NFTs, also known as Nyfties are digital assets on a blockchain. They have unique qualities that stop them from being interchangeable. That means that they are difficult to forge, so it guarantees the authenticity of the item being purchased.
As technology grew, so did the ease of making forgeries, duplicating work, and so forth that have been costing artists their well-earned pay for decades. NFTs have helped to solve the problem artists around the world have been having when it came to getting their well-earned royalties. NFT ownership is recorded on the blockchain, thus preventing illegal copies from being made. This ensures that artists get paid for their work.
Hence, the different types of NFTs springing up, which include music, artwork, event tickets, domain names, physical asset ownership, and collectibles. At the moment these are sold at auctions in a similar style to how artwork is sold at a live auction. The only difference is that it is all done online.
How Does It Work?
NFTs are mostly found on the Ethereum blockchain and Ethereum-based tokens are used to authenticate ownership of the NFT. That’s because the item or asset is attached to the token, so you can copy the file from someone else’s NFT but it won’t be the original and that can be traced. Whoever owns the token owns the NFT. As such, each copy or reproduction is verified as not being the original. The token contains the ownership information, a certificate of authenticity, and copyright information.
The blockchain is the public register for ownership of a digital item that is secure because it can’t be hacked or overwritten. A ledger entry is created the same way as with any blockchain cryptocurrency. This entry contains the address to the file, which establishes ownership of the NFT. When the NFT is sold, then that token code is also transferred and noted as a ledger entry. This is how ownership is tracked on the blockchain.
The NFT owner can add metadata to the character of their new NFT. This additional information would describe whether it is art, music, and so forth, as well as what format it is in: for example, jpeg. video, and so on.
Tokens don’t have any value on their own; the value is based on the media attached to it. Think of an award-winning piece of art. The artist’s talent and reputation give the painting its value and so that is what it gets priced for an auction. Value is based on market demand. It is also based on rarity or scarcity, because the NFT creator can decide if they want to make copies and, if so, how many.
Something very important to bear in mind is that the artist still owns the copyright, which they use to claim their royalties.
So you own the item but cannot duplicate it. Also, it could be stored on the artist’s website, which could be taken down. Therefore, ensure that you know what happens to the asset should these things occur, to protect your purchase.
Why Is It Popular Now?
The amount that several digital items have been sold for has turned heads. And the industry has exploded purely because cryptocurrency is on the rise and the COVID-19 pandemic has pushed a lot of items online. People can’t physically watch a concert, so they purchase an exclusive album online and watch it there.
People were also not spending as much money because they were stuck indoors, didn’t have to drive to work, and couldn’t travel, so they now have the extra cash to spend. Plus, cryptocurrencies have surged in popularity, so one could say that the stars have aligned for NFT trading.
Its popularity has also helped create several companies that facilitate the buying and selling of NFTs, called NFT Marketplaces.
A lot of investors are paying high rates to promote NFTs based on their belief that they will only increase in profitability.
With all this backing, it’s no wonder more people are interested. Add to that the fact that trade is an easy process that doesn’t require extra financial backing or extra platforms. For example, if you create a piece of digital art, you just have to sell it on a marketplace. There is no need to market it, spend money on promoting it, or punt potential buyers.
Is It a Crypto Fad?
I have mentioned a few times that NFTs are not new and have been around for at least a decade. An example of this are CryptoKitties, digital kittens that were collectibles, and very popular among those involved in cryptocurrency when they were created in 2017. Despite all the celebrity hype, NFTs aren’t a fad based on how high the trading volume is and is still growing.
NFTs have been linked to a technological revolution that taps into us wanting to own rare items of high value without the worry of illegal copies. This is fantastic in an age where everything that is online can and is copied. NFTs bring back value to items with security and traceability.
Even though there were record-making sales in the news, NFT prices have dropped but are staying constant even as the hype dies down, which is making it a much more stable market in which to invest. It’s also innovative and new, which can be a push back to many who are presented with something that seems too good to be true.
This is why there are concerns that the NFT market could crash and bring down investors with it. But not everyone is skeptical. NFTs have been likened to the dot-com bubble when people thought the internet was a fad. In reality, it was just overly priced early projects that had caused all the excitement.
