I always knew Galapagos syndrome was not a myth, but according to my past economics science classes, this modern business pattern couldn’t apply easily to a decentralized and intangible environment. Things are evolving. Over the last decades, Japanese emergent creative scenes have been unique in many fields, including games, fashion, music, and more. Japanese creators have been offering in-house exclusive products that often embrace the local culture, unfolding narratives that can sometimes be tricky for outsiders to understand. The Web3 space is no exception.

Of course, numerous Western projects have significant fan bases and holders throughout the country – especially blue-chip NFT and PFP collections. RTFKT is one of these successes. By merging collectibles, gaming, fashion, and sneaker culture in a digital, screen-based environment, their creations have become favorites among Japanese cryptophiles. And when iconic japanese artist Murakami teamed up with the metaverse brand for their CloneX collaboration, it made waves. Still, Japanese creators launch new on-chain initiatives and Web3 projects daily, with many sharing specificities and visions deeply rooted in the domestic culture. This aspect makes the local crypto space unique and exciting, as it is complex to decipher correctly without cultural knowledge.

By hanging around Tokyo and being connected with creatives, it’s easy to witness the gap between the local Web3 and cryptoart scenes within the megapolis versus outside the country. In addition to the profusion of the anime-esque aesthetic, the almost-weekly NFT events, some of them sharing similarities with legitimate otaku gatherings, and of course, the PFP sticker exchange (which is taking over the business card ritual within the Web3 community), the increasing crypto frenzy seems to have finally made it to the mainstream. Today in Tokyo, you can stumble across normies talking Web3 at the 7-Eleven, or even enjoy an NFT-centric TV J-drama from the comfort of your kotatsu.    

Despite this, the adoption of NFTs has been relatively slow in Japan. According to Ren Stern, founder of virtual goods brand Senspace, we have yet to reach the peak of the hype, which is an excellent opportunity to skip the short-term profit-focused cycle, or at least shrink it, and jump straight to the long-term value-driven one. But with the love for limited collectibles, brand collaborations, a thirst for new trends and tech, and values centered on community and wellness, all the lights have turned green. The conditions have been met to shape a one-of-a-kind and flourishing Web3 space. Although let’s make it clear: visual artists paved the path.

If pop-culture driven projects and mainstream on-chain content have taken over the current Japanese crypto space, visual artists have led the way, being fairly represented since the late 2020 NFT boom. Some Japan-based creative minds like Kazuhiro Aihara, Kaoru Tanaka, mae, and Saeko Ehara, have been exploring smart contract magic, contributing to the space with their dynamic psychedelic visuals, pixel art, or generative art long before the digital tokens went viral throughout the archipelago.

While old-school work ethics (including strict business practices, lack of transparency, low flexibility, and slow decision-making) and Japan-localized freelance gigs were quite the norm, the Web3 space expanded possibilities for artists and creators to navigate in a more fluid environment. “I have been working in the entertainment industry making visuals,” Saeko Ehara told me when I asked her how NFTs are a game changer. “Right after I started minting, I connected to the online community and got many opportunities to showcase my work worldwide. NFTs erased the borders and canceled our isolation,” she said, adding that love and respect have been her watchwords while digging into the cryptoart space. Many will say that opportunities, globalization, and transcendence are similar to what happened in other locations around the globe, which is true. However, the whole pattern is slightly different here.

Visual artists kicked off the crypto creative movement in Japan. They opened the door and accelerated acceptance and understanding, explored the space alone and quietly for long months. Indeed, it took until early 2022 for most of the domestic Web3-powered communities, PFP projects, and branded content initiatives to emerge, instead of growing along with art-related creations, as it happened worldwide. During that incubation period, project initiators had been familiarizing themselves with the space. They watched, learned, and adjusted their future strategies to unveil mature projects that had been slow-cooking for months. This unrushed and cautious move, sticking to Japanese values like ganbaru (頑張る ~ effort) and gaman (我慢 ~ enduring), is the antithesis of many hyped pump & dump, accelerated projects as seen in the West. The resulting digital collections, anime-inspired assets, and on-chain projects have been drawing a dynamic and polished crypto landscape, pushed by limitless devotion and a collection culture without any equal in the world.

Scarcity has always been a big deal in Japan. Not only Supreme or Nike’s weekly drops or special collab releases, but almost everything limited in time or edition may grab the attention of its devoted community and can induce endless lineups. “I believe that the Japanese collector culture has now become a prominent culture in the world, and I am sure that NFTs will be essential in the development of this culture,” Japanese virtual human Imma explained to me when I asked about her view on this. “However, since the collection culture itself is already evolving in every industry, I feel that NFT is not the only mainstream and evolutionary force,” she added. “Rather than creating a large number of contents with the sole intention of making something collectible, the creators should focus on the value of the content they are creating,” she concluded, hinting at the collecting trend fueling consumerism. “I think the content comes first, and one way to expand the content is collecting.” 

