Is it art?
Art has attracted controversy for centuries, but even the most fervent aficionados of the modern variety might balk at the latest trend to hit their world. Journalist Rhymer Rigby explores NFTs and questions whether we should all be investing in this market.
E xciting times in the pointless economy. Late last year, it was reported that an NFT yacht had just sold for 149 WETH. But what does this even mean? Let’s start with the currency. WETH means “wrapped Ethereum” and Ethereum is a kind of cryptocurrency, like Bitcoin. Wrapping it means you can use it on a non-native blockchain, which makes it more versatile. Got it?
Great. Well the yacht isn’t real either. It exists only in a virtual world called The Sandbox. The good news is you can use the yacht (which has a hot tub) to visit islands that are also NFTs, where there are villas, which are NFTs. The bad news is the game hasn’t been released to the public yet. And there are all sorts of rumours about the buyer being unreal, too. But in money we all understand, 149 WETH is about $650,000.
So what is an NFT? The initials stand for non-fungible token. A Bitcoin is a fungible token, like a dollar. You can use it to buy stuff, and one Bitcoin is worth the same as any other Bitcoin (although its value fluctuates wildly against old-fashioned currencies). Like Bitcoins, NFTs are stored on digital ledgers (blockchains). The difference is their fungibility. You cannot use a virtual yacht to buy things, just as you cannot use a real yacht to buy things.
Right. Welcome to the 2020s. NFTs are quite exciting. If you’re in the art world, they are the current big thing. They are also big in music, virtual worlds and, perhaps inevitably, porn. Collins Dictionary made NFT its word of the year, describing an NFT as “a unique digital certificate, registered in a blockchain, that is used to record ownership of an asset such as an artwork or a collectible”.
Actually, I’d go one further. Buy an NFT from me. I’ve created a one-off piece of digital art with my cat, Fernando (opposite). It’s on Opensea – an NFT marketplace – and it’s yours for £15 or the crypto equivalent. You can buy the whole thing for a fraction of the cost of a fractional Banksy. Who knows, it might even be worth £30 one day
Some people are certainly making money from them. In the run-up to Christmas, digital artist Pak sold 266,445 NFTs for an eye-watering $91.8 million. Twitter founder Jack Dorsey sold his first tweet as an NFT for $2.9 million – to a Malaysian businessman, who said people would realise the true value of the purchase in years to come. Some of the most expensive NFTs are the Cryptopunks. Originally given away for nothing, these look like punk characters in a 1980s video game. The cheapest now costs more than $300,000.
As might be expected, the market is moving fast – and in strange, disruptive ways. Recently, a former Christies auctioneer joined forces with crypto experts to buy a Banksy for $12.9 million. The plan is to sell 10,000 pieces of it as NFTs, offering fractional ownership of a real piece of art via blockchain.
Of course, as with Bitcoin, there are plenty of critics. Like many crypto assets, NFTs have a hefty carbon footprint. Some say they’re a fad. Others call them a pyramid scheme. The more thoughtful talk of speculative bubbles and artificial scarcity. Website PC Gamer memorably described the yacht sale as “the latest development in the NFT techno-financial trash fire none of us are allowed to look away from”. They have a point.
So, should you buy an NFT? Well, you might make a lot of money, or you might lose the lot. There’s plenty of fool’s gold in the digital hills – and, one suspects, plenty of fools. Still, if you want to play in a kind of digital Wild West, go for it.
Actually, I’d go one further. Buy an NFT from me. I’ve created a one-off piece of digital art with my cat, Fernando (opposite). It’s on Opensea – an NFT marketplace – and it’s yours for £15 or the crypto equivalent. You can buy the whole thing for a fraction of the cost of a fractional Banksy. Who knows, it might even be worth £30 one day n