In October 2020, Miami-based art collector Pablo Rodriguez-Fraile spent nearly $ 67,000 on a 10-second piece of art that he could view for free online. He sold the video last week for $ 6.6 million.
The video by digital artist Beeple, whose real name is Mike Winkelmann (in the first photo), was authenticated using the blockchain, which serves as a digital signature to confirm who owns it and that it is the original work.
It is a new type of digital asset known as a non-fungible token (NFT). According to the source, the popularity of NFT has skyrocketed during the pandemic as investors are willing to spend huge amounts of money on items that only exist on the Internet.
Examples of NFTs range from digital artwork and sports cards to bits of land in virtual environments or the exclusive use of a cryptocurrency wallet name, akin to the battle for domain names in the early days of the Internet. Blockchain technology allows items to be publicly authenticated as one of a kind, unlike regular online objects that can be endlessly copied.
According to OpenSea, an NFT marketplace, sales reached $ 86.3 million in February. For comparison: in January it was equal to $ 8 million, and a year ago – $ 1.5 million. The dynamics are clearly shown in the diagram.
Investors are warned that the NFT market could represent a price bubble. As with many new niche investment areas, there is a risk of major losses if the hype dies down. In addition, the marketplace, where many participants operate under pseudonyms, provides an excellent environment for scammers.
However, Christie’s has just begun its first sale of a digital art object. This is a collage of 5,000 pictures, also created by Beeple. Its thumbnail is shown below. Collage exists exclusively as NFT. The rates have already reached $ 3 million. The auction should end on March 11th.