Two weeks ago, I was recording a podcast at Luminous Sound Studios with two friends who, like me, are marketing and advertising-savvy 50-somethings and our conversation wound its way to NFTs and the implication of their legitimacy and acceptance. While we had a cursory knowledge of the concepts, it’s fair to say that in that moment none of us could have written a persuasive essay on the topic. That’s when our engineer and intern – both 20-somethings – chimed in and spent the next 30 minutes explaining the intimate details of non-fungible tokens (NFTs), blockchain, cryptocurrency, Bitcoin, Ethereum and why this is anything but a passing fad.
For those new to NFTs, “non-fungible tokens” are digital tokens that are tied to assets that can be bought, sold, and traded. Think a certificate of authentication for a “one of one” asset in cyberspace – an original piece of digital art, an official digital snapshot of an iconic moment in an NBA game, your proof of ownership for a piece of virtual California property in an alternate digital multiverse. A recent TIME feature article explained NFTs this way:
NFTs are best understood as computer files combined with proof of ownership and authenticity, like a deed. Like cryptocurrencies such as Bitcoin, they exist on a blockchain—a tamper-resistant digital public ledger. But like dollars, cryptocurrencies are “fungible,” meaning one bitcoin is always worth the same as any other bitcoin. By contrast, NFTs have unique valuations set by the highest bidder, just like a Rembrandt or a Picasso. Artists who want to sell their work as NFTs have to sign up with a marketplace, then “mint” digital tokens by uploading and validating their information on a blockchain (typically the Ethereum blockchain, a rival platform to Bitcoin). Doing so usually costs anywhere from $40 to $200. They can then list their piece for auction on an NFT marketplace, similar to eBay.
Clearly, there’s a lot to unpack about NFTs, blockchain, and the raging debate about whether the whole crypto-phenomenon is the future of capitalism or the emperor’s new clothes. Regardless of where you net out on the discussion, the acceptance of NFT legitimacy has clearly reached a tipping point, and the size and volume of recent transactions suggest there’s a massive investment wave that’s only beginning to grow.
According to the TIME article referenced above, in 2020, collectors and speculators spent $250 million on NFT-based artwork, memes, and GIFs. In just the past month, collectors and speculators have spent more than $200 million. That’s mind-boggling, but not surprising when you consider some of the most notable recent transactions and these equally staggering numbers from nonfungible.com, the largest database of blockchain gaming and crypto collectible markets:
- All-time, the top 10 NFT dealers have sold digital assets in excess of $433.8 million
- In just the past seven days, the same top 10 NFT dealers sold assets topping $33.7 million.
- On March 11, a digital artist known as Beeple set a record for digital art selling a single piece at famed auction house Christie’s for more than $69 million
- Recently, Twitter founder Jack Dorsey put an NFT of his first Tweet up for auction – it’s expected to fetch more than $2.5 million