69.34 million dollars for a JPEG picture! ? $2.9 million for a tweet! A self-portrait created by Sophia, a humanoid robot, sold for nearly $700,000! What is it about these items that were not considered valuable in the past that have broken the tradition of being auctioned off at high prices that has made the world go “crazy”?
NFT (Non-Fungible Token) is a non-homogenized token, similar to the technology of Bitcoin, but with the difference that it is indivisible, irreplaceable and unique, in short it is a virtual token for a product crypto “endorsement” blockchain art.
Three years ago the entire NFT market was worth no more than $42 million, now according to a new report from NonFungible.com, NFT sales exceeded $2 billion in the first quarter of 2021 and the total value in circulation is already greater than the entire year 2020. It is bursting at the seams with its unique nature and wide range of application scenarios.
What has triggered the explosive growth of the NFT market? There is speculation that it is because of the increasing maturity of the technology, which has seen its market value rise year after year since its birth in 2012 until 2019, especially when CryptoKitties was introduced and more people recognized the value of NFT. In the short history of the crypto world, several waves of boom such as IC0, stablecoin and DeFi have been launched from 2017 to 2020, and NFT, as an extension of people’s interest in DeFi, has naturally been given more attention.
Source: Google Images
Another reason is that the U.S. is trying to eliminate domestic risk by printing money amidst high debt and severe deficits, resulting in a greater concentration of global wealth, an influx of dollars into the market, and the bubbling of cryptocurrencies after their insane rise, prompting investors to look at the NFT market.
Who is looking at the NFT market?
“It’s attracting people who have built their own audience, perhaps on social media, and are selling work to an audience.” says London-based artist Benjamin Gentilli. Late last year, he sold NFT at Christie’s for nearly ten times its pre-sale estimate of $131,250.
In the American art scene, a growing number of mainstream artists have also tied their work to NFT.
In February, Mike Shinoda, founder and co-lead singer of the American band Linkin Park, auctioned off a piece of music he produced as an NFT, which eventually sold for $30,000. the NFT application has also found its way into the NBA, used to purchase famous highlights from iconic basketball games, such as Lebron James’ slam dunk.
NFT provides secure proof of ownership of digital items, which protects the value of the buyer’s merchandise, and the seller receives perpetual revenue through the auction transaction. Unlike the proceeds of a traditional artwork being auctioned, NFTS can be coded to allow the original creator to receive proceeds on each token transaction, typically between 2.5% and 10% of the sale price. Undoubtedly Christie’s auctions give a sense of legitimacy to these digital artworks. Meanwhile, driven by celebrities such as Musk, Twitter CEO Jack Dorsey, bull market queen Catherine Wood, and artist Beeple’s high-priced crypto paintings, NFT has become one of the hottest capital entrances in the first half of 2021. In addition, a host of digital asset trading platforms, such as Coinan, Firecoin, MXC Matcha, etc., have started to actively layout NFT projects.
Source: Google Images
But all booms are bound to be accompanied by bubbles, and NFT is no exception. Are these so-called “scarce” works really high-value investment commodities? In fact, one of the founders of the NFT Foundation was the “originator” of the auction that attracted global attention in March of this year, which amounted to more than 400 million RMB. The rest of the 30 or so bidders were mostly Gen Zers who were participating in auctions for the first time. In fact, investment in alternative markets are more risky and less rewarding than investing in more mainstream markets such as stocks, the NFT market is largely speculative, the probability of buying high-value assets at low prices is not high, in order to increase returns and market speculation is feared to be only short-term benefits, want to change hands many times to trade is not sustainable.
Some say this will be another “tulip bubble”. For celebrities who want to expand their prestige and income potential, the real value of the auctioned goods may not matter, but it is important to be the one who cuts the leeks, not the one who gets slapped on the beach before the big wave of economic crisis comes. This may also be one of the reasons why Takashi Murakami temporarily withdrew the auction and Musk announced in the middle of this month to stop buying cars with Bitcoin.
Traditional art circulation is not easy, when art has absolute scarcity, convenient transaction circulation mode, the creator can get higher income, will also generate unprecedented passion for art creation. With the proliferation of digital artworks, people’s awareness of NFT is increasing, the bubble will also become smaller, when people’s expectations of NFT value gradually become stable, the risk of holding NFT will also be reduced, and eventually develop into a benign digital art commodity trading market, born in line with the aesthetics of the current generation Z people, unique digital art masterpieces, truly become a new blue ocean worthy of global investment.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/what-is-it-about-nft-that-makes-the-world-go-crazy/
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