Photo by Mundissima
Photo by Mundissima
Collecting anything is hot right now. Save for that new record-breaking Honus Wagner tobacco card, non-fungible tokens, or NFTs, are the ragiest of rages. And the market has gone downright Matrix of late, with more and more big-time collectors swallowing the red pill. What are NFTs, and why have they become so popular of late? We’ve created a handy guide to demystify NFTs for you and give you all the information you need should you want to dive in.
What are NFT’s?
The origins of the NFT (pronounced either “Enn-Eff-Tee” or “Nifty”) can be traced back to December 2012. Vitalik Buterin, the creator of a blockchain network known as Ethereum, which produces the second most widely distributed type of cryptocurrency, Ether or ETH, collaborated on a theoretical project known as “colored coins.”
The colored coins were a type of Bitcoin—like Ether, a “fungible” or mutually interchangeable cryptocurrency—that would be unique from other Bitcoin, in that they could be used to represent a commodity, stock, bond or other asset like, say, a Lamborghini, with the coin representing unique ownership of said asset.
The key was that the coins could be traced back to their blockchain roots, providing an owner with the equivalent of a digital certificate of authenticity, telling them that this coin was the OG coin.
What do NFTs have to do with blockchain (and what is the blockchain)?
To truly understand NFTs, you first have to grasp blockchain, the type of cryptographic technology on which NFTs are hosted, created, bought, sold and traded.
Blockchain is a type of secure digital database (you can imagine something like a supercharged spreadsheet) that can store oodles of information in unique “blocks,” which are then “chained” together in a bank ledger-like data string.
The inherent worth in NFTs is that their chain of blocks can only be traced back to a single source of origin. Not only that, they can also be stored easily, transferred between people digitally, purchased using cryptocurrency, and potentially rendered untraceable by an owner who wants to remain anonymous.
NFTs can take the form of just about anything collectible in digital form: images, audio and video files, pets, pieces of art, tweets, memes and sports cards. With few exceptions to the rule, physical versions of NFTs do not exist (see “CryptoPunks” below).
Are NFTs the same as Crypto?
Since day one, NFTs have existed concurrently in the realm of cryptocurrency. But don’t be fooled: the two aren’t one in the same.
Even though both have a digital certificate of authenticity stored in a blockchain, NFTs are not interchangeable (i.e. nonfungible) like Bitcoin or Ether, making them wholly unique.
Cryptocurrencies like Ether, however, can earn interest, and be borrowed, leant and traded like normal dollars at any number of brick-and-mortar banks across the U.S. This is referred to under the umbrella term DeFi (or decentralized finance). Anyone can take part in DeFi by using what are known as “dapps” (or decentralized apps). Coinbase, for instance, is one of the leading cryptocurrency exchanges, and is driven by crypto investors (it serves 49 states, excluding Hawaii).
How do NFTs fit in? Given their value in the world of crypto, at least one DeFi platform plans to accept NFTs as loan collateral.
Why are NFTs so expensive and valuable?
The market for NFTs has exploded in the last four years—but especially, this year—for the same reason certain high-grade sports cards, like the 1909-11 T206 Wagner, 1952 Topps Mickey Mantle or 1986-87 Fleer Michael Jordan rookie card have become so popular of late: they represent a finite commodity, armed to the teeth with pop cultural and historical value.
Speculators are also hoping that certain items will be driven sky high by major sales, making for hefty profits. Case in point: Back in March, an NFT, entitled Everydays: The First 5000 Days, created by the CryptoArtist Beeple, sold in a Christie’s auction for more than $69 million. It was the only one of its kind created, and the owner now owns the singular digital copy of it.
How do you buy NFTs?
Besides traditional auction houses like Christie’s and Sotheby’s, where you can bid on and buy NFTs (paying for them in U.S. dollars/equivalent foreign capital or cryptocurrencies like Bitcoin or Ether), the other big-time sellers include OpenSea, Nifty Gateway, SuperRare, SuperFarm, Rarible, VeVe, Ethernity, Binance, Crypto.com, YellowHeart, Blockparty, HUMBL Marketplace, and even your old buddy eBay.
Some early NFTs were acquired for free—Larva Labs, for example, released its now ultra-valuable CryptoPunks to any Ethereum user who had a “wallet” (or place where one’s Ether is stored)—but most of them, nowadays, are bought and sold.
