You might have probably heard about the explosion of non-fungible tokens (NFTs) this year. From art and music to burritos and kitties, these digital assets are selling like 17th-century Dutch tulips – some for millions of dollars.
But are NFTs worth the money? Some experts say that NFTs are just another bubble that is about to burst, while others firmly believe that NFTs are well on its way to change the investing space forever. However, first let’s understand the basics.
NFTs have been around since 2014, however only this year they have been recognized as one of the most popular method to buy or sell digital art. “Non-fungible” means that it is unique and cannot be replaced by anything else. For illustration purposes, let’s choose anime cards. If you had a Pikachu (Pokémon) and traded it for Exodia (Yu-Gi-Oh!) then you would have something completely different. This trade would make you the new official owner of the new card by securing it on the Ethereum blockchain, where no one could modify the record of ownership or copy/paste a new NFT into existence.
In March 2021, a digital art called “Everydays: The First 5000 Days” was sold by Mike Winkelmann (aka Beeple) for a whooping $69.3 million. To date, this purchase made this NFT the most expensive one in the world. In another instance, John Watkinson and Matt Hall managed to bag $11.8 million for a pixelated image called the “CryptoPunk”. When the investors were asked why they were willing to pay that much, they stated that NFTs is the start of a new era in art.
But you may ask yourself, what is the point of NFTs? If you are an artist, the NFT space might capture your interest since it provides a mean to sell your work that there otherwise might not be much of a market for. If you are a buyer, then it is a great way to support your favorite artist or just acquire the rights of the artwork. And finally, if you are an investor, NFTs can work as any other speculative asset, where you would sell it one day for a profit.
That being said, it is an exciting space to explore. However, if you are considering investing you should do that with a healthy dose of caution.
Sources:
https://ethereum.org/en/nft/
https://www.theverge.com/22310188/nft-explainer-what-is-blockchain-crypto-art-faq
https://www.forbes.com/advisor/investing/nft-non-fungible-token/
https://influencermarketinghub.com/most-expensive-nfts/
