Remember this prehistoric meme?
That’s the Nyan cat. Believe it or not, the above GIF was sold for over half a million dollars. Yes, the cat GIF you can easily google and watch it loop for as many hours as you’d like, was sold for the price of a 3,000 square-foot house.
Why would anyone sell that? Better yet, why would anyone buy it for that much money?
It’s simple: that moving pixelated cat was sold as an NFT, also known as the new darling of digital art collectors worldwide.
NFTs are non-fungible tokens, meaning they’re not interchangeable with other assets of the same type. If a token is non-fungible, that means it can’t be copied or replaced. It can’t be exchanged among people — like dollar bills — and it can’t be forged like a Van Gogh, for instance.
Dollars are fungible, while NFTs aren’t. Bitcoins are fungible, while NFTs aren’t. Hopefully, that makes it easier to understand.
NFTs are turning the digital art world around. They give creators a way to make money from their artwork, while also giving online art curators a sense of ownership and connection with creators. By sense of ownership, I mean rigorous ownership, as NFTs come with a certificate of the digital ownership of the asset you’ve bought.
That’s right: NFTs are registered and authenticated on the blockchain. The origin and authenticity of a piece of digital art can be proven after acquiring professional Certificates of Authenticity in certification services like Verisart. This way, an NFT’s source can be traced even after a collector has purchased it from the creator, as the NFT states who owns the asset.
Here’s why that matters, and why NFTs are so valuable today.
How Do NFTs Work, and why are they important?
NFTs are created with a type of cryptocurrency (or crypto, a digital currency) called blockchain, which makes them a brand new opportunity for collectors, investors, and artists.
Why are people trying to get their hands on them? In short, because they’re unique. And because they’re unique, they’re highly desirable. When a highly desirable thing is sought after by salivating buyers, you better grab it as soon as you can.
Now, on to the figures.
The NFT market size has boomed. The market cap was around $250–350M in 2020, but it’s already $2 billion in the first quarter of 2021. $2 BILLION. It’s a little short of insane.
According to NonFungible.com, there were more than twice as many buyers as sellers in the first quarter of this year, with 73,000 buyers for 33,000 sellers [1]. Both buyers and sellers can collect and sell NFTs in online marketplaces like OpenSea and SuperRare.
Let’s see some examples of NFTs.
-
GIFs, like the groovy kitty you saw above.
-
Digital art, like images and video clips, is sold on platforms like Cultured Crypto and Foundation.
-
Tweets. Yes, tweets. Twitter’s CEO Jack Dorsey sold his very first tweet as an NFT on March 2021 for, uh, $2.9 million.
-
Collectible cards. Even your beloved one-of-a-kind Pokemon cards can now be safely traded in NFT marketplaces. According to Connor Sephton from CoinTelegraph, “If you were to buy a coveted Pokémon card, you’d be able to receive it in the form of a nonfungible token — with this platform storing it safely on your behalf.” As you’ve noticed, the key term is “safety”.
How Will NFT Impact the Curator Economy in the Near Future?
With NFT, art curators (or collectors) have the power to collect something that they really resonate with. But how so?
Curators can co-create or co-own a creator’s asset, and the more the value of NFT increases, the more the creator will receive in financial return. It’s a win-win structure, and a profitable one for all involved. NFT trading platforms are where passionate supporters of digital assets develop meaningful connections with their respective creators.
What’s more, it’s a huge investment opportunity for appreciators of good assets, and even for hobbyists. As an example, Cultured Crypto is a digital space that arguably curates the best collection of NFT art on the planet. True digital art aficionados wouldn’t want to miss the latest and greatest NFTs from the world’s best artists around the globe.
Are There Any Downsides to an NFT?
Everything comes with a price. And since the price is essentially what we’re talking about, let’s hear some of the downsides of NFTs.
For appreciators of unique physical art, such as paintings, NFTs might not be as interesting. Unfortunately, such physical assets can’t be digitalized. For some people, that’s great. On the other hand, for others who would like to buy the digital version of a painting they love, that’s sad.
Another thing that may frustrate NFT buyers is the lack of control over their tokens. Remember the Nyan Cat? Someone bought it for $580,000, but if you go ahead and Google “Nyan cat gif”, you’ll find the original GIF, as well as all of its fun variations. To some people, it may not make sense to pay a large value for something people have access to for free.
Will NFTs Replace Valuable Physical Assets?
Not really. Collectors of physical assets will always be around, and physical assets won’t just vanish into thin air.
As we all knew, the digital shift of pretty much everything was inevitable. Classes and meetings have gone digital, particularly when we needed it most. But will we sacrifice in-person meetings if they’re attainable? Not at all.
Art has also gone digital, and art curation followed suit. So have a lot of the physical assets you owned, such as collectible cards. That’s not to say that traditional art and collectibles have become replaceable — they never will. They’ll become antiques, at most.
We’ve all had this conversation at least once: for years now, we’ve been talking about the potential obsolescence of books when compared to Kindles and PDFs. And as we’ve seen, they still haven’t been able to mimic the original reading experience. The same goes for digital art versus physical art.
Surely, digital assets like NFTs can’t be ruined, stolen, or forged, as the transaction and provenance from creator to the buyer is ironclad. Plus, the collaboration between owner and collector is highly profitable. Still, that won’t necessarily make every single artist become part of the NFT empire. Not in the foreseeable future, at least.
Despite that, NFTs are an interesting consideration for those looking to profit from their unique creations, as well as their rare (or, dare I say, “iconic”) items in the safest possible way. It’s quite amazing to see both the creator and curator economies transform before our eyes.
—
See you next time,
Kazuki
P.S. — You can see what I’ve read and highlighted about NFT from here.