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$ 69 million for digital art? NFT craze explained

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While it was Beeple, there was William Shatner.

Last July, the author of “Star Way” actor, singer “TekWar” created a number of business cards, which depict his career pictures. A telegram from the producer, a photo from his first model shoot, a dental x-ray – he listed them as unique digital signs of online sales – the so-called NFT.

In nine minutes, the entire 125,000 symbols were completely consumed, for about a dollar each. At the time, it seemed like a lot of money for digital items that had no real value.

Not so much now.

In recent weeks, such signs have come to be known as the NFT, which is either an ecologically destructive speculative bubble or a promising new model of art և media funding, depending on who you ask.

Months after the release of Shatner Signs, companies began creating business cards from popular NBA videos, and artists rushed to cash in on the craze. Beeple’s graphic artist Mike Winkelman’s digital collage sold for $ 69 million at Christie’s auction on Thursday. The auction house named Winkelmann “one of the top three most valuable living artists”, but the sharpening of his work, as long as the pieces were made for a single million last month, reflects a greater fury over all NFT items.

The basic idea behind technology is quite simple. NFT, which acts as a non-fun character, is like a real object certificate, real or virtual. The unique digital file is stored in the blockchain network, any change of ownership is checked by the World Wide Web and “entered in public”. This means that the chain of custody is always mentioned in the case,: it is practically impossible to change the fraud.

On the contrary, bitcoins և other cryptocurrencies are fun symbols. Like the US dollar, any bitcoin is equal to any other, while NFTs are unique. To date, most NFT sales have been made in cryptocurrencies such as Ether են registered in the Ethereum blockchain, although this does not require a horse.

The NFT file does not contain a digital art piece, video clip, or Shatner card itself. It’s just a kind of contract saying, “the owner of this NFT owns this other digital file,” which often refers to the original art file. NFTs can also be used as non-counterfeit digital event tickets, or even property sales records. These are all bits of unique code attached to a verifiable title string.

A game called Cryptokitties puts this technology to early use. Since 2017, users have been able to buy and sell collective NFTs related to individual virtual cats, and prices have risen by six figures to the beginning of 2018. The same company as CryptoKitties, Dapper Labs, also follows the growing NBA collection company Top Shot. , which sold $ 230 million in NFTs related to basketball highlights from October 2020 to January this year.

The involvement of NFTs in collectors is obvious. Instead, rely on forensic examinations or patchwork to prove that a piece of art or a business card is a real deal, the authenticity being identified in the NFT file.

The appeal of millions of NFTs being bought and sold at the moment is less intuitive. The NFT file is not in itself a physical trading card that one might appreciate for its rarity in historical production or want to complete a collection. It is also not a piece of art, moreover, a famous piece of art that has a reputation for beauty or historical interest. And today, with digital files typically attached to NFTs, anyone can view the same basketball lights or back up the same digital image to their own hard drive at any time. What NFT does identifies և records the origins of NFT itself, such as limited edition photo reproduction, but when NFT artwork is freely available, there is no inherent reason why it would be valuable to everyone.

This is where the collective imagination of the market comes into play. In the absence of intrinsic value, NFTs roughly estimate how art-card trading can serve as a financial tool for investors.

The elite art market, despite being a scapegoat for the tasting industry, which’s supposed to influence the value of individual works of art, has been inevitable from any material reality for decades. Many art buyers buy art because it is valuable, not because it is art, they store it in warehouses until they find it expedient to dissolve it as an asset in their books, to sell it to a new buyer who also values ​​it. is it as a financial asset? ,

The business card market became unstable in 2020. Rare card auction prices were breaking at a steady pace. $ 900,000 for a LeBron James և Michael Jordan card in February, $ 1.8 million for another LeBron card in July, and և 1.81 million for an ian anis Antetokounpo card in September. In October 1909, the Honus Wagner Card was purchased for $ 3.25 million.

The cards themselves did not change, but as an asset class, they became, like the fine arts, more attractive to investors, speculators, who were looking for a value-potential income return.

NFTs follow the same principle. Anything unique, verifiable can become a place to make money, to make a profit, to open it for any real or virtual object. Twitter CEO Jack E. Dorsey is auctioning off his first NFT tweet, which is entirely dedicated to selling NFT tweets, and currently has a bid of $ 2.5 million. Some sell other people’s NFT art without their consent. If you want, you can try to sell NFT for the moon.

But there is a real cost to creating this value out of the box. The development of cryptocurrency transactions has taken away a great deal of computing power, which has raised environmental concerns about the boom. French ounce Lemersier, an environmentally conscious French artist who carefully monitors his studio’s energy use, feared knowing that he was selling only six pieces of his own, as NFTs consumed more electricity per day than in the previous two years. On a larger scale, the computer networks that together form the Bitcoin և Ethereum blockchain use as much electricity each year as Argentina և Ecuador, respectively.

Apart from the high energy value, there is no guarantee that NFTs will retain any value for a long time. Just as there was no reason to believe that a paper with a picture of Honus Wagner was ever worth more than a card printed on it in 1909.

But for now, many artists are cashing in on the craze. People struggling to make money from their art by asking for advice or selling physical prints can slap the NFT in the face and make thousands of dollars.

The music world has also begun to dip its fingers in water. Last Friday, Kings of Leon released a new album on all major channels, but decided to drop three NFTs at once, sweetening the deal for fans (who could also be NFT speculators) by offering album bonuses, live show bonuses, and additional art. to buyers:

Mike Shinoda, one of the first members of the Linkin Park rock and roll band to create his own venture capital in 2015, became one of the first musicians to release a single alongside NFT in late February. Buyers paid thousands of dollars for one of ten happy-go-lucky videos of the 75-second song “Happy Endings” with animation, and the proceeds went to ArtCenter College of Design in Pasadena.

In the case of Shinoda, buyers also received a physical signed copy of the album art in the mail. But the real world is not. “It simply came to our notice then. It’s not a physical thing, “said Shinoda in an interview with Input Magazine. “It’s about the idea of ​​ownership.” Of course not.

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