Because an NFT is, by definition, a one-of-one, it cannot, however, be exchanged for another one exactly like it. An NFT can only be swapped for a completely different NFT or NFTs.
How do you know that you actually own an NFT?
Proof of ownership comes with:
- a “token ID,” or a unique number string
- “wallet address,” or where your digital asset is stored on the blockchain
- a “smart contract address,” a computer program that serves the same purpose as a physical contract
- the NFT itself, in whatever form you acquired it in (that Beeple NFT came in the form of a .jpg)
How do you make an NFT?
For those of you would-be crypto creatives out there who might be licking your chops at the prospect of making (or “minting,” in digi-speak) your own NFTs, it’s relatively easy to get a side-hustle going—as long as you’ve been blessed with an artistic gene (or have a friend that can pitch in). The best sites for helping to mint your empire: Mintbase, Mintable, Enjin, Cargo, Alchemy and Upland. Or you could just take that Bitcoin or Ethereum or Dogecoin jingle-jangling around in your e-wallet and buy in.
What were the first NFTs?
The art world took notice in 2017, with the launch of CryptoPunks on the Ethereum blockchain. The co-founders of Larva Labs, computer programmers John Watkinson and Matt Hall, released 9,000 CryptoPunks, which came in the form of 24-by-24 pixel heads, free to anyone with an Ethereum wallet and kept the other 1,000 for themselves.
CryptoPunks essentially gave way to the current CryptoArt movement, turning art into one of the most saleable versions of the NFT.
Case in point: one CryptoPunk recently sold in a Sotheby’s auction for $11.8 million. Users can buy and sell them using the MetaMask app on Larva Labs’ site, which lists all punks for sale and recent sales figures.
Besides CryptoPunks, the collectible (and breedable) CryptoKitties, created by Dapper Labs, were launched on the Ethereum blockchain, immediately selling for more than $10 million. And for even further cuteness (and value) overload, check out the similar MoonCats and Chubbies.
What are the most expensive NFTs?
If it’s not already obvious from all the players involved, NFTs are a huge business right now. What are the highest-grossing NFTs out there? The aforementioned Beeple piece, entitled Everydays: The First 5000 Days, is currently the big winner (as of this writing) at $69 million–plus.
Beeple also claims the No. 2 and No. 3 priciest NFTs spots (as of this writing), with his February sale of Crossroads for $6.6 million and March sale of Ocean Front for $6 million, both via Nifty Gateway.
Famed intelligence leaker (and Russian expat) Edward Snowden earned $5.4 million via the Foundation app for the Stay Free (Edward Snowden) NFT, featuring a portrait of Snowden by artist Platon Antoniou “drawn” on top of court documents condemning Snowden’s leaks.
Rounding out the Top 5 (as of this writing) is NFT artist Mad Dog Jones’ “Replicator,” which sold for $4.1 million via a Phillips auction.
Original meme NFTs have found a market of late as well, with the original “Disaster Girl” NFT selling for $500,000, and the basis for the “Doge” meme going for $4 million (a related cryptocurrency, known as Dogecoin, was at one point worth nearly $90 billion).
There’s even a market for tweets turned into NFTs, like the first tweet Twitter founder Jack Dorsey ever tweeted, which sold for a highly tweetable $2.9 million (see: Cent). Internet-famous NFT Nyan Cat also went for a respectable ~$600K.
Who are the big NFT collectors?
A number of collectors have set themselves apart from the rest in terms of their NFT collections. Some of the best known NFT hoarders include WhaleShark, an anonymous Hong Kong–based collector, who owns a collection that’s reportedly worth more than $50 million; Eric Young (a.k.a. @etyoung), who has invested more than $1 million in NFTs and has bought and sold some of the rarest on the market, including a piece by Pak he recently bought for $1.4 million in a Sotheby’s auction; and Colborn Bell, who has spent hundreds of thousands of dollars on NFTs and owns more than 2,000 of them, which he displays in his Museum of CryptoArt.
What’s the CryptoArt movement?
