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21 September 2021

Why Are NFTs Valuable?

Why Are NFTs Valuable?

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11, 2021, one of the world’s premier fine art auction houses, Christie’s, soldits first purely digital NFT artwork.

$69.34 million is the highest sum any individual has paid for a piece of digital artwork, and the figure made Beeple the third most valuable living artist sold at an auction.According to Christie’s, the history of digital art dates back to the 1960s, but the ease of duplication traditionally made it impossible to assign provenance and hence value to the medium.

That changed with the recent introduction of non-fungible tokens or NFTs, a new type of cryptocurrency that first appeared on the Ethereum blockchain.

NFTs are unique units of digital data that get stored on a blockchain like Ethereum, and they can be used to tokenize digital art, music, or any other type of asset.

And digital rocks from EtherRocks, one of Ethereum’s earliest NFT collections, hit a floor price of over $2 million. Such staggering numbers raise several questions about the value of NFTs?

While NFTs can encompass anything from in-game items to music, metaverse merchandise, lists of words, and other kinds of digital collectibles, digital art is the niche that’s seen the biggest growth this year.

While anyone can enjoy an artwork displayed on OpenSea or download the JPEG, not everyone can own the original NFT.

Tokenizing an asset on a public blockchain creates a way for anyone with an Internet connection to verify its authenticity and ownership.In some senses, owning an NFT of an artwork versus owning a JPEG of the same artwork can be compared to owning an original Andy Warhol versus owning a poster of the piece. .

Almost all animals benefit from altering the perceptions, behavior, and psychology of others in their environment in ways that benefit themselves.

As humans are capable of higher-order thinking, as targets or receivers of these signals, they often verify their validity before accepting them at face value.

Just as old money homes are filled with expensive artworks, collectibles, and golden toilets, crypto’s nouveau riche like to fill their digital wallets with NFT artwork.

One question that naturally follows from this topic is why crypto’s new money are choosing NFTs of pixelated punks, poorly drawn rocks, and cartoon depictions of apes over, say, classical artworks, gothic mansions, or golden faucets.

In an interview with the BBC, former Christie’s auctioneer Charles Allsopp said that buying NFTs “makes no sense” because “the idea of buying something which isn’t there is just strange.” 

NFTs, then, may not be all that different from traditional art after all

Whether it’s tokenized digital art or a physical painting from a world-renowned artist, in the end, the value is determined by what someone is willing to pay for the piece and its associated flexing rights

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