Gashapon (ガシャポン) can be another great example that highlights how collectibles are ingrained in Japanese culture. These vending machine capsule toys have been popular among hardcore collectors and casual fans — adults and children alike — since the 1960s. Non-fungible collectibles are the digital era’s version and their extension within the metaverse. From a long-term perspective, because the Japanese culture of collecting runs deeper than trends, NFTs will allow tons of new possibilities as long as the concept of rarity and ownership habits are a thing.

Beyond the Gatcha-Gacha madness, anime, games, VTubers, and many more subcultures are essential add-ons to the Japanese crypto creative space. Many of these otaku-flavored Web3 projects have been staying local by choice or just because non-Japanese people are not ready for them. Still, some have reached the world, contributing to building a legacy and exporting a nation’s cultural heritage that Japan can be proud of. 

Shinsei Galverse is the best example among these success stories, being the first Japanese Web3 project to break out outside the country. “Before Galverse, PFP projects were strange phenomena in a distant land. Now big companies and IP holders are creating content to follow in our project footsteps,” Galverse’s creative director and co-founder Emi Kusano explained to me. “We feel lucky to have unlocked something, and I would like this project to continue being an example in the future.” Ranked first on OpenSea during a couple of days right after its release last year, the Showa-era anime IP and NFT project proves that through otaku culture, building a profit-disinterested and passionate global community is something possible. “Many people buy NFTs for speculative purposes, but I think lots of local Galverse holders are part of the project because they enjoy the community,” Galverse’s artist, animator, and co-founder Ayaka Ohira added. “In Japan, there is a culture of secondary creation, such as Comiket culture, and a culture of Oshikatsu (推し活 ~ act of supporting or cheering on something or someone you really like), and I can feel these vibes in the Web3 space.”

Finally, VTubers also have a say in this vibrant space. Of course, you can find them from all over the world, but they are quite big in Japan, and top accounts can rake in millions of dollars a year. They have brought a niche subculture to a thriving industry while steadily becoming creative builders in Web3.

Indeed, a major VSinger agency called KAMITSUBAKI STUDIO has begun crowdfunding with blockchain technology. According to metaverse-based Virtual Singer Edo Lena, this is the first step toward merging the VTuber community and the Web3 one. “I have been active as an individual VSinger for a few years. Still, I expect this culture to spread globally by connecting with the Web3 community, not just for otaku, and it will likely happen,” the diva told me, insisting that VTubers are aware of crypto scams and haven’t fully drank the Kool-Aid yet. “I believe the community fusion will crop off sometime soon. However, to reach that point we may have to wait for crypto to be integrated into daily life in the same way digital money payments are already safely used in Japan,” she concluded.

As the bear tendency is not that much of a downer for local forces, Japan will continue to develop its own ecosystem, crypto winter or not. The primary purpose is to genuinely explore Web3 as a tool, as well as the community building side, and, as much as possible, not to emphasize the profit and speculation aspects.

With a handful of talented young artists and creators, IRL Web3 hangouts like the Shibuya-located MUTANT STAND, and of course, Japan’s largest NFT event NFT ART TOKYO, nothing can block the crypto-creative scene’s growth. “NFT ART TOKYO focuses on IRL events with the mission of supporting all kinds of artist activities with NFT from behind-the-scenes,” OG team member Sadas told me. “In the future, we plan to collaborate with various events and communities to serve as a bridge between local NFT artists and the rest of the world.” Since the government announced last year its willingness to support and apply friendly legislation toward the development of the Web3 industry, and also big investors started putting big cash on the table, the crypto community’s rallying cry, LFG!, has never made much more sense than now.

In 2002, when @lilwolfstreams was nine-years old, a classmate told her about Neopets. Her parents wouldn’t let her have a real pet, so the idea of an adorable digital creature that needed her care was appealing. She created an Uni Alacorn, a Lupe, a Gelert and a Peophin, and started logging 2-4 hours a week playing games within the site, especially Destruct-O-Match and Pterrattack. These were the days of Angelfire and LiveJournal, when the Apple iMac came in 13 colors as bright as Jolly Ranchers, and mice were round. At its mid-2000s peak, 25 million Neopets users were online at the same time as @lilwolfstreams, navigating the browser-based cyber world known as Neopia.