At the moment, there is a lot of hype, so prices are high but they will drop and stabilize. This is a good thing because it means that NFT trading is here for the long term.
What Are the Most Expensive NFTs to Date?
As the list is continuously changing, I am not going to list the top 10 most expensive NFTs to date, but I will list some of the most notable NFTs to date, not just based on their price but also on their rarity and originality.
Beeple With Everydays: The First 5,000 Days
This piece of NFT art was sold at Christie’s for $69 million and to date is the largest amount anyone has paid for an NFT, as well as the most expensive work of art by a living artist. It is made up of 500 pieces of art that had been created in May 2007.
The artwork was bought by Vignesh Sundaresan, also known as MetaKovan, who has displayed it in a digital art museum in the Metaverse, which is a virtual space that is shared.
Edward Snowden with Stay Free (Edward Snowden 2021)
This piece of art depicts Edward Snowden’s portrait over the court documents showing that the National Security Agency in the United States illegally mass surveyed individuals. This was a piece of charity art that benefited a company called Freedom of the Press Foundation by being sold for over $5.4 million.
Mad Dog Jones With Replicator
This artist is currently the most-expensively selling living Canadian artist because of this piece of art. It is also unique in that new NFTs will come from it every 28 days, each with its own resale value. This is quite a return on investment for the buyer, who could own up to 220 unique NFTs that they can sell. Well worth the cost of $4.1 million if you can get so much more out of it, don’t you think?
Kevin McCoy With Quantum
This is an exceptionally unique NFT, as it is the first-ever created as far back as 2014. The artist created the token on Namecoin in May 2014 using technology he created with the coder Anil Dash. They presented this to an audience at the New Museum in New York but their audience laughed.
But as the phrase goes, “Who’s laughing now?” I would say $1.4 million is certainly having the two creators laughing all the way to the bank.
Pak With the Switch
This piece of artwork gives the owner the option of changing the artwork to a new unknown image. This is part of the artist’s way of representing the way art is evolving digitally. However, once the new owner decides to trigger the switch, then it can’t be changed back.
It was sold as part of a collection of seven pieces of digital art at Sotheby’s for $17 million, so I can see why the owner would be hesitant to change the piece.
3LAU With Gunky’s Uprising
This piece is a combination of animated artwork and a music video created to celebrate the disc jockey (DJ) and electronic musician’s third anniversary of his album Ultraviolet. For $1.3 million, it’s no wonder he has a couple more art pieces for sale.
These feature unreleased music with the option for the buyer to name the songs as well, when purchased.
Don Diablo With Destination Hexagonia
This Dutch DJ, record producer, musician, and songwriter is known for his electronic music created this full-length, 1-hour concert.
Based on a Sci-Fi theme, the owner received a hard drive containing the only copy of the file. This makes it a very rare collectible, and worth the roughly $1.2 million cost.
Don Diablo is now creating NFT comic books.
Larva Labs With CryptoPunks
These NFTs, inspired by the London punk scene, the cyberpunk movement, and several books and movies, were released on the Ethereum blockchain in 2017.
These are limited to 10,000 characters (6,039 males and 3,840 females) and created through computer code so no two characters are duplicated. Some have even rarer traits, which makes them great collectibles. These traits include humans, zombies, apes, and alien CryptoPunks, the latter three being the rarest and most valuable.
This is especially true now, with the boom in NFT sales. A couple of years ago, they could be obtained for free by anyone with an Ethereum wallet. Now they are being purchased for as much as $7.58 million each.
Jack Dorsey With the First-Ever Tweet
Jack Dorsey, the CEO of Twitter, has also jumped on the bandwagon and sold his and Twitter’s first-ever tweet for $2.9 million. The tweet was sent on March 6, 2006 and went on sale via the platform Valuables. It was purchased by a Malaysian-based businessman who coveted the purchase and likened it to owning Da Vinci’s Mona Lisa.
This is exactly how NFTs are perceived: valuable pieces of artwork that are rare.
Sky Mavis With Axie Infinity
This online video game uses Ethereum cryptocurrency that allows players to trade, collect, breed, raise, and battle creatures called ‘axies.’ All the characters are NFTs and in February 2021, an estate from the game was sold for $1.5 million: virtual estate from a video game.
This made it the largest digital land sale recorded on the blockchain.
