Non-fungible tokens (NFTs) are the latest craze to sweep the cryptocurrency world with artists and celebrities raking in millions of dollars worth of ether (Ξ, or ETH), the native fungible token of the Ethereum blockchain.
“Fungibility” refers to the ability to exchange two different tokens or assets that have exactly the same value.
A physical analogue of a non-fungible asset are natural diamonds. You can’t simply exchange one diamond for another and retain the same value, as several factors determine how much a diamond is worth.
An example of a physical fungible asset is a R5 coin. You can exchange one coin for another with no gain or loss in value simply based on the number printed on the face of the coin.
The recent “sale” of Twitter CEO Jack Dorsey’s first tweet for $2.5 million and the successful Christie’s auction of a collection of work by NFT artist Beeple for over $69 million has ignited a frenzy in NFTs.
Decrypt reported that Google Trends data shows that search traffic for NFTs is nearing the same levels as initial coin offerings did in 2017 — at the height of Bitcoin’s last bull run that fuelled wanton speculation in the cryptocurrency space.
Blockchain-based NFTs are not new concept, but the maturity of applications to support widespread minting and auctioning of NFTs is a relatively recent development.
CryptoKitties, a collectible cat breeding game which runs on Ethereum, achieved great success during the height of the last cryptocurrency boom in 2017. CryptoKitties helped lay the foundations of the NFT craze currently sweeping the crypto community.
In 2018 the sale of a CryptoKitty called “Dragon” raised eyebrows when it attracted a price of Ξ600 — worth about $172,000 (R2.5 million) at the time. Nowadays that same amount of ether is worth much more, around $958,914 (R14 million).
The Dragon CryptoKitty sale price is chump change by today’s standards, though.
NFT artist Mike Winkelmann, who goes by the alias Beeple, recently sold a collection of his work through well-known auctioneer Christie’s.
The most expensive was a collage of 5,000 pieces titled Everydays: The First 5000 Days, which sold for $69,346,250 (over R1 billion).
Much like CryptoKitties, CryptoPunks are collectible characters with proof of ownership stored on the Ethereum blockchain.
Unlike CryptoKitties, there are a fixed number of CryptoPunks. Only 10,000 will ever exist.
“Originally, they could be claimed for free by anybody with an Ethereum wallet, but all 10,000 were quickly claimed. Now they must be purchased from someone via the marketplace that’s also embedded in the blockchain,” explains the website of CryptoPunks developer LarvaLabs.
“No two are exactly alike, and each one of them can be officially owned by a single person on the Ethereum blockchain.”
Several other CryptoPunks currently feature in the top 10 most expensive NFT sales to-date.
Even before the successful auction of his “First 5000” collection through Christie’s, Beeple had already made a significant amount of money by selling his art as NFTs through platforms like Nifty Gateway.
Crossroad is a series of three animations and a NFT that experimented with the concept of programmable art.
The piece was sold days before the 2020 US Presidential election for $66,666.60 (R1 million) and would transform into one of two animations depending on the outcome.
just setting up my twttr
— jack (@jack) March 21, 2006
The fifth most expensive NFT sold to-date is the very first tweet posted by Twitter CEO Jack Dorsey on 21 March 2006.
This NFT boggles people’s minds because it is not necessarily unique and does not appear to be art. By minting an NFT of his tweet Jack Dorsey has not sold over control nor, arguably, his intellectual property. Nothing stops him from creating another NFT based on exactly the same tweet a year from now.
Rather than thinking of all NFTs as representing unique artworks, in the case of Dorsey’s tweet it is better to think of them as a signature on a piece of memorabilia.
Like if you take a normal ball to a…