Who could have thought that an NFT artwork could be worth 100,000 times more in just three days? That was the case with the Hashmasks collectibles, which, in just a single week, generated over $9 million in sales after selling Hashmasks digital artworks
Currently, the most expensive NFT ever sold is the artwork “EVERYDAYS: THE FIRST 5000 DAYS”, created by popular digital artist Mike “Beeple” Winkelmann and sold for $69.3 million through an auction organized by Christie’s, making this the third most expensive work from a living artist sold at an auction. The NFT which represented a collage of 5,000 of Beeple’s earlier artworks, was purchased by Vignesh Sundaresan.
It is for this reason- the massive amount of money that people are making from NFTs, that the popularity of NFTs has exploded. The year 2021 saw Google search around NFTs reach its highest-ever numbers, and NFT marketplaces like Nifty Gateway and OpenSea have recorded incredible trading volumes, as everyone looks to take hold of the asset. NFTs for art, music and even tweets have been sold. Notably, Twitter CEO Jack Dorsey sold his first tweet for $2.9 million.
But what are NFTs?
The abbreviation “NFT” stands for Non-fungible Tokens. It is a digital token that’s a type of cryptocurrency, much like Bitcoin or Ethereum, and this means that it is a collectible digital asset, which holds value as a form of cryptocurrency and as a form of art or culture.
NFTs are unique because they are non-fungible. A fungible asset is something with units that can be readily interchanged – like money. With money, you can swap a N100 note for two N50 notes and it will have the same value. Similarly, digital files such as photos and eBooks can be easily and endlessly duplicated.
This is not the case with NFTs because they are non-fungible. If something is non-fungible, it means it has unique properties so it cannot be interchanged with something else. With NFTs, there is only one of its kind. Simply put, NFTs are unique assets in the digital world that can be bought and sold like any other piece of property, but they have no tangible form of their own.
With NFTs, artwork can be “tokenized” to create a digital certificate of ownership that can be bought and sold. This is done by embedding a unique ID (metadata) into a token that represents the asset. When an NFT is minted, its ID is registered on the blockchain and becomes its passport, enabling users to see and verify its entire history (ownership, creator, price) without the need for an intermediary. The blockchain is a digital ledger that allows the recording of transactions and enforcement of contracts through a decentralized network of computers and without the need for an intermediary.
In the actual sense of it, there’s nothing stopping people from copying the NFT artworks. Beeple’s art that sold for $69m, for example, has been copied and shared countless times. What makes the difference is that the buyer of the NFT owns a “token” that proves they own the “original” work. Yes, as obscene as it sounds, people are paying millions for these tokens. In many cases, the artist even retains the copyright ownership of their work, so they can continue to produce and sell copies. Some people compare it to buying an autographed print.
Jumping on the NFT bandwagon
As a result of its success, almost everyone is jumping on the NFT bandwagon, including popular artists and musicians. Celebrities including, 3LAU, Shawn Mendes, The Kings of Leon, and Lindsay Lohan have started making NFTs. NFTs are a possible game-changer for artists who opt to release songs, albums, and the like as NFTs to fans, considering the high potential of NFTs to be converted into huge amounts of money. Others have also seized the opportunity provided by NFTs to make money by investing in the non-fungible tokens; they buy NFTs and sell them later at a profit.
Yet, an air of scepticism abounds around this new class asset. While some people find it hard to make sense of the concept of paying millions for something that cannot be seen physically, others have described the whole NFT concept as “being in a bubble” – and you know what happens to a bubble, it bursts!