These digital certificates, called to revolutionize multiple sectors and the multiverse, also suffer the ups and downs of the cryptocurrency market.
Three letters, one acronym, have become one of the terms that has burst with more force in recent times. It is NFT, Non-Fungible Token, which is a digital certificate of authenticity that through blockchain technology, the same technology used in cryptocurrencies (tokens), is associated with a single digital file. From there, a new form of digital expression (and business) has been built.
If the above explanation of what NFT consists of has not cleared up all doubts, it is worth remembering that a non-fungible good is one that is not consumed with its use, that cannot be replaced and that is not substitutable. It is something unique, contrary to what happens with money: you can exchange without qualms a 10-euro bill for a 10-euro note because both bills have the same value, they are fungible. The same thing happens with cryptocurrencies. At the other extreme, a work of art is the most illustrative example of a non-fungible good: it is an unrepeatable, unique piece, irreplaceable by another.
Now let’s take all this to digital. NFTs are individual units – image, video, audio, text or compressed file – with a unique value. This is possible because each digital asset gets an identifier in which metadata (author’s name, its initial value or sales history) is recorded using blockchain technology, ensuring that the piece cannot be duplicated.
With these premises, these assets have triggered a sort of new gold rush in the form of crypto-art. The sale of NFT is a new way to (try to) make easy money in the online world and there are many artists, influencers, celebrities, companies, and organizations jumping on the bandwagon.
In one year alone, in 2021, NFTs in the form of artwork files, memes, stickers and just about anything that can be digitally recorded generated more than 3 billion euros. Quite another thing, as we will see a little later, is what the market looks like in the first quarter of 2022.
The Origin of NFT
The first NFT project, which drove the new cryptocurrency concept, cast off in 2017 through the Ethereum network, an open source platform used to execute smart contracts. Cryptopunks, a limited collection of 10,000 original characters (no two are alike) created by two young Canadians Matt Hall and John Watkinson (LarvaLabs), achieved unprecedented success.
With the idea that each character can only have one owner -accredited by blockchain technology-, a buying and selling market was quickly created in which the punks (24 x 24 pixels in size) change hands to the highest bidder.
In May 2021, pioneers Larva Labs sold for $16.9 million nine cryptopunk heads. A year later, the cheapest punk for sale is priced at just over $96,000.
That’s How The Craze Started: $69 Million For An NFT
An exact date can also be pinned down when NFTs entered a new dimension. It was March 11, 2021, when the JPG file ‘Everydays – The First 5,000 Days’ (‘Everydays: The First 5,000 Days“), created by the artist Beeple (Mike Winkelmann) was sold for $69.3 million (57.8 million euros) by Christie’s auction house in New York.
From A ‘Tweet’ To A Van Gogh
From then on, news about crypto-art pieces multiplied all over the world. Without leaving March of that year, a columnist for The New York Times sold an article for 560,000 dollars; an internet user bought a digital chrome of Cristiano Ronaldo for 240,000 euros; Jack Dorsey, co-founder of Twitter, sold his first tweet for 2.9 million dollars and someone acquired a digital portrait made by the robot Shopia for 650,000 euros at auction.
Back in April 2021, the protagonist of the famous meme Disaster Girl pocketed $500,000 from the sale of the original file. In July, Berners-Lee earned 4.5 million from the sale of the original WWW archive, which he developed in 1991. And back in September, Russia’s leading museum, the Hermitage in St. Petersburg, raised nearly half a million dollars by auctioning NFT of works from its collection, namely a Van Gogh, a Kandinsky, a Da Vinci, a Monet and a Giorgione.
NBA And League Cards
The sports world has also seen in NFTs a new business to exploit. The NBA has raffled off great plays from the history of North American basketball in virtual sticker packs priced from $9 to $299, creating a new business model. And LaLiga has reached an agreement with Sorare, a company owned by soccer players such as Gerard Piqué, Antoine Griezmann and Rio Ferdinand, to distribute NFTs of the players and thus open up a new revenue stream for the clubs. Brands such as Marvel are also developing their own certified files.
Metaverse, Where A Digital Yacht Is Worth Us$650,000
Special mention should be made of the metaverse, the new parallel dimension in which tokens may end up establishing themselves as a business with incalculable potential. Not for nothing has $650,000 already been paid for the Mataflower, a digital yacht made of bits and bytes, in the Sandbox multiverse.
Back to real life, galleries and auction houses continue to enter the world of NFT. For example, Julien’s Auctions in Beverly Hills put up for auction a Gibson ES-335 guitar by Ketih Richards, accompanied by a clip in which the rolling stone stamps his signature on the instrument.
What About the Crypto Crash?
So much for the irruption and stratospheric rise of NFTs. It remains to be seen whether these digital certificates are on the crest of the wave or in a bubble that will burst sooner or later. Not for nothing are these tokens linked to cryptocurrencies, which have been going through a delicate moment lately.
In mid-May 2022, cryptocurrency investors panicked, and the markets bled with the collapse of Bitcoin and the other cryptocurrencies (LUNA and TerraUST bore the brunt). Rising interest rates, inflation or the Ukraine war would explain the massive flight of investors from riskier assets.
Since the beginning of the year, NFTs showed the same symptoms as cryptocurrencies and closed the first quarter with a collapsed market. A homegrown example: a year ago, the youtuber Willyrex became one of the biggest advocates of NFTs and, in November 2021, he ended up bringing out his own collection of digital objects, selling them all in just a few seconds after inviting his legion of followers to invest. Six months later, Willyrex acknowledged the loss of his entire NFT investment.
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