NFT, A 10-second film by an artist called Beeple sold online for $6.6 million in February 2021. Around the same time, Christie’s announced a sale of 5,000 “all-digital” pieces by the Wisconsin-based artist, whose actual name is Mike Winkelmann. It was placed up for sale online with a starting bid of $100, and it sold for a whopping $69 million on March 11.
Aside from the high pricing, onlookers were intrigued by another fact. Collectors who purchase Beeples do not get any tangible manifestation of the artwork in return for their money. There wasn’t even a framed print. What they do acquire is a kind of cryptoasset known as an NFT, which stands for non-fungible token.
Each Beeple is accompanied with a one-of-a-kind NFT – a token attesting to the authenticity of the owner’s version. “We’re in uncharted terrain,” said Christie’s modern art expert Noah Davis to Reuters. “We received over a hundred offers from 21 bidders in the first 10 minutes of bidding, and we were at a million dollars.”
Why are NFTs important?
NFTs may be thought of as digital objects’ equivalent of certificates of authenticity. They are now being used to sell a wide variety of virtual items, such as:
- NBA virtual trading cards
- Music and video snippets from EDM artists such as Deadmau5.
- Grimes’ video art
- The first “nyan cat” meme
- Mark Cuban, owner of the Dallas Mavericks and entrepreneur, tweeted
- Decentraland is a virtual real estate market.
As Bitcoin and other cryptocurrencies have grown in popularity over the previous year, so have NFTs, with an anticipated $338 million in 2020. Each NFT is maintained on an open blockchain (often Ethereum’s), and anybody with an interest may follow them as they are made, traded, and resold. NFTs may be set up such that the original artist continues to receive a share of all future sales since they employ smart contract technology.
NFTs have prompted intriguing philosophical problems regarding the nature of ownership along the way. Do you ever wonder why digital artefacts that can be copied and pasted indefinitely have any worth at all? Proponents might argue that most types of collecting aren’t based on intrinsic worth. Old comic comics were made for pennies in ink and paper. Rare shoes are sometimes constructed from the same materials as useless ones. Some artworks wind up in the Louvre, while others end up in charity stores.
You may snap a lovely image of the Mona Lisa, but it’s not the Mona Lisa, as the collector who sold the $6.6 million Beeple piece pointed out. “It has no value since it lacks the provenance or history of the piece,” stated the Beeple lover. “The fact is that this is very important due to who is behind it.”
What exactly does “non-fungible” mean?
Every bitcoin is the same value as every other bitcoin. NFTs, on the other hand, are all one-of-a-kind. “Fungibility” refers to identical commodities or assets that may be switched interchangeably. Another ideal example is a $1 note, which is worth precisely one dollar.
Concert tickets, on the other hand, are non-transferable. Even though all Radiohead tickets are the same price, they are not exchangeable. Each ticket represents a particular seat and a certain date – no other ticket will have those precise features.
Where do you buy or sell NFTs?
Digital-artwork NFTs are often traded on specialist platforms such as Coinbase NFT, a web3 social marketplace for NFTs, as well as Zora, Rarible, and Opensea. If you like games and sports memorabilia, Dapper Labs has produced experiences such as NBA Top Shot (virtual trading cards) and Cryptokitties (a Pokemon-ish digital-cat collecting app that actually was the first NFT hit in late-2017). NFTs are being used by online games such as Gods Unchained to sell in-game assets such as weapons and aesthetic improvements. Markets such as Decentraland and The Sandbox sell real estate in new virtual worlds.
You may also purchase and trade NFTs using a suitable crypto wallet.
How do NFTs function?
If you’re into DeFi, you’ve probably heard of the ERC-20 standard, which enables anybody to design a token that works with the Ethereum network. These are so-called “fungible” tokens. The majority of non-fungible tokens are created utilising the ERC-721 and ERC-1155 standards, which enable developers to create one-of-a-kind cryptoassets through smart contract. Because each NFT is recorded on a blockchain, there is an immutable record beginning with the creation of the token and ending with every sale. (Some NFT-focused developers, such as Dapper Lab’s Flow, have also constructed their own alternative blockchains.)
What can you do with NFTs once you buy them?
That’s an excellent question! Some individuals use huge displays to exhibit their digital artworks. Some people purchase virtual real estate (through NFT, of course) on which to create virtual galleries or museums. You may also explore virtual environments such as Decentraland and see other people’s collections. The allure for some followers is in the buying and selling, much like any other asset class. (In October 2020, the collector who sold the $6.9 million Beeple paid less than $70,000 for it.)
More and more popular musicians, particularly from the music industry, have been interested in the sector. Kings of Leon, a Nashville band, revealed in early March that their upcoming album will be released in the form of many NFTs. Depending on the version a fan purchases, several bonuses will become available, such as variant cover art, limited-edition vinyl, and even a “golden ticket” to a VIP performance experience.