Is it crazy to pay thousands of dollars for digital art pieces? Or, is it crazy to spend millions to merely claim that you own the original copy of 24x24 pixels of an animation? The more a normal person like me thinks about it, the more I get the answer, a NO from my mind. However, this decision is not only rational but also daring and remarkable.
So, when Chris Torres who created Nyan Cat, an animated flying cat with a Pop-Tart body leaving a rainbow trail, all those years ago, no one including him would have thought that the meme which was available on the web for so long, that has been viewed and shared for millions of times on the web would one day be sold for millions.
On February 25, 2021, Chris Torres who was the creator of the Nyan Cat put a one-of-a-kind version of it up for sale on Foundation, a website, which buys and sells digital items. What followed was a bidding war and in the final hour of the auction, the Nyan Cat was sold to a person recognized only by his bitcoin wallet number. Can you imagine what the price was? Roughly US $590,000!
When Mr. Torres was asked about it in an interview, he was breathless and was listened saying that, “I feel as if I have opened the floodgates. I am very surprised with the success, but I think I am glad that I have opened the door to a whole new meme economy in the world”. This acquisition marked a new pinnacle in the rapidly expanding market of digital items ownership in the form of unique digital signatures called NFT or Non Fungible Tokens.
The emerging market for these products indicates a noteworthy, technically astute attempt by digital content creators to engage monetarily with their consumers and cut out intermediaries. Many NFT purchasers are enthusiasts and admirers who brag about their purchases on social networking sites or on televisions in their houses. Others are attempting to profit from the rise in bitcoin value. Many people consider it a kind of amusement that incorporates betting, sports cards collection, investment, and day trading.
The sky-high NFT selling rates have sparked the typical puzzlement and mockery, which has long plagued the crypto industry that has failed to find a useful application for its capabilities outside of trading currencies. Furthermore, because many of the trades are using cryptocurrencies, which have changed drastically in worth over the previous two years, there is concern about the sustainability of prices.
So, what are “Non Fungible tokens” exactly?
A fungible token is a resource that may be traded as a like for like in economics terminology. Consider USD or Cryptocurrencies like Bitcoin or Ethereum: they both have similar worth and may be readily swapped. For instance, a bitcoin can be replaced with another bitcoin, or in the non-digital world, a $5 note can be replaced with a $5 note. A non-fungible item, on the other hand, such as an antique home or a vintage vehicle, does have its own inherent worth.
NFTs are created by combining this concept with the crypto system registered on the blockchain ledger. These are essentially electronic certifications of provenance that may be applied to graphic design or, well, quite fairly whatever else that is digital, such as sound recordings, videos, animation, GIFs, and even this post.
Non Fungible Tokens verify an item's provenance by storing the information on a blockchain network that is kept on servers all over the world, making it almost difficult to misplace or delete.
These certificates are now popular in the collection community, where they have been utilized to tackle an issue that is inherent to digital merchandise: claiming possession of stuff, which could be freely and indefinitely reproduced.
According to NonFungible.com, the monthly amount of NFTs exchanged has increased from a mere million to $241 million since September 2020. The NFT frenzy is causing havoc in the conventional arts, gaming, sporting, and premiums industries since the marketplaces are now available to anybody with an Ethereum wallet and a willingness to link to the blockchain ledger.
Artworks are typically launched and auctioned in groups, with buyers being assigned randomly. Decentraland, a digital environment where you may acquire tracts, mansions, and connect with other users, is a safe haven for gaming junkies and lockdown-averse people. A LeBron James dunk was bought for $208,000 on NBA Top Shots, and Jack Dorsey's first tweet was acquired for $2.9 million.
Folks are paying many bucks currently to jump in on this bandwagon since NFTs are so popular. If matters calm down and individuals think they would prefer to possess real stuff than digital materials, interest will decrease, lowering the prices and worth of your asset.
Typically, purchasers do not obtain intellectual property rights, patents, or even sole proprietorship of whatever they bought. They are purchasing prestige style points and the assurance that their version is "The Original". Tangible products, such as fine arts or books, have always been associated with emotions and artistic significance, and individuals have been ready to spend a hefty price for them. Digital technology, on the other hand, does not have a similar worth since it could be effortlessly duplicated, distributed, and pirated.
