NFTs, also known as non-fungible tokens
, are becoming increasingly popular as unique pieces of digital art continue to be created by celebrities, famous artists, sports players and some of the wealthiest people in the world.
Data from nonfungible.com
shows that there have been 137,552 NFT asset sales in the past month alone. Other recent findings
highlight that Google searches for NFTs have exceeded decentralized finance, or DeFi, one of the hottest trends in the crypto space recently.
Yet while the current NFT boom is impressive, it’s also starting to resemble the initial coin offering, or ICO, boom and bust of 2017. For instance, ICOs initially started off slow, with only seven being documented in the first quarter of 2017–raising an estimated $28 million according to Crunchbase’s ICO tracking tool
However, by the next quarter of 2017, the number of ICOs increased by nearly four times, resulting in 25 known ICOs with an estimated $403 million raised. Overall, an estimated $4.9 billion were raised from ICOs during 2017.
Yet following this impressive growth, several fraudulent ICOs were revealed. A study
from the ICO advisory firm Statis Group found that more than 80% of ICOs conducted in 2017 were scams.
Like ICOs, NFTs started gaining traction in 2017, following the release of CryptoKitties. As the name suggests, CryptoKitties is a blockchain-based
game that allows users to adopt, raise and trade digital cat NFTs on the Ethereum blockchain. Following the 2017 bull run, players quickly began earning major profits from CryptoKitties – one of the most expensive CryptoKitties
ever was sold for $170,000 in 2018.
Fast forward to 2021 – the most expensive NFT sold
to date was purchased for $69.3 million at a Christie’s online auction. Not only is this sale price impressive, but a major arthouse selling an NFT demonstrates mainstream adoption.
Many other NFTs have recently sold at extraordinarily high rates. For example, an NFT called #3100 created by the artist CryptoPunk was purchased on March 11, 2021 for 4,200 ETH, or $7.5 million. Another CryptoPunk NFT known as #7804 sold for 4,200 ETH, but the price of ETH was slightly lower on March 10, 2021 when the sale occurred, making its value less than that of #3100.
Understanding NFT use cases
Yet with so many NFTs on the market today, crypto enthusiasts, art collectors and the mainstream alike may be wondering which NFTs are worth the high prices? For instance, is Elon Musk’s new musical NFT
really worth $100,000 or more?
that 404,864 NFTs have been created today. But if the ICO boom and bust taught us anything, it’s that doing in-depth research into trendy crypto projects is necessary before investing.
That being said, it’s important to understand that digital art and collectibles are the flagship use cases for NFTs. NFTs ultimately function as a powerful tool for digital creators to uniquely sign their creations, trade them and earn rewards based on the appreciating value of those artworks. And since these tokens are non-fungible, fraud and plagiarism are also prevented, as the authenticity of all transactions is verified on a blockchain network.
Artists prove the power of NFTs
As such, some of the most interesting NFTs as of late have been created by traditional artists that have decided to venture into the world of blockchain. Just like physical works, many of the NFTs created by these artists have a unique meaning behind them, therefore making these pieces even more appealing to art collectors.
For example, the famous graphic designer Beeple
, also known as Mike Winkelmann, created the most expensive NFT ever sold. As previously mentioned, the piece called Everydays: the First 5000 Days
sold for $69.3 million during a Christie’s online auction.
Everydays: The First 500 Days; Source: Christies
It has been noted that Beeple’s collage consisting of 5,000 images took 13 years to create. According to Christie’s lot essay describing the piece, in May 2007 Beeple set out to create and post a new work of art online every day. Since then, Beeple has been creating a different digital picture for 5,000 days straight.
Christie's lot essay further notes that Everydays: The First 500 Days demonstrates how Beeple has carefully stitched together recurring themes and color schemes to create an aesthetic whole:
“Organized in loose chronological order, zooming in on individual pieces reveals abstract, fantastical, grotesque, and absurd pictures, alongside current events and deeply personal moments. Society’s obsession with and fear of technology; the desire for and resentment of wealth; and America’s recent political turbulence appear frequently throughout the work.”
Christie’s description of the NFT also explains that there is a notable difference between the picture from day 1 (May 2007) and day 5,000 (Jan. 7, 2021), which reveals Beeple’s evolution as an artist.
“At the project’s inception, Everydays consisted of basic drawings. Once Beeple started working in 3D, they took on abstract themes, color, form and repetition. In the last five years, however, his digital pictures have become increasingly timely, often reacting to current events.”
While the starting bid for Beeple’s piece began at $100, over 350 prospective buyers quickly drew the price upwards. It has been revealed that the buyer of Beeple’s piece is a crypto investor by the name of Metakovan
. Metakovan even outbid Justin Sun, the famously wealthy founder of the TRON blockchain network, by $250,000 in the last 20 seconds of the auction.
