NFTs have exploded in popularity in the last few years. Believe it or not, some of these pieces of digital content can sell for millions of dollars, like a new casino. In this article, we’ll run through what exactly NFTs are and look at two very valuable NFTs that have sold for massive sums of money. Both of these have been listed as the most expensive, but as you’ll find out later, some people don’t think one of them should count.
What is an NFT?
In this section, we’ll give you a brief summary of NFTs in case you don’t fully understand them yet. Carry on reading to learn more about them and how they work.
Fungible and non-fungible tokens
The term ‘NFT’ stands for ‘non-fungible token.’ If something is non-fungible, this means it has unique properties and can’t be fully replaced because whatever you replace it with doesn’t match its qualities. A video game save file, for example, can be classified as non-fungible since the progress you’ve made in that game is unique. Other examples include a family photo album and a portfolio of someone’s drawings. If you exchange something that’s non-fungible, you can’t get the exact same value in return.
Trade your family photo album for someone else’s, for example, and the one you receive won’t have the same value to you since the photos aren’t of your own family members. On the other hand, if something’s fungible, it can be replaced without there being any change in value. If you swap a dollar coin for someone else’s, you’ll end up with the same amount of money. You won’t have lost or gained anything. The value has stayed the same since both coins that were traded are worth the same amount of money.
NFTs and ownership
NFTs signify ownership of a digital asset. That asset can be copied and consumed an unlimited number of times, though ownership can’t. If you own an NFT, you’re the sole owner of whatever the NFT is. You have bragging rights, as it were, and if you claim to be the owner, no one can deny this.
If it’s a piece of digital art, for example, it’s your property and yours alone. Others can view it and copy it; they can even screenshot and download it, but they don’t own it. If you give the NFT to someone else — if, for example, you sell or trade it — that person would be the new owner of the artwork. Each NFT can only have one owner at any given time.
NFTs and signatures
What some people do is add specific information that proves their ownership of the NFT’s data. An artist could add their signature, just like they might put their signature on a physical piece of work.The signature is an extra layer of confirmation that the owner of the NFT is indeed its one and only owner. It’s not necessary for an NFT to have one, but many owners, especially those who have created the NFT, like to have one.
NFTs and cryptocurrencies
NFTs have been likened to cryptocurrencies because they work in a similar way. Cryptocurrencies are digital currencies that are decentralized, which means that they’re not connected to any government or banking institution in any way. They use cryptography, and complex codes — for security, hence their name. All transactions involving cryptocurrencies are recorded on a blockchain, which is a public ledger that anyone can add to. Bitcoin was the very first cryptocurrency to launch.
Since coming online in early 2009, it’s paved the way for thousands of other cryptocurrencies, such as Ethereum, Tether, and Litecoin, among others. But, as it always happens, there were some periods of the bitcoin bubble bursting. NFTs are similar to cryptocurrencies in that they use blockchain technology. Whenever there’s a transaction involving an NFT, a record of it is created and stored on the ledger. Anyone can check this at any time, as all records are completely public.
Why are NFTs so valuable?
From 2020 to 2021, the popularity of NFTs soared. In 2020, the NFT market was worth approximately 82 million dollars. By the following year, it had reached as high as 16 billion dollars. This dramatic rise was not just fuelled by NFTs becoming more well-known but also by their value going up dramatically.
It was a combination of factors that resulted in the NFT suddenly becoming so big. The ongoing popularity of cryptocurrencies helped, as did a number of high-profile NFT sales that made headline news and spread awareness. Some big-name celebrities have created, bought, sold, or traded NFTs, and some of these include:
- Shawn Mendes
- Snoop Dogg
- Grimes
- Eminem
- Neymar
- Justin Bieber
- Timbaland
- Madonna
However, the popularity of NFT seems to be declining. In May 2022, it was estimated that sales of NFTs were down 90% compared with 2021. It seems that lots of people looked into them and ended up buying and selling some but have since moved on.
Is an NFT a speculative investment?
While there’s no denying that NFTs have been hyped up, what seems to have put people off is that they’ve been deemed speculative investments. If an investment is speculative, this means that it’s high-risk, and though it can be profitable, there’s no guarantee that this will happen. The main reason investing in NFTs has been classified as speculative is because the market for them is very young. They haven’t been around long enough for people to determine whether or not they’re worth investing in.
Their long-term value hasn’t been proven either. There’s also the fact that they work in a similar way to cryptocurrencies, which are known for being highly volatile. The value of a cryptocurrency can experience sudden rises and falls in value, which can be quite dramatic. Finally, there’s the perception of value. While some may be willing to pay millions of dollars for a piece of digital art, not everyone will because people tend to find physical things more valuable than digital ones.
