Why would someone
spend millions of fake dollars on works of art and collectibles that don't
exist in the real world? Non-fungible tokens are the name for these kinds of
collectibles (NFTs). Most of the time, when experts try to explain NFTs to old
schmucks, they only make things worse. With that in mind, here is how I try to
explain something that many people find hard to understand.
Non-Fungible Tokens: What Are They?
Let's go to the
British Broadcasting Corporation for a crash course on NFTs: Money is an
example of a fungible asset in economics. This means that its units can be
easily swapped with other units. If you have a ten-dollar bill, you can trade
it for two five-dollar bills. A ten-dollar bill is a fungible asset because it
can be traded for something of the same value.
Let's say you own an
original Henri de Toulouse-Lautrec painting. It's a piece of art that you can
touch, but it's best not to because the billions of microorganisms on our hands
could cause damage. You could sell it for between $20 and $30 million. Prints
of your painting can be bought for about $25, but there is only one original.
It is a fungible asset.
On the other side, a
non-fungible asset doesn't exist physically, and here is where we enter a word
minefield that would make a grown man cry. It's the world of Ethereum,
blockchains, and cryptocurrencies.
What do NFTs do?
NFTs turn digital
artwork and other artifacts into unique, verifiable assets that are simple to
trade on the blockchain, according to CNN's Jazmin Goodwin. See what I mean
about explanations from experts?
An NFT is a document
that certifies the owner of an item that only exists digitally and was
purchased using a payment method that only exists digitally, simply for a
country bumpkin. What is far more intriguing is how NFTs have drawn the
attention of purportedly knowledgeable, sophisticated investors.
What Beeple Does
Beeple is the
identify of the digital artist, Mike Winkelmann. He seems like a nice guy, but
his early works are full of racist images that make fun of African Americans
and Asians and images that make fun of women (Vanity Fair).
People moved into the
digital world and, for more than 13 years, put an image on the internet daily.
Then he put them all together and called the book that came out of it Everyday:
The First Five Thousand Days.
Christie's, a
well-known auction house, put up for sale what it called the "monumental
digital collage." We could picture what happened on March 11, 2021:
The auctioneer asked,
"Do I hear $100?" Yes, two hundred. One million from the man in a
kilt standing next to the aspidistra. 2,000,000! The list goes on and on. The
fortunate high bidder delved into his digital wallet and withdrew Ethereum, the
second-largest digital currency in the world, was investor Vignesh Sundaresan
when the hammer finally fell.
This can seem like a
heavy price to pay for a digital good that can have many identical digital
copies produced of it. One can only guess that Mr. Sundaresan wants to recoup
his investment by asking someone else to pay more for his NFT. His net worth is
around $1 billion, all of which he made in the world of cryptocurrencies.
Non-Fungible Tokens: Are They a Safe Investment?
Some might think this
story has a tone of skepticism or even mockery. Perhaps. Let's look at what
else is happening in the NFT market.
Alex Ramirez-Mallis
makes movies in New York City. He has found a unique way to get into the NFT
bazaar. Since being in a coronavirus lockdown gave him lemons, he decided to
make farts and sell them.
Four of
Ramirez-friends Mallis's, helped him record their farts. The result is One
Calendar Year of Recorded Farts. Today, you can buy the Master Collection. Or
look through our hand-picked, limited-edition single farts. New drops daily.
To buy a valuable NFT
token, you need cryptocurrency:
You can also buy
individual fart recordings for 0.05 Ethereum, or about $85 each (New York
Post). Eight owners have paid the necessary amount to get the whole 52-minute
accumulation as of this writing.
So, is it a right
idea to trade in rectal gas NFTs? First, no one in their correct mind should
listen to a writer's investment advice. Second, Ramirez-Mallis says that if the
value goes up, they could be holding a valuable fart, if that is the important
word here.
Other NFTs that are accessible
If you think farts
are a bit low-brow, there are plenty of other NFTs for the savvy investor. Jack
Dorsey, the CEO of Twitter, made his first Tweet available as an NFT. It was
concise, just establishing my Twitter. It sold for $2,915,835.47, which is an oddly
exact amount.
The winning bidder
was Mr. Sina Estavi, CEO of Bridge Oracle, a corporation active in the esoteric
area of blockchain technology. Maybe in the strange land of alphanumeric
mysteries, the number 2,915,835.47 means something.
Where was Charmin
when there wasn't enough toilet paper? It looks like making an NFT. The
company's virtual rolls come with a physical display, and money goes to a good
cause, ahem, "behind" it: the non-profit Direct Relief
(insidehook.com).
Nick Bilton, a writer
for Vanity Fair, scoured the internet and found a lot of NFT deals: NFTs are
trading cards of the characters from the TV show American Gods. The website
Quartz has a news story about NFTs that is also an NFT. There's an NFT house
for sale, naked pictures of the actor Katie Cassidy up for auction as NFTs, and
all kinds of digital collectibles, from pixelated punks to mischievous cats
with wings.
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