A fast-growing market for digital art, ephemera and media is marrying the world’s taste for collectibles with cutting-edge technology.
Mr. Torres was left breathless. “I feel like I’ve opened the floodgates,” he said in an interview on Friday.
The sale was a new high point in a fast-growing market for ownership rights to digital art, ephemera and media called NFTs, or “nonfungible tokens.” The buyers are usually not acquiring copyrights, trademarks or even the sole ownership of whatever it is they purchase. They’re buying bragging rights and the knowledge that their copy is the “authentic” one.
People have long attached emotional and aesthetic value to physical goods, like fine art or baseball cards, and have been willing to pay a lot of money for them. But digital media has not had the same value because it can be easily copied, shared and stolen.
Blockchain technology, which is most often associated with Bitcoin, is changing that. NFTs rely on the technology to designate an official copy of a piece of digital media, allowing artists, musicians, influencers and sports franchises to make money selling digital goods that would otherwise be cheap or free.
In an NFT sale, all the computers hooked into a cryptocurrency network record the transaction on a shared ledger, a blockchain, making it part of a permanent public record and serving as a sort of certification of authenticity that cannot be altered or erased.
The nascent market for these items reflects a notable, technologically savvy move by creators of digital content to connect financially with their audience and eliminate middlemen.
Some NFT buyers are collectors and fans who show off what they have bought on social media or screens around their homes. Others are trying to make a quick buck as cryptocurrency prices surge. Many see it as a form of entertainment that mixes gambling, sports card collecting, investing and day trading.
Eye-popping NFT sale prices have attracted some of the same confusion and derision that have long haunted the cryptocurrency world, which has struggled to find a good use for its technology beyond currency trading. And there is uncertainty over the stability of values, since many of the transactions are using cryptocurrencies, which have fluctuated wildly in worth over the last two years.
“A lot of people are cynical about this kind of thing,” said Marc Andreessen, a venture capital investor at Andreessen Horowitz, in a discussion on the social media app Clubhouse this month. But people don’t buy things like sneakers, art or baseball cards for the value of their materials, he and his partner, Ben Horowitz, explained. They buy them for their aesthetics and design.
“A $200 pair of sneakers is, like, $5 in plastic,” Mr. Andreessen said.
Justin Blau, a D.J. who goes by 3LAU, turned to NFTs after the pandemic halted his touring. He and his art director, Mike Parisella, who goes by the name Slimesunday, began selling unreleased songs with exclusive visual effects. They have sold more than $1.1 million worth of digital art and music, Mr. Blau said. Last week, he announced plans to offer a full album as an NFT.
Even though Mr. Blau and Mr. Parisella retain the copyright to their work, and even though it can be easily copied and shared, fans have been eager to collect the original, authentic versions.
“There’s this whole new culture of owning digitally native assets,” Mr. Blau said. “It’s an emotional thing.”
Mr. Blau is also a collector, and he has bought 25 pieces of digital art. He’s active in a WhatsApp chat called Chad Team 6, where a group of well-known D.J.s share crypto-investing tips.
Griffin Cock Foster founded Nifty Gateway, a site for buying and selling NFTs, with his identical twin, Duncan, in 2018. The company sold for an undisclosed amount to Gemini, a cryptocurrency exchange founded by another pair of cryptocurrency-inclined identical twins, Tyler and Cameron Winklevoss, the next year. The Cock Foster brothers, now 26, continue to operate the company.
Mr. Cock Foster said he had noticed new interest around the holidays. “My college friends were making fun of Nifty Gateway when we got started,” he said. “Now they’re bidding thousands of dollars for art.”
Andreessen Horowitz has backed Dapper Labs as well as Foundation, the site that ran the Nyan Cat sale. A representative for Andreessen Horowitz declined to comment.
Fifteen bids later, he learned exactly how much: 8.77 Ethereum coins, or $17,198.15.
Mr. Hofmann is still wrapping his head around it all, he said. He planned to spread the money he earned around by acquiring some NFTs of his own.
“It is definitely something I’m now spending a good deal of my free time thinking about,” he said.
Like all white-hot internet phenomena, the excitement around NFTs could easily fizzle out. Cryptocurrency prices could plummet again, or people could simply lose interest as the pandemic fades.
The Cock Foster brothers have tried to warn people that it’s difficult to make money flipping digital art. People looking for a fast sale tend to lose money on Nifty Gateway. Duncan, who has spent $80,000 buying art on the site, displays his purchases on three monitors in his apartment. The works have appreciated in value, but he hasn’t sold much.
“I’ll just hold on to it for the rest of my life and maybe pass it down to my kids,” he said. “Or do what art collectors do and auction it off at the end of my life.”
Source: New York Times