The crazy world of crypto continues to baffle the world. Two years ago, digital cats were selling for six-figure amounts, with the highest “crypto kitty” selling for $170,000. Last month a computer-animated, flying cat with a pop tart for a body sold for $580,000 — after which, its creator stated, “I feel like I’ve opened up the floodgates”. The creator in question, named Mr. Torres, may have done just that.
Last week a GIF of Lebron James dunking sold for $208,000, followed by several million-dollar purchases of NFT. However, this week broke new records. A digital art collage was purchased for $69.3 MILLION, created by digital artist Beeple. Beeple has been making money hand over fist selling similar files and has had an online presence since 2007. The piece was auctioned off by Christie's to an anonymous buyer only know by the pseudonym MetaKovan.
Here’s the crazy part though: this isn’t MetaKovan’s first Beeple — he seems to be a collector. MetaKovan purchased the NFT with cryptocurrency, stating that he felt “like I got a steal”. Imagine, if you will, a world where Beeple could be held with the same esteem and admiration from art collectors and connoisseurs as a Monet.
Monied Boomer: “I just bought a Monet.”
Monied Zoomer: “I just bought a Beeple.”
The response to the sale was mixed. Many voices cried madness, but some also embraced it, describing it as a “brave new world”. The embrace of non-fungible assets may become completely normal. Traditional art is, by definition, non-fungible — with both intrinsic and extrinsic value. The demand for rare, fine art is already well established, but tokenized digital art as a market is still in the early stages and immature.
Only time will tell whether it really has the legs for demand among the new rich and younger generations. From the outside looking in, perhaps it already is a market i.e., among the newly minted crypto millionaires, and we simply just don’t understand it. Non-fungible tokens, or NFT’s, are simply digital certificates that represent a specific, one-of-a-kind asset.
Cryptocurrencies like Bitcoin and Ethereum would be fungible, just as dollars and euros are fungible. A traditional piece of art would be non-fungible, or less fungible at least, but this concept applies to digital art in a similar way but instead it’s tokenized. Here is another kicker though, many of these NFT’s don’t even include the exclusive rights or possession of the underlying piece. They are often simply just the lines of code that proves the ownership of the digital asset.
Pretty insane, right?
NFT’s however could be a cause for major concern. Cryptocurrency often is used to launder money, as well as fine art. New questions may now arise over whether NFTs may be an even more sophisticated way to mask illicit transactions, especially since extrinsic and abstract values can be attached — this ultimately will rely on market clearance and sustained demand for NFTs. Others are looking at this as an outright bubble in crypto, similar to DeFi. That being said, there’s already likely an asset bubble in fine art.
None of us know where the future of NFTs lies, and perhaps this will all equate to madness when it’s all said and done, but the future lives in uncertainty. All of life is an experiment and we certainly live an exciting and crazy time.
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