If there was ever a brand to revive itself in Web3 form, it seems like Neopets would be a runaway success. Just consider the recent Nickelodeon NFT drop, but more importantly, the fact that Neopets’ cornerstones are immersion, community and positivity: all polestars of Web3. “Neopets is the nicest community I’ve ever been in,” @lilwolfstreams says via Zoom, who has logged 5,000 hours on the site to date. But today, her community of OG Neopets users are pissed off: They don’t want NFTs and don’t want a metaverse, despite the fact there is now a 30-person team devoted to both ventures. Jellyneo, the foremost Neopets fan site since 2004, declined to be interviewed but offered one comment via Twitter: “NFTs are dumb, and are a tragic mistake,” along with a link to what has become their de facto manifesto on this new direction. In it, they reference another blockchain bungle from 2018 called “CryptoQuest,” quoting dismal sales and an out-of-business marketplace that erased the collectibles along with it, along with inadequate response to the use of slurs in the Neopets Metaverse Discord.

Regardless, the Neopets metaverse expects to launch in the first quarter of this year; a trailer, a gameplay demo, and a litepaper already exist. Players like @lilwolfstreams continue to take to Reddit, Twitter, the Neoboards, and now Discord to shout: We just want our original browser game to work. They’re tired of the missteps and controversies over the years, and there have been many.

Like childhood, memory lane can be simultaneously wonderful and harrowing to travel down. The road of Neopets was paved in 1999 by two college students in the UK named Adam Powell and Donna Williams and built for dorm-lifers who, like @lilwolfstreams, were in the market for a pet that they could love and feed (and in Neopets, clothe). The site grew so meteorically that a group of investors bought it two years later: One of them was Doug Dohring, a Scientologist who used L. Ron Hubbard’s Org Board business model to run the notoriously “kid-safe” entertainment site (to this day, Adam and Donna maintain that they did not know this, and never let Scientology education infiltrate the site.) Viacom purchased Neopets in 2005 for $160 million, JumpStart Games purchased it from Viacom in 2014 for an undisclosed amount, and Chinese company NetDragon acquired JumpStart in 2017.

From Reddit boards to the New York Times, the controversies along the way are well-documented: predatory advertising practices, being a “training ground for children gamblers,” hacking (the site was actually in the middle of a security breach at the time of this writing), illegal trading, and questionable customer service. By 2018, usership had dwindled to 100,000 daily users.

And then there was COVID. Usership spiked 30-40 percent in the months after March 2020, fueled by stay-at-home orders, more time online, and a desire to return to the simpler days: in our childhood rooms, chatting on AOL Instant Messenger with a copy of Green Day’s “American Idiot” blasting from the boombox. “Nostalgia is a refuge, as people turn to the feelings of comfort, security, and love they enjoyed in their past,” psychologist and nostalgia expert Krystine Batcho recently told Business Insider.

The death of Adobe Flash Player on December 30, 2020, nearly broke the entire site for good: Many portions were rendered unusable, and plots and games were lost. “There are 14 games now,” says @lilwolfstreams, verifying it on her computer as we speak. “There used to be hundreds.” And yet, the game chugged on as users found workarounds; @lilwolfstreams uses a browser called Cent that mimics the old Flash experience; others use one called Pale Moon.

It was 2021, 23 years since its inception, and the Neopets brand was still alive. Right around then, Dominic Law started working on blockchain opportunities at Netdragon. “We wanted to test the waters,” he says of the 2021 NFT drop, a run of 20,500 algorithmically-generated Neopets living on the Solana blockchain. But even that project was bedeviled. The hashtag #NoNeoNFTs proliferated on Twitter, Neopets cut the genesis drop from 20,500 to 10,500 (seemingly from a lack of interest), and only 4,225 sold; the rest burned. Fans criticized the artwork, and accused Neopets of stealing from the fan art website, Dress To Impress. After all of this, they also persisted with a plan – previously announced in September 2021 – to build a metaverse.

“I agree with peoples’ problems with NFTs,” says Tree, an NFT collector and a Neopets player since day one (disclaimer: Tree is a Neopets Metaverse ambassador, an unpaid position that offers priority access to game modes and whitelisting opportunities for future NFT and token drops). “Most of [the space] is opportunists.” But when it comes to scams, he says that technology is not to blame: it’s people. “Before this, we had phone and email scams, and we didn’t say these needed to be shut down.” Regarding the Dress To Impress scandal, he points out that the site has an open source license and that anyone is allowed to use their art. Of course, why not just make original art?

