NFTs at the Forefront of the Pseudonym Economy
January 7, 2022

NFTs at the Forefront of the Pseudonym Economy

Pseudonymity is the sine qua non of a decentralized economy. It effectively shields the originators of new ventures in the ecosystem from potential persecution. More largely, decentralization was born from an impulse to enable our own global freedom. It builds an infrastructure to decorrelelate the volatility and power abuses of central authorities from our ability to trade and thrive. That is why we look to pseudonyms and NFT avatar projects to back the identity construct in virtual communities. In this article, we will explore what pseudonyms and NFT avatar projects are and what promise they hold for a decentralized future. Specifically, we will investigate:

  • pseudonyms as social insurance;
  • animated franchises in the creator economy;
  • NFT avatars for the ownership construct;
  • NFT avatar projects’ utility; and
  • pseudonymity for decentralization.

Pseudonyms as Social Insurance

2 to the power of 33 equals 8.6 billion. This means that 33 bits of information are what is necessary to fully anonymize somebody. However, pseudonyms exist on a continuum of anonymity and identifiability. This means that a pseudonym along with other pieces of information—such as those we can find in a Twitter bio—can reveal some percentage of one’s identifiers. For example, if a Twitter account holder discloses that he is a Columbia alumnus, this gives us enough information to reduce the pool of potential individuals he may be. Yet it allows his audience to connect with some portion of his background while protecting him from character assassination. Should a social media mob band together and stain his reputation because of the views he expresses, he would be safe. 

Pseudonyms effectively separate the earning persona from the online persona. Indeed, a person can shield herself from smear campaigns that may affect her career. Notwithstanding, with a pseudonym she would also be subject to a higher level of accountability than if she ran an anonymous account. This is because she would be putting out content under a consistent name and building her standing and follower base over time. Thanks to pseudonyms, just as we use different email addresses or bank accounts for various types of communications or transactions, a forum participant may do the same depending on the context she finds herself in. She would effectively create a fictitious identity around a pseudonym and enjoy limited liability for its demise.

Animated Franchises in the Creator Economy

The market for animated franchises is booming. Former Snap executive John Brennan founded Invisible Universe with an $8-million seed round and backing from Serena Williams and Jennifer Anniston. It is essentially grooming family-friendly franchises with rapid prototyping thanks to real-time social-media feedback. Invisible Universe realized that the lead time to create a franchise averaged half-a-dozen years. Even then, a positive reception by the market was not always guaranteed. Accordingly, the company aimed to leverage the channels where we invest most of our attention (i.e., Instagram, TikTok). It effectively used short-form content in partnership with celebrities to create character IP. In turn, the IP could generate millions in entertainment royalties and merchandise.

Examples of successful social media accounts attributed to fictional characters abound. Growing a following of 125k, 336k, and 3 million fans, @hatsunemiku, @realqaiqai, and @lilmiquela are respectively trail blazers in harnessing social media attention as digitally-constructed personas. This is a testament to the fact that disclosing one’s identity as commonly conceived of is not a necessary condition for users to heed notice. Instead, the common denominator between successful creators is value, be it in entertainment or sound investment advice. Effective marketing know-how in brand anthropomorphization can help design personas with consistent personality traits. In turn, users suspend disbelief and evaluate any account chiefly by the quality of its content. This leads to vibrant virtual communities and an opportunity to monetize content for the most audible nodes in the network.

NFT Avatars for the Ownership Construct

NFT avatars are non-fungible tokens that bestow ownership of digital, visual-art assets upon their buyers. These are singular, static images meant chiefly for use as profile pictures on social media platforms. In essence, an NFT avatar is a token conferring proprietorship over an asset with negligible reproducibility constraints. For skeptics, it is inconceivable to spend up to $7 million on such a good. It would arguably be easier than falling off a log to make a right-click on a JPG file and select “Duplicate” or “Save Image As.” However, in a world with a limitless potential to expand virtually, the ownership construct can act as a powerful social demarcator in the metaverse. In the movie The Matrix, Agent Smith, the AI software, reveals to Neo:

“Did you know that the first Matrix was designed to be a perfect human world? Where none suffered, where everyone would be happy. It was a disaster. No one would accept the program. Entire crops were lost. Some believed that we lacked the programming language to describe your perfect world. But I believe that as a species, human beings define their reality through misery and suffering. The perfect world was a dream that your primitive cerebrum kept trying to wake up from. Which is why the Matrix was redesigned to this, the peak of your civilization.”

The scarcity of resources is part and parcel of the makeup of our social fabric. Animals defend territories, and so do humans except that they enjoy the advantage of language. With the power of storytelling and the creation of meaning to rally crowds under collective identities, we surpassed kinship. We organized ourselves by the millions to achieve common goals. Nonetheless, no social structure that aimed to suppress private ownership as experimented in the 20th-century Soviet Union has ever succeeded. This is because we, humans, like to strive. If there is no higher reality to work towards, we lose our spark. An acceptable level of economic inequality in a free society is healthy. That is why NFT avatars will play an indispensable role in backing the ownership construct in the metaverse.

