Degens: The high-risk crypto traders making millions from nothing (2024)

19January 2022

On January 1, 2022, a 22-year-old student from Indonesia minted his first NFT artwork on OpenSea, the world’s largest marketplace for crypto collectibles. Named Ghozali Ghozalu, he had spent the last four years taking a picture of himself (almost) every day for the last four years, and now he was ready to cash in on the long-term project.

Over the next 48 hours, Ghozali minted hundreds more items, collecting his 933 selfies under the name Ghozali Everyday (a possible reference to Beeple’s $69 million digital artwork Everydays). The images, which date back to his teenage years, were listed for 0.001 ETH (or just over $3) each.

As you’d expect, the images took a few days to sell out — they’re just selfies after all, showing an 18-year-old turn into a 22-year-old against various brighty-coloured backgrounds. In some, he sits in a gaming chair with headphones on (these are now considered rare, like shiny collector’s cards), and in another he sits with his sleeve rolled up, having apparently received a coronavirus vaccine.

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However, the images listed by Ghozali did eventually sell out, and thanks to a bunch of high-risk crypto traders, or degens, their price has now gone through the roof. As listed on OpenSea, the floor price — AKA the entry point for new buyers — is 0.29 ETH as of writing, which translates to around $900. The collection’s total traded volume stands at 374 ETH (more than $1.1 million).

How did this happen? Well, the success of many NFTs seems pretty arbitrary, based on nothing more than manufactured hype and speculation (see also: the art world at large). Can the same be said of the Ghozali Everyday selfies? Yes and no — and that’s where the degens come in.

WHAT IS A DEGEN, ANYWAY?

The term ‘degen’ can be traced back to sports betting. Shorthand for ‘degenerate’, it’s generally used as an insult, referring to gamblers with a tendency to stake large amounts of cash without the knowledge or experience to back it up. In the ever-growing crypto space, however, traders have started to wear the label with a sense of pride.

In fact, whole communities of investors willing to risk all of their money have risen around the term, alongside other esoteric references and ironic imagery (some of which have come back to bite groups such as Bored Ape Yacht Club in recent months).

Essentially though, the definition is the same as the one conventionally used offline. You could be called a ‘degen’ if you often buy (or ‘ape’) into a project without properly doing your own research (‘DYOR’). Yes, that is a lot of jargon, and no, it doesn’t seem to serve any useful purpose.

WHAT DOES THAT HAVE TO DO WITH A TEENAGER’S SELFIES?

Ghozali’s dedication to his photography project is pretty impressive, even if the photos themselves aren’t particularly stunning. However, it probably wouldn’t have been picked up by NFT enthusiasts if some local degens hadn’t swooped in to help out.

On January 12, days after Ghozali listed his first NFTs, the collection was promoted by the Indonesian streetwear entrepreneur — and self-declared degen — Jeffry ‘Jejouw’ Jouw. After Ghozali invited him to view the collection in a Twitter space, Jejouw himself bought “like nine” for around $3 each, he tells Dazed: “And after that I’m hyping it up and making memes.”

This, it seems, is a big part of the degen strategy (if they can be said to have a strategy at all). Instead of doing the research to confirm that the digital asset they’re buying is a good investment beforehand, they dive in headlong – tempted in by memeability, or a shiny new profile picture to use on social media — and try to create a buzz to raise its value after the fact.

As well as making plenty of noise in an effort to boost the prize of Ghozali’s NFTs, Jejouw inspired another Indonesian celebrity, the chef (and “part-time degen”) Arnold Poernomo, to buy into the project. Poernomo quickly snapped up some of the NFTs, and got to rallying his own community, posting a slew of memes that featured edits of Ghozali’s face. The idea was to “sweep the floor”, or buy up all of the lowest-price NFTs to raise the overall floor price.

“Degen isn’t a community, degen is a way of life” — Jeffry Jouw

IS THIS BEGINNING TO SOUND LIKE A PONZI SCHEME?

Trading NFTs – and particularly the short-term, high-risk flipping of degens – often hinges on getting as many people involved as possible, boosting the price of the latest meme currency or JPEG collection to later dump it for a massive profit. However, in this hyper-competitive space, where the rules are being rewritten on a daily basis, someone pretty much always has to lose out.

“This space has changed a lot of people’s life,” writes Poernomo in a January 12 tweet promoting Ghozali Everyday. “If it can change you… we can change his life too.” But what about the degens who risk it all on less successful projects, often buying in due to FOMO rather than a genuine interest in the art, and don’t get to see any of the profits? What about the artworks that don’t generate enough interest to generate any profits at all?

Jejouw remains focused on the upside, saying that his friends who work in the Indonesian stock market used to laugh at him for spending “100-200K” on JPEGs, but now he’s flaunting massive returns and “laughing at them”. Other friends, he says, started with 1 ETH and earned enough to buy their own house within six months.

Needless to say, all of these claims need to be taken with a large pinch of salt. Even outside of the crypto space, many of its supporters can’t seem to stop selling. “I just see Ghozali and believe he will become a superstar,” adds Jejouw, echoing the hyperbolic language of blue chip galleries. “He should be a Nobel Prize winner.”

Elsewhere, he details his own personal journey in an effort to play down the risks. “I started with 7 ETH in 2021,” he says. “If I lose everything it only cost me 7 ETH and some expensive JPEGs.” This, he says, is the: “Degen lifestyle.”

EXPERTS WARN THAT NFT COLLECTING IS A RISKY GAME

Thanks to the decentralised, largely-unregulated nature of the market, there are some “really bad” crypto tokens out there, as Nadya Ivanova, COO of market research firm L’Atelier BNP Paribas told Business Insider last year. A quick scroll through OpenSea’s listings is enough to confirm that the same goes for NFT art.

Already, Ghozali’s success has spawned several imitation accounts and low-quality rip-offs, which is just one example of the pitfalls buyers have to look out for. Like the physical art market, Ivanova adds, the virtual art market is “usually a space for the knowledgeable”. Even then, the legal permissions aren’t always clear, like in the $3 million sale of a Dune book earlier this month, which saw crypto group Spice DAO fundamentally misunderstand the reproduction rights.

Obviously, there’s a lot of money to be made for those that do have this knowledge, but in doing so they often have to take a whole host of younger, less knowledgeable traders along for the ride. These people don’t only risk aping in or dumping assets at the wrong time, either; in their need to beat others to the punch, they’re also more vulnerable to scams or sketchy practices such as wash trading.

Does that mean that more experienced influencers such as Jejouw would warn younger traders, with less money to fall back on, to stay away from the degen community? “Hell no,” he says, adding: “Degen isn’t a community, degen is a way of life.” Of course, it’s probably best to DYOR before actually getting involved.