However, the situation is transforming thanks to distributed ledger technology known as blockchain that is most commonly linked with Bitcoins. NFTs use modern technologies to identify a legitimate version of digital material enabling artists, singers, innovators, and sporting teams to profit from digital products that might normally be inexpensive or free. In an NFT purchase, all systems connected to a cryptocurrency system register the purchase on a distributed ledger called a blockchain, giving it an everlasting official trace that cannot be changed or deleted. Furthermore, the artworks can be auctioned on a marketplace, with the revenues going to the creator.
“I think that is exactly what it required, and it will be interesting to watch how it works out,” Torres added.
"Most NFT platforms permit the artists to preserve their copyrights and registered works, which I believe is significant for a creator since it allows them to protect their copyright ownership," Torres said. "I have seen a lot of talented artists be caught on a terrible network or relinquish their copyrights in the past, and I have always been concerned about ensuring artists are appropriately recognized for their works."
Torres is also advertising another NFT on the platform, this time depicting dogecoin, a meme cryptocurrency that exploded in popularity in January.
In the realm of non-fungible tokens, often abbreviated as NFTs, the past weeks have been utterly insane. If you need evidence, go no farther than what transpired on the 11th of March, when an item of graphic design by a creator identified as Beeple established a new world record for digital artworks in Christie's auctions, selling for US 69.3 million dollars. The project, entitled "Everydays — The First 5000 Day", is a montage-like composite of all of Beeple's photos posted on the internet since 2007. However, the craze is not over yet, with a slew of multimillion-dollar deals transpiring in recent months.
Until being burnt down, and artwork by the mysterious Banksy was digitized and turned into an NFT. Even the CEO of Twitter Mr. Jack Dorsey has gotten in on the fun, auctioning off his maiden tweet as an NFT for 2.5 million USD to benefit charities. In addition, the fact that all this happened in only a few weeks adds to the incredibleness of all of this! For example, on January 1, weekly NFT trading rates totaled under 10 million USD, while rising to nearly 200 million USD only 6 weeks later. The amount of subscribers has risen significantly as well, from less than twenty-five thousand in early January to around 350,000 now.
The blockchain system that supports this new surge of NFTs has several distinct characteristics:
Tradable, NFTs may be sold on a variety of platforms, similar to how you can auction your baseball card at a cards show or your artwork on eBay or Craigslist.
Traceable, this feature enables you to verify that the NFT you are interested in purchasing is genuine.
Immutable, Enables for the hard programming of specific parameters, ensuring that they are distinct. This, for instance, can be configured to create only one thousand copies of a specific Top Shot feature.
Interoperable, Enables NFTs to circulate freely between platforms, preventing them from becoming "trapped" in a single application or environment. Instead, they may be securely transferred to digital wallets or markets.
Cash Flow, it increases the asset's demand and equity, enabling the ecology to be stronger as a result.
Regulation, it is critical because it enables us to establish guidelines that are used by all NFTs, allowing us to achieve the majority of the advantages stated earlier. Many of the protocols being used at the moment of typing are Ethereum-based, although other blockchain technologies are also being created.
Perhaps NFTs will not last, which is a danger for someone, taking the lead in this popular trend. In any case, we live in a society where Marcel Duchamp's urinating statue is still on display in art galleries, is considered a classic of the twentieth century by many commentators, and was auctioned for 1.6 million dollars in 2002. Paintings on a solitary color canvas, as well as other kinds of abstracts and philosophical artwork, have a rich history and may fetch hundreds of millions of dollars.
The objective is not to debate what constitutes "art." Simply put, assuming that NFTs would flop in the art industry is a folly. Bear in mind that as the worth of Bitcoin and other crypto currencies grows, numerous millionaires around the globe will attribute their fortunes to them. They are not all seeking to acquire Rembrandts and Picassos, after all.
Isn't it strange that the genuine version is worth so much? This is not particularly revolutionary. A books' 1st edition is significantly more valuable than its 3rd edition. Similarly, a counterfeit duplicate of a great artist, no regardless of how skilled or identical to the genuine one is nearly priceless.
