the same structures keep appearing in different industries, different eras, and different organizations while we keep reaching for the same human explanations.
The Pattern Repeats doesn't exonerate the actors. The damage was real and the accountability was earned. It asks the harder question. What made this rational when it should have been unthinkable. And what does that tell us about where it's happening right now. The case studies are simplified to focus on the structure, the consequences are not.
Bored of Apes
This edition: when the music stops.
You've spent your life understanding what creates value and what's worth investing in. A brand new asset class just hit the market. No matter what you do, the numbers just don't make logical sense to you.
But everyone around you is talking about this as an innovation that's just as big if not bigger than the internet. You start to ask yourself if everyone else gets it and I don't, am I the issue here? Someone just bought in and then doubled their money nearly overnight.
Do you trust your logic and sit out or accept that maybe this is real but just beyond your ability to understand?
A Non-Fungible Token, or NFT, is a unique digital reference point that tracks who owns a specific digital file. That file could be an image, a video, a piece of music, or almost anything else that exists in digital form.
The process is simple. Someone creates a digital image. They attach an NFT to it, establishing a recorded owner. You pay for that NFT and the ledger now says that you officially own that image.
However, you don't own the image exclusively. Anyone can right click it and save an identical copy to their desktop in seconds. The image itself is infinitely reproducible. What you own is the ledger entry. A digital certificate that says your name is next to this particular file in this particular record.
At the peak of the market people were paying millions of dollars for that certificate.
The question the architecture never wanted you to ask out loud was if anyone could copy it indefinitely, what made it worth anything at all?
What We Were Told It Was
For decades, the idea that digital could replace physical felt laughable to nearly everyone who heard it.
Why would anyone pay for a song on their computer when they could buy the CD? Why would anyone choose a digital book over the experience of holding a physical one? Why would anyone stream a movie when they could own it on a shelf?
The people asking those questions weren't stupid. They were applying reasonable logic to a world that was rapidly changing underneath their feet. And they were wrong every single time.
Music went digital and an industry transformed overnight. Movies and television followed. Books, courses, and knowledge of every kind found a new home on screens rather than shelves. In each case the early skeptics were left behind and the early adopters built fortunes on the transition.
The pattern was consistent enough and the track record was long enough that by the time NFTs arrived, a compelling argument was already waiting for them.
Art had always existed in physical form. Paintings on walls. Sculptures in galleries. Photographs in frames. But music had always existed in physical form too, until it didn't. The sequence that had transformed every other creative medium was pointing directly at art as the next logical step.
If you had been wrong about music, wrong about film, wrong about books, how confident should you really be that you were right about this?
That question is where the structure found its foothold.
The Assumption That Couldn't Hold
But the analogy had an error running through it that the enthusiasm of the moment made nearly invisible.
Digital art was being presented as the next medium to make the same leap that music, film, and books had already made. The argument was historically grounded and the pattern it pointed to was real. What it didn't account for was that every previous transition had moved toward abundance. More access for more people at lower cost. NFTs were attempting something entirely different. Creating scarcity and asset value.
The same historical record. An entirely different economic proposition buried inside it.
Music, movies, and books didn't go digital as a way to invest your money. They went digital as an easier way to buy something you wanted. Nobody bought a Spotify subscription expecting to sell it at ten times the price in three years. Nobody purchased a digital book thinking it would rise in value while sitting in their library app. The value proposition in every previous transition was access and convenience. More of what you already loved, available faster, at lower cost, on any device you owned.
The NFT market was built on an entirely different proposition. Not access. Not convenience. Appreciation. Store of value. An asset class that would grow in value the way a Van Gogh or a Warhol grew in value. The argument borrowed the legitimacy of the digital transition and quietly replaced its value proposition with something the transition had never actually demonstrated.
But that wasn't the only flaw. The physical scarcity that gives famous art its value is real and irreversible. There is one Starry Night. There will only ever be one. The entire architecture of fine art valuation rests on that foundation. An NFT could establish a recorded owner but it couldn't establish the one thing that made the famous art comparison meaningful. The image was still able to be copied and stored by anyone the moment after you paid millions for the right to say it was yours.
