Non-fungible Tokens

NONFUNGIBLE TOKENS (NFTS)

WELCOME TO A NEW ERA IN ART COLLECTION

We can’t help but wonder what Picasso, Dalí or Van Gogh would have said if they had known that a hundred years or more after creating their own masterpieces, a type of art would emerge that was 100 per cent digital, freely reproducible by anybody, and sometimes consisting of a simple snippet from a video… or if they could imagine that this type of art would fetch millions of dollars in the world’s most prestigious auctions. If you are an art investor yourself and you’d like to hone the basics of NFTs, read on and discover how much fellow investors have paid for some of the top-selling NFTs. And take note – not all NFTs are visual artworks. All they ultimately need to be is digital and unique. WORDS MARISA CUTILLAS

WHAT ARE NFTS?

NFTs are ‘non-fungible tokens’. They are a means of proving one’s ownership over a digital item (which usually consists of an artwork or design). ‘Fungible’ essentially means ‘exchangeable’ and most goods have this quality. For instance, it is possible to replace one blank notebook for another, or a trading card for another identical card. Fungible items, on the other hand, have something that makes them irreplaceable – think a first-edition, signed copy of Zafón’s The Shadow of the Wind. The same value is applied to digital tokens, even if they have been reproduced millions of times. Investors buy into an original digital asset – something that can theoretically have as much value as any other original artwork.

Edward Snowden’s Stay Free

NFTS AND THE BLOCKCHAIN

NFTs are typically built using the same type of programming as cryptocurrency and they are held on Ethereum or other blockchains. As stated by TechCrunch, each NFT has a digital signature that makes it unique and each is minted from digital objects that represent both tangible and intangible items. Just a few examples of NFTs include GIFs, videos or short edits from videos, an essay, a domain name, an in-game item, a digital artwork, a ticket that gives the holder access to an event, a unique running shoe in a limited fashion collection, and even a Tweet. Twitter founder Jack Dorsey, for instance, sold the first Tweet he ever published as an NFT for a cool $2.9 million. The Tweet read, “just setting up my twttr,” and it was first published on March 21, 2006. You can check it out for yourself on Dorsey’s Twitter Line.

NFTS AND COPYRIGHT

One thing that makes NFTs unique, says Ethereum, is that “content creators can retain ownership rights over their own work and claim resale royalties directly.” An NFT buyer simply owns a unique hash on the blockchain, a hyperlink to the artwork, and a record of the transaction made. NFTs, then, are tokens representing an asset; they are not the asset themselves. The lack of current copyright trading infrastructure for NFTs means that buyers wishing to own the copyright should make a specific agreement to this effect with the original creator. Buyers should also be wary of the fact that the lack of a legal framework for NFTs means that a buyer could potentially invest in a minted NFT that has actually been stolen from its creator.

WORLD’S MOST EXPENSIVE NFTS

In 1987, an anonymous buyer paid $39.85 million for Vincent van Gogh’s Sunflowers – arguably his most famous work– and one he hoped to sell for just $125. Knowing this fact makes it a little hard for old school art fans to understand the price fetched by the most expensive NFT sold to date: Beeple’s collage-like Everydays: The First 5000 Days, which fetched $69.3 million at Christie's this year (Beeple is Mike Winkelmann, a renowned Charleston-based graphic designer).

Other expensive works include Beeple’s Crossroads (sold for $6.6 million and featuring a Trump-like character naked and lying on the grass with obscene writing all over his body) and Edward Snowden’s Stay Free – an artwork containing the court documents deciding that the National Security Agency’s mass surveillance tactics were illegal.

The truth is that many NFTs are eye-catching and beautiful, much like any other product of creativity. Others, however, have prompted smirks and criticism from art experts – including Logan Paul’s NFT comprising Pokemon trading cards as well as videos from clips you could watch anytime you wished to. He has already sold $5 million worth of NFTs and no doubt will be mining more – and who could honestly blame him? e

Beeple’s Crossroads