He has a counter-argument to most of the controversies: that bringing Neopets.com up to date might not be possible – “it’s built on 23 years of spaghetti code” – that to remake something is more time intensive and more challenging than making something new. “I don’t know how many people are playing Neopets and how much money they make, but I know it’s less than 1% of Netdragon’s earnings. It’s a possibility they’re even losing money on that site.” And regarding the “cash grab” argument usually hurled at NFTs, he explains that the Neopets community is “already very used to micro-transactions. A year of Premium [on Neopets.com] is $70; an NFT could be $50.” And then there’s the deluge of online hate, which irks him. “The thing is that all of this is what makes Neopets so special. It’s like a big fucked up family, but it’s my distant family and all of our family in a way,” he says.

And when Tree discovered Neopets NFTs in September 2021, he described it as a Eureka moment. “They’re the OG of generative art,” he says; he spent months figuring out which Neopets NFTs to buy: He ended up with 100.

Stacys, an early digital artist with three of her own sold-out NFT collections (and also a Neopets Metaverse ambassador), also sees Neopets NFTs and metaverse as an opportunity, not a failure. She got her first taste of digital ownership as a 13-year-old living in Calgary, Alberta, playing untold hours of Destruct-O-Match and Cheat!. She received early entrepreneurial training, a commonly shared experience, particularly for young girls who learned how to code and start businesses. Today, she owns an NFT of a Lupe “with a Woodland Paint Brush.” She is excited about digital ownership moving to the blockchain instead of a server that could go away (anyone remember Netscape Navigator?).

Customization is also a big deal to her. She wants her Neopets to have homes and see the creators build on the IP. “I imagine there will be even better opportunities for us to interact together in the metaverse,” she says.

“Web3 is inevitable,” says Neopets’ chief metaverse officer Dominic Law, who still has the turtle he had as a child when he first delved into the digital menagerie. Speaking from his home in Hong Kong, he told me over Zoom that Neopets were his first “furry” companions. Today, he focuses on captivating Neopets’ past user base, which is still strong. There are currently 1 million monthly active users to the classic site, and Law estimates that about 80% of those in the Neopets Metaverse Discord community are OG users and people familiar with the brand.

The Neopets metaverse will be free-to-play (and eventually have play-to-earn components). Its blockchain is yet to be determined. Law says he is inspired by “Animal Crossing” and “Roblox,” though eventually, they will decentralize the game. At NFT NYC (where Neopets was a sponsor), a staff member told SuperRare editor Oli Scialdone that the team plans to port many of the classic games over.

Scialdone stopped by the Neopets booth and reported that its visitors were mostly “younger millennials, women, and visibly queer. It was a stark contrast from the sea of presumably cishet men at the conference and a welcome break from all the booths shilling ‘synergetic crypto marketing solutions.’” It seems like a foreshadowing of who will be in the metaverse.

Herdy lives in the UK and has been playing Neopets since 2001. He is best known for maintaining the most comprehensive lore resource for the game and has the most publications in The Neopian Times, recently passing 400. He says that even though Neopets has had its controversies, he expects it from a game with updates five days a week for over twenty years. “The Neopets Metaverse is another matter entirely, though,” he says.

“Realistically, what might have been acceptable would have been some sort of NFT trading card game, like “Hearthstone,” with high-quality art to compliment the existing game. But Netdragon has gone in a completely different direction.” He would like to see Netdragon give a full and comprehensive apology, and stipulate that Neopets Metaverse proceeds will in part be plowed back into Neopets.com. Meanwhile, @lilwolfstreams tells me she will write a letter to Neopets about her feelings.

“I love Neopets, but I don’t know if they’ll bring it up to modern standards,” says the more optimistic Tree. He says he hopes they’re around forever, adding: “I’ve never seen any existing franchise announce crypto or NFTs to gaming that didn’t have a backlash – because the people supporting it aren’t vocal. They’re like, ‘Okay, we’ll see where this goes.’ Whereas the people who are completely against it will be vocal because in their minds, there’s always a chance that it may get them what they want, you know?”

With so much of Web1 gone or going the way of the floppy disk, I wonder if Neopets will ever give its OG players what they want or if they’ll have to let go. After all, what right do they have to hold on to something forever? Maintaining a website costs money, and the owners get to decide where their money goes. But on the other hand, it seems the metaverse wants the OGs to be nostalgic, while simultaneously forcing them to move on. Will Neopets even have a fan base if they don’t bring the old guard along? And will their metaverse be enticing enough for its early adopters and new fans, or become a no man’s land of 3D proportions? We’ll have to see who shows up.

*Since this writing, Neopets launched its Metaverse Alpha and raised $4M in funding from Polygon Ventures, Blizzard Avalanche Ecosystem Fund, Hashkey Capital, IDG Capital, and NetDragon Websoft.