On March 11, 2021, Mike Winkelmann, popularly known as Beeple, sold his digital artwork as a non-fungible token (NFT) for a mind-boggling $69 million at an online event hosted by art auction house Christie’s. The sale made it one of the most expensive pieces ever sold by a living artist. The JPEG file, titled ‘Everydays: The First 5000 Days’, was bought by Singapore-based Vignesh Sundaresan, who goes by the handle MetaKovan. Overnight, these niche tokens which until then were only perceived to appeal to cryptocurrency nerds, transformed into a new type of digital asset. The mainstream media really noticed and NFTs have become the rage of the crypto world ever since.
What are these tokens all about?
A fungible token is one that can be exchanged for something else, like a bitcoin or let’s say, a $10 bill. One can exchange it for another $10 bill and its value remains the same.
However, non-fungible tokens are rare, digitised assets having unique properties, are often one of a kind, and therefore cannot be interchanged for something else. Imagine a collectible such as Pokémon card, a Mona Lisa painting, a talented rapper’s demo tape, or a Roger Federer autographed tennis ball used from his 20th Grand Slam winner. Except that these would be tokenised and recorded on a public blockchain, thus representing the digital proof of ownership of this unique asset. A blockchain is a shared ledger which is maintained by thousands of computers around the world, and hence forging the records on it is virtually impossible.
Where can one buy and sell NFTs?
Any digital creator today can mint an NFT on platforms such as OpenSea and Rarible that enable users to trade and monetise their tokens.
While some platforms require users to have a crypto wallet address, others like Nifty Gateway have incorporated a payment gateway, paving the way for non-crypto natives to seamlessly embark on their digital collectible journey.
However, users accessing platforms that have their barriers to entry lowered often encounter the perpetual problem of the ‘long tail’ where visibility and sales and heavily skewed in favour of established creators and brands. Newer projects like the gamified aggregator Blind Boxes aim to address this issue.
Says Anita Moore, co-founder and CEO, Blind Boxes “We are elevating the NFT experience by bundling rare, digital assets from established as well as budding creators into mystery boxes to be sold on our platform. This allows for increased exposure and hence higher sales potential for the creator, while enhancing the discoverability of these assets for the enthusiastic collector.”
Are NFTs in a bubble?
Gary Vaynerchuk, CEO of digital agency, VaynerMedia and a renowned YouTube celebrity likens the NFT craze to the dotcom bubble at the turn of the 21st century but is confident of the technology and its evolution over time.
On the other hand, Beeple wasted no time in converting the proceeds from his art sale earned in the cryptocurrency Ether to U.S. dollars, that has had crypto maximalists causing a furore.
While opinions on the future of NFTs swing wildly from one end of the spectrum to another, we can certainly expect to witness a wave of innovation in this space in the near future.
Views are personal. The author is an entrepreneur, travel show host, and a crypto enthusiast. He can be reached on Twitter @rahuljagtiani and Instagram @rahul.jagtiani.