In a recent conversation about the social networking application Clubhouse, Marc Andreessen, a startup venture capitalist at Andreessen Horowitz, remarked, "Several individuals are skeptical about this type of activity." However, as he and his colleague, Ben Horowitz, noted, consumers do not purchase items such as shoes, paintings, or sports cards for the price of the elements. They purchase them because of their appeal and elegance.
As per Nonfungible.com, which analyses the business, the marketplace for NFTs started to flourish up last year, with even more than 222,000 persons engaging in $250 million worth of purchases, quadrupling the volume in 2019. As the financial sector has surged in tandem with the epidemic, venture capitalists have sought out bolder and more exotic investments, ranging from footwear and sportswear to alcohol and artwork. In the same period, rising cryptocurrency values indicated that there were more Bitcoin billionaires with cash to spend.
Dom Hofmann, one of Foundation's first sellers, published a video he shot in 2012. A sweltering summer night in New York as depicted in a basic, somewhat ordinary sequence. It had historical importance, though, as it was one of the first films submitted to Vine, the now-defunct social networking program Mr. Hofmann co-founded. He found out the actual amount after 15 bidders: 8.77 Ethereum tokens is equivalent to $17,198.15.
Mr. Hoffman stated that he is still trying to get his mind around all of this. He intended to reinvest his earnings by purchasing some NFTs of his own. He stated, "It is absolutely something I'm now devoting a lot of my leisure times pondering on."
The Cock Foster siblings have sought to advise individuals that making money reselling digitized artwork is tough. On Nifty Gateway, individuals searching for quick selling are more likely to lose revenue. Duncan, who has invested $80,000 on the website, has 3 screens in his flat where he exhibits his acquisitions. Although his paintings have increased in worth, he has not traded many.
He responded, "I'll simply keep it for the remainder of my lifetime and maybe passing it along to my offspring." “Or I could sell it off at the twilight of my lifetime as art lovers do.”
Last year, “Star Trek” actor William Shatner sold 90,000 virtual trade cards for $1 each. Last month, electronic singer Grimes sold $6 million worth of digital artwork, besides a $389,000 video clip showing winged cherubs hovering in pastel dream sequences. NBA star LeBron James' dunking clips are fetching up to $225,000 on eBay. Lindsey Lohan, an actor, managed to sell a photograph of her face. In computer games, you may also acquire digital property and meme creatures like Nyan Cat. Anne Spalter, a digital creator, began as an NFT skeptic but has since auctioned numerous artworks using the tokens.
The most recent was a $2,752 video dubbed "Dark Castles," which featured suspiciously deformed fortresses created by AI technologies.
Spalter, who launched digital visual art, classes at Brown University and the Rhode Island School of Design in the 90s, stated, “NFTs have started opening artwork to a whole lot of folks who would never have been to a museum in New York.” “They are technology innovators, they're financiers, and they are in that world.”
WHO, ON THE OTHER HAND, WOULD INVEST $70 MILLION ON ONE ITEM?
Christie's revealed on 20th February that the purchaser of Beeple's artwork is the funding source of a digital arts company known as Metakovan, a disclosure that might stoke fears of a cryptocurrency art market bubble. Metapurse, the globe's biggest NFT fund, was created by the purchaser and is expected to gain an increased attention. Beeple's sculpture is now the third-most costly work ever auctioned by living artists, behind pieces by Jeff Koons and David Hockney, according to the British online auction. Spalter believes the balloon will burst, but that NFTs still offer the potential for creators as a method to decrease theft and misrepresentation of work.
The enthusiasm surrounding NFTs, like all other sensations on the web, may quickly burn out. Cryptocurrency values may fall more, or individuals may end up losing curiosity as the epidemic subsides. Alternatively, it may rise and rise onwards to greater heights. The attraction for sellers is there. They now have a solid platform where they can expect to get huge rewards for their hard work. Although for buyers who are buying it for things other than sentimental value like a financial investment for the long term, have to weigh in the pros and cons and research deeply about the NFT and its potential market.