The argument felt airtight from inside the momentum. The gaps were only visible to anyone who stopped long enough to look.
The Emperor's New Portfolio
The gaps in the argument were visible. But the momentum of the moment made looking for them feel like the wrong instinct.
At the retail level, NFTs had developed their own language, their own community, and their own set of signals for who understood what was happening and who didn't. Skepticism wasn't treated as reasonable due diligence. It was treated as evidence that you hadn't done the work to understand it yet. The burden of proof had been quietly reversed. You weren't evaluating an asset class. You were proving you were capable of understanding one.
When the person next to you just doubled their money overnight the argument that the logic doesn't hold becomes very difficult to make out loud.
But the more consequential version of this dynamic wasn't happening at the retail level. It was happening in boardrooms and investment committees at institutions that should have had every tool available to catch it.
Some senior investors and fund managers who couldn't follow the logic weren't reaching the same conclusion you might expect. They weren't treating their own confusion as a signal worth following. They were treating it as a generational limitation. A gap in their own fluency that required younger, more digitally native eyes to bridge. The inability to understand became a reason to delegate rather than a reason to pause.
So the people with the pattern recognition to identify the architectural flaw were removed from the evaluation. And the people closest to the culture were handed the due diligence function without the historical framework to perform it.
Institutional investors strongest warning signal was their own confusion. The structure converted that signal into a liability and handed the decision to someone else.
The emperor had no clothes. But questioning the wardrobe had become evidence that you were too out of the loop to understand fashion.
The Carousel Stops
The carousel ran as long as new riders kept getting on.
NFTs required a continuous flow of new buyers willing to pay more than the last buyer had paid. That's not unique to NFTs. It's the architecture of any market where the asset produces no income and the only return available is a higher price from the next participant. It works until it doesn't. And when it stops working it stops suddenly.
In 2021 the market peaked. Trading volume reached billions of dollars monthly. Profile pictures sold for hundreds of thousands of dollars. Established auction houses that had spent centuries trading physical art opened NFT departments. The momentum felt self-sustaining.
It wasn't.
When buyer enthusiasm began to slow the architecture had no floor under it. A share of stock has an underlying business. A piece of real estate generates rent. A Van Gogh produces cultural and institutional value that exists independent of what the next buyer will pay. An NFT certificate for an infinitely reproducible image produces nothing except the expectation of a higher price from someone who hasn't bought yet.
When that expectation broke the correction was swift and nearly total. Trading volume collapsed from $4 billion to around $800 million. But the volume drop understates the real damage. An independent review later estimated that roughly 95% of NFTs had little to no remaining monetary value. The correction wasn’t a minor adjustment. It was the collapse of the underlying premise.
The institutional NFT departments that had been stood up to bridge the generational gap were quietly dismantled. The institutions were left holding positions they never should have entered and now could never exit.
Justin Bieber paid $1.3 million for a Bored Ape NFT at the peak of the market. Current estimates put its value somewhere between $12,000 and $70,000 depending on the day. A robot samurai NFT that sold for $1.8 million at the peak is now worth under $3,000. Not because the images changed. Because the next buyer never came.
The people who had gotten in earliest and loudest got out first. The people who had followed the momentum in closest to the peak absorbed the collapse.
The Weakest Parts Of Both
They built a narrative around the value proposition of famous art combined with the consumption model of music without realizing they were taking the weakest parts of both.
Famous art derives its value from physical scarcity that cannot be replicated. Digital music derives its value from frictionless access and availability. NFTs delivered neither. The certificate couldn't create true scarcity. The image couldn't create true exclusivity. The architecture borrowed from two legitimate frameworks and inherited the limitations of each without capturing what made either one work.
The future felt inevitable from inside the momentum. The gaps were obvious the moment the carousel stopped.
What are you currently invested in, financially or otherwise, where the value proposition is borrowed from two successful models without inheriting what made either one work?
Where has your own confusion been treated as a personal limitation rather than a signal worth following?
What carousel are you on that requires the next participant to be worth anything at all?