Multimillion-Dollar Sales and More From the Big Year for NFTs
NFTs have made a big splash in 2021, yet most people don’t really know that they are. Spelling out what the acronym stands for — non-fungible tokens — doesn’t provide much more insight. But in a nutshell, an NFT is a way to digitize works of art and other collectibles into one-of-a-kind items. This definition might not make NFTs understandable to everyone, but the bottom line is that the rise of crypto and the blockchain have created a space where NFTs can exist and generate huge profits for some sellers. And where there’s the opportunity for huge profits, there’s sure to be a mass of people clamoring to get in. Here’s a quick look at some of the big news headlines from the NFT world in 2021.
$69 Million NFT Sale
Probably the biggest single news item in the NFT world in 2021 was the sale of “Everydays: The First 5000 Days,” a digital work of art, for a whopping $69 million. The size of the sale was clearly notable, as was the fact that the sale was handled by prestigious auction house Christie’s. As broken down by the Harvard Business Review, this means that somebody paid nearly $70 million for a picture on the internet.
The sale is emblematic of the vast fortunes being tossed about in the NFT space, and the size of these sales has generated a frenzy of interest. Suddenly seemingly everyone is interested in creating and selling their own NFTs, with everyone from rappers and sports figures to rock stars and actors trying to get in on the craze.
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NFT Market Jumps 704% in 2021’s Third Quarter
According to analytics platform DappRadar, NFT trading volume in the third quarter of 2021 jumped 704% over just the previous quarter, to $10.67 billion. Year-over-year, the jump in trading volume was an unfathomable 38,060%. NFTs are gaining in popularity thanks to celebrity endorsements by people ranging from Snoop Dogg and Shaquille O’Neal to Steve Aoki and Stephen Curry, and they are being legitimized by huge sales transactions at reputable institutions like Christie’s and Sotheby’s.
In early November 2021, a diverse group of investors, artists, speculators and others descended on New York City to attend NFT.NYC, a conference dedicated to non-fungible tokens. According to a review in the New York Times, the conference, now in its third year, drew some 5,000 people, with a 3,000-person waitlist. The feeling in the air seemed to harken back to the internet bubble of 2000, when excess was the name of the game and conferences sprung up around the country celebrating all of the “next big things.”
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Problems With NFTs
One of the dangers of NFTs is that clever criminals can “claim” digital artwork as their own and create an NFT with it. As NFTs are a relatively new technology, many digital artists may be unaware they exist, or how their creations may be vulnerable to the unscrupulous. As ownership is recorded anonymously on the blockchain, it can be hard to track down any such criminals or for the original artists to reclaim ownership of a work that has been made into an NFT.
An additional concern with NFTs is hacking. Although protections are in place, anything in the digital world is susceptible to hacking. And unlike a piece of physical property that can be traced back to its original owner, in the anonymous, decentralized world of the blockchain and NFTs, there’s no way to trace who has stolen your NFTs, and there’s no central authority you can call for help.
What’s the Future for NFTs?
Only time will tell whether or not NFTs are in a bubble now or are just starting their climb. If history is any guide, the minting of millionaires who were early adopters of the technology — just like those who first jumped into cryptocurrency — and the ever-growing number of investors looking to pile in to make their own fortunes may harken a future reckoning and repricing at the top end of the NFT market. Yet, it may just as well be the case that the NFT millionaires were simply the first to take advantage of an emerging market. Whatever the case, NFTs are likely to make even more headlines throughout 2022.
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