Let’s take a closer look at how NFTs have shaken up the art world. As evidenced by CryptoPunks, the Beeple sale and the growing interest in CryptoArt from major auction houses, NFTs can provide collectors with a lot of value. But why, if CryptoArt doesn’t really exist in the physical plane?
The artwork by the Old Masters that you can view in, say, the Louvre or Prado was, of course, painted using easels, oil paint, watercolors and other physical art supplies. A digital artist goes about his or her work using an amalgam of computer programs like Apple’s Procreate or Adobe Illustrator and, maybe, drawing directly onto a desktop computer screen or tablet using a stylus like an Apple Pencil or Adobe Ink. But digital art isn’t only drawing and painting; it can also take the form of stop-motion animation, sculpture, audio, video, mixed-media and others.
Digital art, at least in terms of the CryptoArt community, has taken on two distinct definitions: It can represent crypto-themed works of art (i.e. subject-matter-driven pieces that hinge on cultural, political, economic or philosophical themes in relation to the blockchain and cryptocurrency technology); or it can refer to those pieces published directly to the blockchain as NFTs. The latter is more widely accepted and what is usually referred to by the term.
FEWOCIOUS, one of the hottest NFT artists out there today, uses both physical and digital media as their canvas, sometimes painting directly onto a canvas, and other times, using an Apple Pencil to paint on their iPad. The key difference between digital art and NFTs is that digital art was never able to be collected in the traditional sense; unless you owned every computer or tablet that the art was created on, you didn’t actually own a digital art collection.
NFTs changed all that, making the blockchain footprint of a piece of digital art collectible, in the sense that you owned the original record of the piece on the blockchain. FEWOCIOUS’ NFTs exist in the blockchain, but it’s not uncommon for them to have a physical painting accompany an NFT in a sale, as is evidenced by this recent Christie’s auction, in which they sold physical paintings coupled with a series of one-of-one NFTs—doodles, drawings and other one-of-a-kind pieces.
How is NFT art ultimately created? You simply need to make the piece of art, either on that easel or tablet/computer screen, take a high-resolution image of it and save it as a .jpg or other acceptable image file extension. You’d also need to have an Ethereum wallet and between $50-$100 in Ether (for platforms that charge an NFT-creating fee or “gas”). You’d then connect your wallet to one of Ethereum’s main marketplaces—OpenSea, for example—follow a number of easy steps and upload the image of your piece of art. Popular places to find CryptoArt micro-economies include Foundation and Showtime (not to be confused with the cable network).
Who are the famous CryptoArtists?
You’ve already touched on the masterpieces of Beeple (a.k.a. Mike Winkelmann) and FEWOCIOUS (a.k.a. Victor Langlois) a little bit. Who else is hitting it big in the NFT art market right now?
- ThankYouX, who started out as an L.A. street artist and graduated to NFTs, known for his use of mixed-media cubes and other abstract elements
- Belgium-based Vexx (a.k.a. Vince Okerman), who is known for his highly stylized, cartoonish doodle art
- WhIsBe (anonymous), who blends the stylings of street and pop art
- Greg Mike (a.k.a. Gregory Michael Mensching), whose art splices mid-century American cartooning with pop art and surrealism
- Canadian Trevor Jones, who is a self-described traditional painter, fascinated by the intersection of tech and art
- Pak (anonymous), a designer/developer who creates many celestial-themed works. Pak’s work has been particularly hot of late, with one of his collections selling in April via Sotheby’s for more than $16.8 million.
Other notables include:
- Sarah Meyohas, a French-American visual artist, made a name for herself in the pre–CryptoArt Movement days, when she launched Bitchcoin, a type of cryptocurrency whose value was tied to her works of art
- Irish conceptual artist Kevin Abosch, who, in 2018, created 100 physical pieces of art, stamped with his own blood, as well as the contract address on the Ethereum blockchain corresponding to a limited run of 10 million virtual works, entitled “IAMA Coin.” (Abosch’s NFT art piece, “Forever Rose,” sold that same year to a group of 10 people for $1 million.)
- Photographer/filmmaker Lyle Owerko, known for his boombox-centric pieces
- Scotland-based Billelis (a.k.a. Billy Bogiatzoglou), a 3-D illustrator and digital artist, who would make any heavy metal fan proud with his surrealist, skull-focused art (he’s also done some creepy one-offs of Marvel supervillains like Venom and Carnage, the latter of which has his own standalone movie coming out this year)
What’s going on with NFTs and sports?
