In early March, a tech company bought a piece of art worth $95,000. Then the executives lit it on fire. At the end of the spectacle, which was shared live on the internet, the group unveiled a copy of the art, this time in digital form. The creation, by elusive British artist Banksy, was called “Morons (White).”
The NFT market is exploding right now, as early adopters and cryptocurrency enthusiasts try to cash in on the trend. Recently, Mike Winkelmann, a digital artist from South Carolina who goes by the name Beeple, sold “Everydays: The First 5000 Days,” a tokenized collection of his art, at an online auction at Christie’s for more than $69 million. NFTs representing other pieces of internet art — like an illustration of Homer Simpson as Pepe the Frog, have sold for thousands of dollars apiece. NBA Top Shot, a partnership between the N.B.A. and the blockchain company Dapper Labs that turns basketball highlight videos into unique cryptocollectibles, has $230 million in sales since 2019. Even well-known musical acts like Kings of Leon are getting in on the NFT action, selling millions of dollars’ worth of music in the form of digital tokens.
As for the digital format, it’s getting more hype than the painting and the burning put together. It’s a rising type of technology called a non-fungible token, or NFT. Think of an NFT as a unique proof of ownership over something you can’t usually hold in your hand — a piece of digital art, a digital coupon, maybe a video clip. Like the digital art itself, you can’t really hold an NFT in your hand, either — it’s a one-of-a-kind piece of code, stored and protected on a shared public exchange.
Non-fungible tokens (NFTs) are a class of cryptocurrency assets in which each item, or token, is entirely unique. This makes them useless as a currency, but quite useful for other things—such as crypto art.
But NFTs are designed to give you something that can’t be copied: ownership of the work (though the artist can still retain the copyright and reproduction rights, just like with physical artwork). To put it in terms of physical art collecting: anyone can buy a Monet print. But only one person can own the original.
To strike gold in NFTs, an artist must have two things: acumen and an audience. Profitable crypto artists spend time developing their fan base and educating themselves in sometimes quixotic cryptocurrency and blockchain protocol apart from practicing their craft.Despite Beeple’s seemingly overnight success, he actually had been honing his digital art skills for over a decade before his first NFT sale.
There’s still a long way to go in ironing out the technology, which can be slow and clunky, and even figuring out where it would be most useful. Stunts aside, the idea behind NFTs is recognition that an increasing amount of what we value in the world is entirely digital and never really “existed” in the first place.
Author: Mr. Prashant Pandit, Executive Director Universal CLC
Blockchain speaker, investor & board member