Why NFT’s Aren’t BS

On November 15, 2017, the painting Salvator Mundi by Leonardo da Vinci sold for a $450,312,500, the highest price ever paid for a painting. It is currently believed to be aboard a yacht in the Red Sea owned by Saudi Crown Prince Mohammed bin Salman.

We are used to sky high prices for physical pieces of art. But until recently, digital art had almost no value. It could be reproduced infinitely, so how could anyone sell or own it?

Enter Non-Fungible Tokens (NFT’s). These tokens are pieces of art, videos, etc. that have a unique digital key. Their one and only owner is recorded on the blockchain, just like the ownership of cryptocurrencies like bitcoin.

The NFT market is exploding (see the March 8th post here):

The 10 largest NFTs have leapt by between 60% and 900% so far this year, according to crypto data provider Messari. In turn, sales of the tokens footed to more than $60 million in February per Bloomberg, up from $250,000 a year ago.

Beeple, a major digital artist, has done very well in the NFT market:

Beeple, who made his first foray into NFT’s in October, generated $3.5 million in proceeds from a 20-work digital art collection two months later.

NPR just put out an interesting, brief interview with Beeple here.

Monetizing digital art is no less legitimate than monetizing physical art, in my view. Why should art made of pixels be worth nothing while art made of paint and canvas be worth hundreds of millions? The medium doesn’t make something art or not art.

The global art market clocks in at $67 billion in sales, while the NFT market is only worth about $250 million. I expect to see that figure expand exponentially in the future, especially with the entry of blue chip art names like Christie’s.

Does that mean there is no NFT bubble? No. Some tokens may be overvalued and some people are probably speculating on quick price increases. But my view is that this market is legitimate and here to stay.

For more on the blockchain and cryptocurrencies, check out these posts:

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Photo: “Mike Winkelmann – Beeple at Expanded Animation – OUT OF THE BOX, POSTCITY” by Ars Electronica is licensed under CC BY-NC-ND 2.0


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