Why NFT artwork worth millions?
A new investment trend is becoming increasingly popular today. Funny pictures, videos, and old tweets that have become an integral part of the Internet culture can now be used as assets for successful investing. Analysts are exploring who is eager to invest in these peculiar pieces of art. Short videos, tweets, and GIFs are being auctioned off and sold for hundreds of thousands of dollars. Even pixel avatars can be sold for millions of dollars. The reason for the hype is the new NFT technology based on blockchain that certifies a digital artwork to be unique and owned by only one person. This February, auction house Christie's, a leader in the art market along with Sotheby's, put up for auction the work of Mike Winkelmann, the digital artist known as Beeple. His collage of 5,000 images called “Everydays: The First 5000 Days” was being created from 2007 to 2021. The art piece was represented by a non-fungible token (NFT). Therefore, Christie's became the first conventional auction house to offer such an unusual lot. The artwork was sold for $69 million on March 11, 2021. Analysts believe that the auction of the NFT art object held by Christie's is the acknowledgment of the new technology that appeared 4 years ago and took off only in 2020. The blockchain-based NFTs serve as unique certificates of ownership that are linked to a certain digital item such as a picture, video clip, GIF, or text. The main feature distinguishing an NFT from a cryptocurrency is its fungibility. This means that NFTs are unique and therefore are not interchangeable. Experts point out that each NFT is a one-of-a-kind asset. An NFT contains unique information and is stored on a shared ledger. Thanks to this, any user can track the owner of this particular NFT item. Notably, NFTs spurred a boom in digital art collecting. The virtual artwork can be sold, bought, and used online. Before NFTs were created, Internet users could copy any video or GIF and share them on forums and social networks. This made the market of digital art quite vulnerable as the uniqueness of virtual art objects was in question. With the help of a non-fungible token, this problem can be solved. A digital art piece rises in value as its popularity increases, and its authenticity can be verified with a few clicks. Many digital artists and creators of videos and GIFs trade NFTs on special platforms. Rarible, OpenSea, and Nifty Gateway are among the most popular ones. Some platforms allow creators to program royalties, or the right to get future cash flows from reselling digital assets. Thus, creators on Rarible can set a percentage they will receive from future sales of their artworks. However, they can earn only from a sale that is done through the Rarible platform. In case the deal is transferred to another platform, royalties are not paid. Experts note that the lack of unified standards for operating on such marketplaces is the main drawback of the system.