What is an NFT you ask?
It’s likely if you hadn’t heard of NFT’s before, you heard of them this month. An NFT or non-fungible token is a strange way of saying that you are the owner of a digital original. Interchangeable, fungible examples would be a bitcoin for a bitcoin, or a gold bar for a gold bar. But a trade of a Honda for a BMW? Those would be non-fungible.
NFT’s are recorded and stored on a blockchain or digital ledger on the Ethereum platform. This is not like a QR code that simply takes you to a URL address. The NFT contract is written in cyber-stone so to speak.
On March 11, 2021 an NFT by popular graphic artist Mike Winkelmann (aka Beeple) sold for $69 million dollars. Beeple has an impressive clients list from Louis Vuitton, Space X, Apple, Nike to Coke. But until this fall hadn’t sold more than a printed poster for more than $100.
In December Beeple’s 10 second clip of folks strolling by a naked, graffitied Trump, sold for 6.6 million dollars. Only two months prior, Beeple had sold the piece for $66,000.
An amazing thing about NFT’s is that Beeple will make 10% on every later sale of the piece. Each NFT has its own contract with details tailored for that piece. Beeple made 10x more money on the next sale of his work than he did when he first sold it. Imagine! What if every artist received a royalty payment every time their work changed hands? That would indeed be a paradigm shift for the archetypical starving artist.
Use cases for NFT’s will likely grow as the technology becomes more ubiquitous. How about an embedded NFT in your candy wrapper representing tickets to a concert? It could be like winning a golden ticket to Willy Wonka’s chocolate factory.
The band Kings of Leon will release their new album as three different types of NFTs. One featuring audiovisual art, another front-row seats, and a special album package. Their new album is also available on iTunes, Spotify. But could this represent the turning point? Will musicians and artists finally be able to cut out the middle men? Will Beeple even need Christies next go round?
“It’s not about the art. It’s about the mechanism of a digital new world.”
- Raol Pal
Will the NFT market continues to make multi-millionaires out of quirky graphic artists? Will fashion designers (virtual sneakers anyone?), or popular bands lead the way? Most likely there will be some real disasters! Some believe NFT's will fail like countless ICO’s or initial coin offerings. ICO's are a way for new cryptocurrencies to get funded. There have been many scammers and ICO’s are often referred to as sh*t coins. But regardless, possibilities for NFT’s are endless.
Many of Beeple’s works already make up a collection inside of a virtual museum. The owner has fractionalized one collection with a special token.
“The goal is not to make money, but to decentralize and democratize art so token holders everywhere can share a piece of history and share the wealth." Says one of the partners in the venture.
Bottom line. A first edition signed book from a famous author is worth far more than its paperback version. And an artwork’s worth is how much the market wishes to attribute value. Why should digital work be any different?