On March 11, we witnessed a fundamental shift in how digital creations are monetized.  

The auction house Christie’s held its first-ever sale of digital art: a collage of five thousand images created over thirteen-and-a-half years by Mike Winkelmann, better known as Beeple. The artwork is attached to a nonfungible token (NFT), a digital certificate of authenticity that runs on blockchain technology.

“Christie’s has never offered a new media artwork of this scale or importance before,” said Christie’s contemporary specialist Noah Davis on the occasion. 

Within the first hour of Everydays: The First 5000 Days going live on February 25, online bids jumped to $1 million. In the final thirty minutes of bidding on auction day, the price skyrocketed to $69 million. 

That’s higher than works by Vincent Van Gogh, Picasso, Frida Kahlo or Salvador Dalí. The sale positions Beeple as the third most valuable living artist after Jeff Koons and David Hockney.

You can track some of the most expensive pieces sold across NFT marketplaces on cryptoart.io. Last month, a 10-second video artwork featuring the collapse of a giant Donald Trump, also by Beeple, sold for $6.6 million. The seller had purchased it for $67,000 in October. 

Source: A fragment of “Everydays: The First 5000 Days” by Beeple

That a venerated 255-year-old auction house is selling a JPEG should be unsurprising. It’s a bull market—and the greed itch persists. The rush to start minting NFTs is just the latest hustle. 

NFT market value tripled to $250 million in 2020. This year we’re seeing an even bigger explosion. In February alone, the 10 most popular NFT collectibles saw nearly $400 million in sales volume, a 400 percent month-on-month increase.

Among the flurry of transactions, a video clip of LeBron James dunking sold for $208,000, an animated cat flying through outer space went for $590,000, a pixelated CryptoPunk drawing fetched $1.5 million, and a song by 3LAU, the DJ, sold for $3.6 million. 

None of this is insane—yet. We are only at the beginning of the process of price discovery and unlocking value in wholly new asset categories. 

According to Sam Lessin, a partner at Slow Ventures, NFTs are a clear example of people “rationally” responding to how technology is changing investing. “Retail investors are starting to behave in ways that might seem crazy through the lens of the old economic thinking, but make perfect sense given the new realities of modern techno-capitalism.”

The internet dramatically boosts liquidity and scale for a range of digital assets, creating a bias toward investing in things with tons of asymmetric upside.

Source: The Hustle

Five months after launch, the National Basketball Association’s Top Shot website, where users buy and trade game highlights in the form of NFTs, has over half a million users and more than $300 million in sales. Major League Baseball and European football teams followed suit, launching their own platforms. Nike, Louis Vuitton and Formula 1 are presently minting NFTs.

Another burgeoning space in the NFT world is virtual real estate. On the blockchain-fueled virtual reality platform SuperWorld, the Earth is split up into 64 billion parcels of land—each an NFT with a set of unique coordinates—which can be bought by users and monetized with virtual ads.

Land in similar virtual worlds like Decentraland can fetch up to $80,000. At launch in 2017, they would sell for $100 a pop. Decentraland’s native token Mana—used to explore, create, play games, and collect wearables—is up 900 percent this year.

“Buying land today in virtual worlds feels a lot like buying land in Manhattan back in 1750,” writes Janine Yorio, head of real estate at the online investment platform Republic. “It is also insulated from the Covid-induced volatility of the real-world real estate industry.” 

Last month, a 9-block virtual estate on the gaming platform Axie Infinity was sold for $1. 5 million.

Source: Gemini

Explosive interest in NFTs, frenzied SPAC issuance, and the surge in hysterically speculative investor behavior has led to talk of a bubble. You may already know how this will end. But sometimes being a cultural observer is more important than being a market observer. 

This bull market feels euphoric, but that’s just why we should stick with it. An orgiastic future awaits us. We have a long way to go.

Photo: Cryptoart