Where to buy NFTs
If you want to buy some NFT art or any other kind of NFT, there are a few simple steps to take. These are laid out below:
- Acquire a digital wallet that lets you store both NFTs and cryptocurrencies. Most of the time, you can only purchase an NFT using cryptocurrency.
- If you need to purchase cryptocurrency, you can do so by visiting an exchange such as Binance or Crypto.com and using your bank card.
- When you buy cryptocurrency, you can immediately send it to your digital wallet.
- Now that your wallet is funded, head to an NFT marketplace such as OpenSea, Axie Marketplace, or Larva Labs/CryptoPunks.
- Browse the NFT collection, and if something catches your eye, make a purchase.
Before buying your first NFT, make sure it’s a sensible investment, and you know what you’re doing.
The most expensive NFT ever sold
As mentioned previously, some NFTs have sold for very large sums of money. In this section, we’ll talk about the most expensive NFT ever sold and explain why it was sold for such a high price.
The most expensive NFT – ‘The Merge’
Check a list of the most expensive NFTs ever sold, and you’ll see that ‘The Merge’ by digital artist Pak comes out on top a lot of the time. This is a rather unique piece of art that ended up selling for 91.8 million American dollars, which is approximately 90 million dollars.
Selling ‘The Merge’
Pak put ‘The Merge’ up for sale on December 2, 2021, on the platform Nifty Gateway, and it was listed for two days. It wasn’t like other NFT sales where a single person makes the purchase and becomes the owner. Instead, a total of 28,893 people collectively bought it.
‘The Merge’ is made up of 312,686 units of ‘mass’, and each one of these units functions as its own NFT. Every person who made a purchase bought a minimum of one unit and could buy more if they wanted to. The starting value of a single unit was roughly 578 dollars, and the value went up every six hours.
What exactly is ‘The Merge’?
The image above – the three white dots of different sizes against a black background – is ‘The Merge’. Though it doesn’t look remotely special, this piece of NFT art has reinvigorated the scene and commonly tops the list of the most expensive NFTs ever sold.
The argument about ‘The Merge’
It’s clear that ‘The Merge’ is one of the most expensive NFTs ever sold, given the amount of money that was spent on it. However, some people don’t think it deserves to be classified as the single most expensive NFT. This is because it was sold to nearly 30,000 people, and not a single person, like art, is traditionally sold.
Each person who bought a unit of ‘mass’ is technically a part-owner of ‘The Merge’.Earlier, we mentioned that ‘The Merge’ tops the list of most expensive NFTs sold a lot of the time but not all of the time. Some people classify a different piece of NFT art as the most expensive. This particular piece was sold to a single person and therefore qualifies as a more traditional sale.
‘The First 5,000 Days’
So if ‘The Merge’ is disregarded, what is actually the most expensive NFT ever sold? It’s ‘The First 5000 Days’ by the digital artist Beeple, whose real name is Mike Winkelmann.
Selling ‘The First 5000 Days’
‘The First 5000 Days’ was sold at a Christie’s auction on March 11, 2021, for roughly 69 million dollars. It was sold to Vignesh Sundaresan, a web programmer based in Singapore who’s made a living from investing in various crypto markets.
What is ‘The First 5000 Days’ all about?
As you can see from the image above, ‘The First 5000 Days’ is more of a montage than a single piece of artwork. It consists of 5000 images covering a wide range of topics and includes images of celebrities such as former US President Donald Trump.
They’re arranged chronologically in the order that Winklemann created them, with the oldest in the top left corner and the newest in the bottom right corner. Though the images are obviously all digital, some of them were originally created by hand and had digital copies made.
‘The Merge’ vs ‘The First 5000 Days’
Both of these works have sold for ridiculously high sums of money. Though there’s some debate about which one should top the list of the biggest NFT sales, there’s no denying that each one is a real contender. The fact that these pieces sold for millions of dollars when they’re not even physical products show just how big the NFT market can be. Though its growth is slowing down somewhat, there’s every chance that interest in the NFT could jump back up. In 2023, there could well be a new NFT that outsells both ‘The Merge’ and ‘The First 5000 Days’.
Summary
NFTs, or non-fungible tokens, are responsible for making digital art explode in popularity over the last few years or so. The two pieces of digitally created art that we’ve looked at have sold for incredibly high sums of money. While art can be very valuable, the fact that non-physical works can sell for millions is proof that people value digital works of art very highly. There’s no telling what will be the next record-breaking NFT. If a black background with three white dots can fetch over a hundred million dollars, anything could smash the record.
Photo credit: The feature image is symbolic and has been done by Reinis Freilibs.