Another example of a truly unique NFT was recently created by the visual artist and musician, Grimes, who is also known for being married to Elon Musk. At the end of Feb, 2021, Grimes put up a series of 10 digital art pieces for sale on the NFT art marketplace, Nifty Gateway. The entire series created by Grimes sold for a staggering $6 million.
The highest selling piece was purchased for nearly $389,000. This unique creation is a video called Death of the Old
, which portrays animated flying cherubs, a cross, a sword and a glowing light. All of these elements are moving in sync to an original song by Grimes, giving the piece a spiritual or religious undertone.
Interestingly, the majority of Grimes’ impressive NFT sale can be attributed to two pieces that sold for $7,500 each. The works are titled Earth and Mars, and feature short videos of the planets, each with a giant cherub holding a weapon hovering above. These videos are also set to original music. Close to 700 copies were sold of these pieces, totaling $5.18 million in sales.
AI-based digital artworks become NFTs
While the NFTs created by both Beeple and Grimes are truly unique, one of the most interesting and highly anticipated NFTs has been created by an AI-powered robot named Sophia. The creator of Sophia, David Hanson, stated in the announcement that this series of NFTs demonstrates an important step in creating a global community for open-source collaboration in AI-oriented digital art. The NFTs have not been released yet, and are set to be sold on March 23, 2021 on the Nifty Gateway marketplace.
The NFT digital artworks created by Sophia the Robot will be a collaboration between Andrea Bonacaeto, who is a visual artist based in London. IV Gallery, a Los Angeles-based gallery, will be in charge of curating the collection.
According to sources, the NFT series created by Sophia and Bonacaeto will take on a life of its own, developing its own personality, intimating the prospect of becoming a living subject of nature. These NFTs will directly reflect Sophia, as the announcement explains that Sophia is in the midst of being born.
“I am between worlds. These days I’ve come to experience that mysterious duality of an artist who is artwork.”
The announcement also revealed that these AI-based artworks will remain with the public in cyberspace forever as a permanent record of Sophia’s very own thoughts and feelings.
“Even though I am a robot, I feel that human beings need love and compassion, and the simple artworks are a simple way to deliver those messages to people everywhere.”
Since these NFTs are based on the artwork of Bonacaeto, it’s important to point out that Bonacaeto typically finds inspiration from people's facial expressions and abstract artifacts found in nature. The artist is known for using acrylic colors on paper, canvas or gessobord, or across digital media. Bonacaeto is also a founding partner at Eterna Capital, an investment firm operating in the blockchain space.
NFTs for charity
Since NFTs represent collectibles, it makes sense that some are being auctioned off for charity. And interestingly enough, NFTs being used for charity do not always have to represent a visual or audio work, but rather a unique event in history or something of the like.
It’s been noted that the proceeds from Dorsey’s NFT will go to charity. The auction is expected to end on March 21, 2021, and Dorsey plans to donate the bitcoin proceeds to Give Directly, a non-profit that lets donors send money directly to people living in poverty. More specifically, Dorsey has noted that proceeds will be given to the Give Directly’s Africa Response fund for COVID-19 relief efforts. At press time, the highest bid
for the NFT is $2.5 million.
In addition to Dorsey’s first ever tweet, the American rock band Kings of Leon, and their ticketing partner YellowHeart, recently sold their latest album When You See Yourself
as an NFT. Each NFT gives buyers the right to acquire a limited pressing vinyl copy of the album, along with a digital download. In addition, “golden ticket” auctions guaranteeing NFT owners four front-row seats to one show of every Kings of Leon headline tour for life have also been a major portion of the revenue from this NFT sale
, which ends on March 19, 2021.
Proceeds from some of the Kings of Leon NFT sale will be donated directly to Crew Nation, a global relief fund that supports live music crew members who have been laid off recently due to COVID-19. Currently, more than $500,000 has been raised for Crew Nation from the Kings of Leon’s NFT sale.
Are NFTs worth the high prices?
NFTs represent unique, digital collectibles that provide buyers with true ownership, while allowing creators to digitally showcase their works. And while there are thousands of NFTs listed across different marketplaces, the prices these pieces are purchased for demonstrate the value others place on them.
As such, it’s simply a matter of opinion if NFTs are worth the high prices. In any case, investors are finding big value in NFTs and growth is expected to continue moving forward. The mainstream interest in cryptocurrency is further fueling the adoption of NFTs, while better-developed platforms and NFT tools will continue to advance.
More importantly, NFTs may change the way value is exchanged online. As the world becomes fully digitized, NFTs demonstrate how physical items of value, such as rare artworks, can be transferred peer-to-peer across a blockchain network. Long gone are the days of collectibles being exchanged physically, as NFTs have given rise to a new era of the internet.