NFT Avatar Projects’ Utility

A sample highly successful NFT avatar projects by sales volume is as follows:

  • CryptoPunks: CryptoPunks are pixelated characters, each unique and numbered from 1 to 10,000 in the blockchain. They are inspired by the punk movement that originated in 1970s London with such ambassadors as DaftPunk.  To date, it has been the most successful NFT avatar project. The project counts celebrities such as Jay-Z, Steve Aoki, and Logan Paul as NFT owners. A two-person team developed the venture in the American studio Larva Labs, also the author of the Meebits NFT avatar project. While every CryptoPunk is unique, some traits are rarer than others. The digital scarcity inherent in the design of NFTs makes these avatars highly sought after. On the twittersphere, they are a symbol of status.
  • Bored Ape Yacht Club (BAYC): 10,000 Bored Ape NFTs have been circulated in the blockchain. This NFT avatar project also gives access to members-only benefits. They can be availed of by connecting one’s wallet to the project’s official website. One of them gives access to a collaborative graffiti board called THE BATHROOM. Furthermore, BAYC shared a roadmap with its community. It details witty, eccentric incentives for NFT aficionados to collectively reach. At the 20 percent sales milestone, the roadmap notes: “We release the Caged Apes. 5 Caged Apes (tokens held back from the sale) are airdropped to random Apeholders.” A notable celebrity purchase includes Stephen Curry’s acquisition of a Bored Ape for 55 ETH, equivalent to $180,000.

NFT avatar projects make pictures typically featuring head and shoulders that can vary by means of accessories. The amount of possible NFTs in a project is equal to the product of the number of available accessories in various places such as the mouth, head, and ears. An NFT avatar project will lead the buyer to customize their NFT and purchase it in the blockchain such that they are the sole owner of it. They can then use it as their profile picture on social media or resell at a higher price when the demand curve shifts to the right. There are multiple uses to this digital good in the crypto-community:

  • Standing out: As an NFT avatar owner, buyers stand out as committed decentralization enablers due to their demonstrated financial commitment. Moreover, ownership demonstrates early adoption if the NFT avatar was purchased at a competitive price earlier on. Finally, the collectible projects prestige for the owner as one of the few lucky holders of a popular, limited-supply artwork.
  • Fitting in: Some NFT avatars come with perks such as belonging to a club that gives access to exclusive networking events. On social networks, they immediately signal participation in the decentralization conversation. In effect, they play the role of fashion items in the physical world as to the assertion of status in the public arena.
  • Opening worlds: NFT avatars are increasingly being backed by other assets such as royalties for secondary sales. Some give entry rights to play-to-earn gaming platforms such as with NFT Heroes. Effectively, more and more NFT avatars work to enable platform integration in the metaverse. They aim to be usable across an NFT ecosystem. While at present they are used primarily as profile pictures, they could be used as characters in the gaming world, tuxedos in VR conference rooms, or attire in a metaverse concert requiring dress-code tickets.

Identification through Sensorial Modalities

Decentralized digital identity calls for more than the visual identity being rendered unique in the blockchain. We make sense of the world with our sense perception. That is why it is handy to identify individuals with a sound and its textual representation along with an image. Our other senses, namely touch, smell, and taste on the other hand do not allow for precise enough differentiation for nearly 8 billion people. In the metaverse, digital identity will be secured through NFT avatars and pseudonyms that are discrete and unrepeatable through the blockchain.

Pseudonymity for Decentralization 

Two criteria are necessary to enable successful decentralized networks. The first one is the lack of an identifiable central authority. The second is for the network itself to be decentralized. This is fundamental to any decentralized autonomous organization (DAO). Effectively, this would counter the persecution of any DAO’s founders and enable the larger decentralized ecosystem to thrive. For example, Satoshi Nakamoto being a pseudonym, no authority could punish a responsible party for the creation of the cryptocurrency Bitcoin. 

With NFT avatars, agents in the system can have a unique visual appearance that they provably own. In case any participant unwarrantedly uses another’s avatar, the community has a tamper-proof way to immediately flag it. Accordingly, NFT-avatar owners can navigate community interactions with a visual identity. Most importantly, this visual identity can in no way enable the identification of the individual behind it. Since the legal framework behind the blockchain ecosystem is hardly nascent, community members look to pseudonymity to protect themselves from regulatory uncertainty.

Closing Remarks

At this time, the need for NFT avatars is at an all-time high given the extraordinary sales volume that relevant marketplaces have undergone in the summer of 2021. In essence, NFT avatars are visual pseudonyms because the blockchain publicly references the collectible’s transaction upon purchase. In effect, other transactions in the buyer’s wallet can in some way lead to identifying her. Although it is nearly impossible to do so without her address, the decentralized, public nature of the transaction makes NFT avatars analogous to pseudonyms. They are not fully anonymized, but the degree of pseudonymity in this case is so high that the identification risk is statistically negligible. 

On the other hand, the need for NFT-based textual pseudonyms has not yet arisen in as vigorous a way. That is likely because any one platform will not anyway allow two identical handles within it. When the metaverse evolves from being fragmented to being integrated, it is conceivable that NFT textual pseudonyms will trade eagerly in marketplaces. Users may then be able to purchase pseudonyms as they do domain names. Because the various virtual worlds will communicate with each other and become part of a single meta-platform, NFT usernames may then become far more commonplace.


Bored Ape Yacht Club. (2021, August 28). Welcome to the Bored Ape Yacht Club. Retrieved from BAYC:

Cryptoslam. (2021, August 28). NFT Collectible Rankings by Sales Volume (24 hours). Retrieved from CryptoSlam!:

Kahan, D. (2021, July 30). This startup is building the Pixar of the internet one TikTok at a time. Retrieved from Fast Company:

Khomenko, D. (2021, August 27). This startup is building the Pixar of the internet one TikTok at a time. Retrieved from Fast Company:

Laporte, N. (2021, August 23). This startup is building the Pixar of the internet one TikTok at a time. Retrieved from Fast Company:

Srinivasan, B. (2019, November 14). The Pseudonymous Economy. Retrieved from San Francisco Blockchain Week 2019:

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