NFTs and the new California Gold Rush

The California Gold Rush was a defining moment in American and Californian history. The discovery of gold in California changed the entire landscape of the country’s population as thousands of people flocked to the golden state hoping to strike it rich by panning for gold. As a result, California became the most populated state in the United States and, over a century and a half later, boasts the 5th largest economy in the world. 

Much can be said about the California gold rush and its similarities to the NFT bull run of 2021 which created a frenzy across the internet with people who flocked to the blockchain looking for digital gold. In fact, the similarities are so common that it’s worth taking a closer look at. 

The first summer

Gold was first discovered in a small creek off the American River near Sacramento in the early months of 1848 by James W. Marshall. While the discovery was originally meant to be a secret, word eventually got out and spread across the world that unclaimed gold was hidden in the mountains of California. 

Much like the NFT bull run of 2021, that first summer of 1848 created generational wealth for many of the miners that were the earliest to arrive at the mines. Similarly, many of the traders who exchanged NFTs during the summer of 2021 experienced immense, nearly immediate, wealth, as many projects tried to tap into this unknown market. 

However, the majority of miners didn’t arrive until 1849 when most of the gold had already been dug up, and the rest were stuck in a position where they were not able to profit nearly as much as those who began a year earlier. This is much like the crypto crash of 2022 that caused the NFT market to sink. 

Similarities to the gold rush

Drawing comparisons, we can see that many of the factors that influenced the spread of wealth during the California gold rush are similar to the NFT market.

• The Gold

When NFTs first made their big appearance on the scene in 2021 following Beeple’s auction, the immediate response was that NFTs were valuable. Although many people questioned where the value came from, the common understanding was that they could be exchanged for fiat currency. 

• The Miners

Not to be confused with the mining node computers use to generate cryptocurrencies, the miners during the California gold rush can best be compared to the many different people that began buying and selling NFTs in hope of making large profits. There were many successes and failures which led to a variety of outcomes for each individual during both events. 

• The Shovel Salesmen

It is well known that the people who profited the most during the gold rush were the shop owners who sold the tools necessary for mining. While not every miner found a nugget of gold, they all needed a pan and a shovel which led to massive wealth for local business owners. Levi Strauss, the famous denim jean company, began as one of these businesses when they started selling clothing to prospective miners. 

In our comparison, it is the NFT project team that stood to make the most wealth during the NFT bull run because they were able to capture so much profit from the initial mints and royalties that followed every successful project.

• Mining Companies

Another aspect of the gold rush following the boom in 1848 was how communities were developed through mining companies which attracted new miners to work for them under a salary. 

This allowed the miners to become familiar with each other and gave a common ground as they continued their search for gold, which is similar to the plethora of NFT alpha groups that congregate daily to discuss the most profitable projects happening. 

• Financial Services

One of the biggest businesses to blossom following the gold rush were financial institutions, such as Wells Fargo, which began as one of the primary banking systems that safely transported gold from California across the country. 

In similar fashion, crypto exchange websites such as Binance, Coinbase, and Kraken boomed during the NFT bull run as crypto prices hit all time highs and buyer accounts increased. 

The impact of the gold rush and NFTs

The gold rush was a catalyst for migration to the west coast, specifically California, in the mid-19th century. Although the prospects of arriving in California were extremely dangerous, many overlooked the difficulties and set forward to begin a new life in the golden state. 

While most of the gold in California has since disappeared and is no longer common around the American River, the impacts of the sudden population boom caused California to become a US state with massive business potential. This is where the comparisons to NFTs get most exciting. 

Although the chances of another NFT bull run similar to the summer of 2021 are highly unlikely, the future of web3 couldn’t look any better because of it. The NFT bull run caused crypto to go mainstream. Since that time, countless wallets have been opened by people who had never considered cryptocurrencies in the past, businesses have formed and developed within the web3 industry, and corporations began using blockchains and cryptocurrencies in their business models. 

Populations on the west coast exploded because of the gold rush, and it’s not any different from the NFT bull run in 2021 which has caused users in web3 to expand tremendously. While the recent crypto crash might be a struggle for many to endure, looking back on history tells us that the bigger picture couldn’t be more bullish.