Non-Fungible Token Takeover

Art is selling for big money in new digitized markets.


First and foremost, it is important to understand what an NFT, or Non-Fungible Token, is. It’s basically data stored on a blockchain; meaning that each is unique and irreplaceable, but they can be re-sold or traded. Unlike currencies such as dollars or euros, and unlike cryptocurrency such as Bitcoin or Ethereum, NFTs cannot be exchanged for other tokens—$1 can be exchanged for $1 (or 4 quarters, 100 pennies, 20 nickels… you get it), but 1 NFT cannot be exchanged for 1 NFT.

NFTs can be anything digital, but we are mostly going to see them as art—music, photo and video files, trading cards, fashion, etc. They are limited and exclusively collectible, which makes them desirable to many modern collectors. Additionally, there is less risk of degeneration or ruin with digital art. Although creating copies of files will gradually wear them down, NFTs are less susceptible to decay or ruin than physical art on paper, canvas, or sculpture.

But buying an NFT doesn’t mean buying copyright or trademark rights, and multiple people can buy the same NFT if there are multiple available. Forbes compares it to a movie ticket: you aren’t buying the rights to the movie. You have purchased a ticket that allows you to see a specific movie at a specific time at a specific place.

All of this begs the question: how much does an NFT cost? Well, most are bought using Ethereum-based tokens, which is a kind of cryptocurrency. For the sake of simplification, all of the sales mentioned will be described in U.S. dollars. Recently, a digital artist that goes by the name Beeple sold a photo collage for a record-shattering $69.3 million at a Christie’s art show. According to Forbes, this makes it the 3rd most expensive piece from a living artist ever sold. Elsewhere, a digital couch sold for $70,000. Just to be clear—there is no physical couch for sale, it’s digital art.

An article from CBS describes a piece of Banksy artwork being purchased by a blockchain company and then burned. The burning was recorded on Twitter, and then the company sold a digital representation of the art as an NFT. The company claims it was an artistic destruction of art inspired by Banksy themself, who has shredded their own art to make a statement. The piece that was burned depicted an art auction in which a crowd was bidding on a canvas that only says: “I can’t believe you morons actually buy this sh*t.” It sold for roughly $400,000.

All of this goes to show that there is, in fact, a market for this new kind of sale, which is exciting for artists who have struggled to sell in this new digital age. It also provides a highly-profitable market for anyone to dive into. It’s yet to be known whether the recent NFT-craze will last, but it’s certainly already made a substantial splash in the modern digital market.

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