A recent cheerleader for and adopter of the NFT craze has been the professional sports world, with a number of licensed MLB, NBA, NFL and NHL NFTs already hitting the market.
Whereas the art world is selling the digital equivalent of something you might hang on your wall, the sports world is selling a digital extension of its memorabilia, in the form of exclusive video clips (like sick LeBron James plays via Dapper Labs’ NBA Top Shot NFT hub) or a Lou Gehrig NFT commemorating the famed Yankee’s “Luckiest Man” speech (which could be tracked down via its partner producer Candy).
Topps, the sports card company that produced the physical version of that ’52 Mantle nearly seven decades ago recently launched its own line of NFTs, featuring NFT packs stuffed with potential one-of-ones, e-autographs and ultra-rare parallel cards, just like the real McCoy. Competitor Panini, which has gained mightily on Topps’ physical card market-share of late, has gotten into the NFT mix, too, with NBA NFT cards.
NHL team the Washington Capitals has even flipped the script, getting into the NFT art trade. And if you consider the WWE a professional sport, it has suplexed collectors with a tiered group of NFTs, honoring popular wrestler The Undertaker, which have come courtesy of partner Bitski. Other sports-related NFT adopters include Barstool Sports and Sorare, with its line of world soccer cards.
What about NFTs in entertainment?
NFTs have even made the rich and famous even richer and more famous. YouTube star Logan Paul has been spending millions on NFTs (and selling them for millions as well). Billionaire Mark Cuban has gotten into the trade via Lazy. So has entrepreneur Gary Vee (see VeeFriends).
Recent Super Bowl–winning Tampa Bay Buccaneers QB Tom Brady has jumped in the deep end via Autograph. Hip-hop star Snoop Dogg; entrepreneur Paris Hilton; actress Lindsay Lohan (who put up a Daft Punk NFT for $15K back in February); DJ 3LAU (who sold off a number of NFTs for $11.7 million, a record at the time); pro skateboarder Tony Hawk; and hip-hop star Jim Jones have all mounted up.
In the “interesting twist” column, rock band Kings of Leon, known for singles like “Use Somebody and “Sex on Fire,” launched a tiered trio of NFT versions of their latest album, When You See Yourself, with one tier offering fans front-row tickets to their shows for life.
DJ 3LAU, a.k.a. Justin David Blau or simply “Blau,” did something similar, to the tune of $11.7 million. Blau turned various aspects of his album Ultraviolet into NFTs on its three-year anniversary, selling a one-of-a-kind song, access to unreleased tracks, music-related artwork and new versions of the album’s songs as NFTs.
What are some other brands and companies that have gotten into NFTs?
A gaggle of other industries have recently gotten involved in the ever-growing NFT marketplace:
- Pokémon collectors can pick up a number of different types of NFT cards (Magic: The Gathering has also anted up)
- Gamers can snap up a number of NFTs that tend towards the nostalgia crowd, with some featuring vintage Atari boxes, collectibles based on popular SEGA games and characters (via doublejump.tokyo), as well as characters from the über-popular Capcom game Street Fighter
- NFT-forward game companies have also mushroomed up, including Epik Prime, which creates in-game NFT goods and marketplaces for a range of gaming companies, have gone viral; as have Genies, which produces a “fantasy version of you” and offers up wearable NFTs that each Genie can collect and then buy, sell or trade via its exclusive marketplace.
- The New York Stock Exchange has gotten involved.
- Playable video games, like Alien Worlds and Mist, offer earnable NFTs that can then be used to trade for types of cryptocurrency. (Other popular games that have dangled the carrot of in-game NFTs include Sandbox and Minecraft.)
- Comic book and entertainment giant Marvel has teamed up with VeVe to create a line of NFT collectibles.
- Virtual real estate NFTs are selling for hundreds of thousands of dollars.
- Nike has even teased a CryptoKicks line (though that’s about as far from “wearable tech” as it gets)
- A series of 25 Taco Bell NFTs sold out in 30 minutes, with all proceeds going to a scholarship fund
- Toy company Mattel launched Hot Wheels Garage, featuring a trio of classic car designs in NFT form
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