Pablo Rodriguez-Fraile, a Miami-based art collector, spent nearly $67,000 in October 2020 on a 10-second video artwork that he could have viewed for free online. He sold it for $6.6 million last week.
In this undated handout obtained by Reuters, “EVERYDAYS: THE FIRST 5000 DAYS” is a collage by digital artist BEEPLE that is up for sale at Christie’s, undisclosed venue. 2021/BEEPLE/Handout via REUTERS via Christie’s Images LTD.
The video was authenticated by blockchain, which acts as a digital signature to certify who owns it and that it is the original work by digital artist Beeple, whose real name is Mike Winkelmann.
A new type of digital asset known as a non-fungible token (NFT) has exploded in popularity as enthusiasts and investors scramble to spend enormous sums of money on items that only exist online during the pandemic.
Unlike traditional online objects, which can be endlessly replicated, blockchain technology allows the items to be publicly authenticated as one-of-a-kind.
“You can go to the Louvre and take an image of the Mona Lisa and keep it there, but it has no meaning because it doesn’t have the provenance or the history of the work,” said Rodriguez-Fraile, who said he first purchased Beeple’s piece because he was familiar with the work of the American artist.
“The truth is that regardless of who is behind it, this is highly valuable.”
Non-fungible assets, in comparison to fungible assets such as dollars, stocks, and gold bars, cannot be traded on a like-for-like basis since each one is special.
Digital artworks and sports cards are examples of NFTs, as are virtual land parcels and exclusive use of a cryptocurrency wallet name, comparable to the domain name scramble in the early days of the internet.
In an otherwise idyllic setting, the computer-generated video sold by Rodriguez-Fraile shows what appears to be a giant Donald Trump collapsed on the ground, his body covered in slogans.
According to blockchain info, OpenSea, a marketplace for NFTs, has seen monthly sales volume rise to $86.3 million as of Friday, up from $8 million in January. A year earlier, monthly revenues were $1.5 million.
“If you spend ten hours a day on the machine or eight hours a day in the digital realm, then art in the digital realm makes a lot of sense – because it is the world,” said Alex Atallah, co-founder of OpenSea.
Investors are concerned, however, that while large sums of money are pouring into NFTs, the market may be experiencing a price bubble.
If the hype dies down, as with many new niche investment areas, there is a risk of significant losses, while fraudsters may find prime opportunities in a market where many participants operate under pseudonyms.
‘EMBRACES TERRIFYING’ BY CHRISTIE
Nonetheless, Christie’s has just launched its first-ever digital art sale – a collage of 5,000 photographs, also by Beeple – which is only available as an NFT.
Bids for the work have topped $3 million, and the auction is set to end on March 11.
“We’ve entered uncharted territory. We had over a hundred bids from 21 bidders in the first 10 minutes of bidding, and we were at a million dollars,” said Noah Davis, a specialist in postwar and modern art at Christie’s.
He added that an online-only transaction in his division had never topped $1 million before.
The auction house, which was established in 1766, will accept payment in the digital coin Ether as well as conventional currency, in a step that could help drive cryptocurrencies further into the mainstream.
“I believe that this moment was inevitable, and whenever institutions of any kind try to fight inevitability, it rarely works out well,” Davis said of crypto payments. “As a result, the best thing you can do is embrace the frightening.”
LEBRON JAMES SLAM DUNK GETS $208K
The buzz surrounding cryptocurrencies and blockchain, as well as virtual reality’s ability to build online worlds, may support NFTs. During lockdowns, an increase in online retail trading correlates with the increasing interest.
The launch of the US National Basketball Association’s Top Shot website, which allows users to buy and sell NFTs in the form of video clips of games, has been related to the start of the NFT rush.
The platform claims to have over 100,000 buyers and nearly $250 million in sales five months after its launch. The NBA receives a royalty for any sale made on the site’s peer-to-peer marketplace, which accounts for the majority of transactions.
The amount is increasingly increasing: sales in February totaled $198 million as of Friday, up fivefold from January’s $44 million, according to Top Shot.
According to the website, each collectible has a “unique serial number with guaranteed scarcity and secure ownership guaranteed by blockchain.” “You’re the only guy in the world who owns #23/49 of a famous LeBron James dunk.”
On Feb. 22, a user charged $208,000 for a video of a LeBron James slam dunk, the largest transaction to date.
One prominent NFT supporter, who goes by the moniker “Pranksy,” told Reuters that he put $600 into an early NFT project in 2017 and has since grown his portfolio to “seven figures” in NFTs and cryptocurrencies. To preserve his family’s privacy, he demanded anonymity.
Pranksy claims to have invested more than $1 million on Top Shot and made $4.7 million in resale profits. While NBA Top Shot confirmed he is one of the site’s biggest buyers, Reuters was unable to independently verify the figures.
In a Twitter interview, he said, “I see them as investments, just like any other collectibles and NFTs that currently exist.” “Before Top Shot, I had never watched a basketball game.”
‘THE Creation OF THE METAVERSE’
Nate Hart, a Nashville-based NFT investor who, like Pranksy, has been following the market since its inception in 2017, has seen the valuation of some famous digital art NFTs like Autoglyphs and CryptoPunk skyrocket.
In January, Hart said he paid $40,000 for a LeBron James Cosmic NFT on NBA Top Shot, then sold it for $125,000 in February.
“We’re speechless; it doesn’t feel real. We were in the right place at the right time and were fortunate, but we also took a risk,” he said.
“There has been a lot of expansion in the space. This, I believe, is a little bit of a bubble. “It’s a bubble,” he declared. “It’s impossible to tell where the top will be.”
Andrew Steinwold, the founder of a $6 million NFT investment fund, has cautioned that the majority of NFTs will become useless in the future.
But, like many supporters, he believes that certain things can hold their value and that NFTs are the future of digital ownership, paving the way for a world where people work, socialise, and earn money in virtual spaces.
“We spend a lot of time online, still wired in, and we spend a lot of time digitally. It only makes sense to add property rights to the mix now, and the metaverse emerges,” he said.
“I believe it will ultimately cross trillions of dollars.”