What is an NFT?
A non-fungible token (NFT) is a unit of data kept within a digital ledger or blockchain (mostly held on Ethereum blockchain) that identifies a digital asset as unique and not interchangeable. This digital asset can be a painting, a video, an audio snippet, a video game collectible item, a GIF, and so on.
Whilst NFTs function like cryptographic tokens, they are not mutually interchangeable like cryptocurrencies are. This means that each NFT can represent a completely different asset and have starkly alternate values.
NFTs are technologically advanced and the opportunity to integrate them across use cases such as real estate, collectibles, music revolutions and gaming is being discussed regularly. However when producing a single NFT within the Ethereum platform uses 48.14 kilowatt-hours – is it worth it?
Why are NFTs so expensive?
In 2021, interest in NFT’s has increased, with celebrities and artists getting on the bandwagon causing the cost of them to skyrocket. This year the most expensive NFTs of all time were sold, demonstrating serious investor appetite.
NFTs are expensive because they are one of a kind. Traditionally artwork is valuable because they were the only version available whereas digital art can be copied and reproduced with much more ease. NFTs tokenize the art so that the owner has a certificate of ownership that can be sold which confirms the asset as original.
According to Google Trends data, the most expensive NFTs aren’t necessarily the most talked about.
The most expensive NFTs of 2021
TRG Datacenters has analysed Google Trends data to see which NFT’s – of the ones that have sold for the most this year – have been searched for the most online worldwide.
According to Google Trends, the most to least searched for NFT art pieces (from Jan – Sept 2021) were as follows:
- The first tweet, sold for $2.9 million
- Hashmasks, sold for $16 million
- Doge NFT, sold for $4 million
- Grimes NFT, sold for $6 million
- Everydays: the First 5000 Days, sold for $69 million
- Rick and Morty NFT, sold for $1.6 million
- Crossroads NFT, sold for $6.6 million
- CryptoPunks #7804, sold for $7.5 million
- Genesis estate NFT, sold for $1.5 million
- World Wide Web Source Code NFT, sold for $5.4 million
The first tweet
Twitter founder Jack Dorsey’s first tweet published in March 2006 read “just setting up my twttr”. Dorsey auctioned the tweet for charity earning an impressive $2.9 million. The tweet was purchased by Sina Estavi, a Malaysian based buyer who bought the tweet using the ether cryptocurrency.
Hashmasks is a living art collectible put together by more than 70 artists worldwide. It is made up of 16,384 unique digital portraits. One of the pieces sold with a 100,000% profit over a period of 3 days.
The original ‘Doge’ meme from 2010 is the infamous shiba inu dog called Kabosu which triggered the creation of the cryptocurrency dogecoin. PleasrDAO is the collective that purchased the NFT and now sells fractional ownership of it which means that anyone can own a piece of the NFT for a dollar.
Grimes sold a series of 10 pieces with the highest selling piece being a unique video called ‘Death of the Old’ that included cherubs, a cross, a sword and glowing light set to an original Grimes soundtrack. Two further pieces called ‘Earth’ and ‘Mars’ both with thousands of copies fetched $7,500 per copy with nearly 700 copies sold before sales closed.
Everydays: the First 5000 Days
A digital piece of art created by Mike Winkelmann (Beeple). Everdays: the First 5000 Days is a collage of 5000 images purchased by Vignesh Sundaresan (pseudonym of MetaKovan), a programmer based in Singapore. The artwork is displayed in full resolution in a digital museum within Metaverse.
Rick and Morty NFT
Co-creator of Rick and Morty, Justin Roiland sold the collection “The Best I Could Do” on the NFT auction house Nifty Gateway. All proceeds of the NFT sale went to the Los Angeles homeless encampments.
Crossroads was created as a response to the 2020 presidential election and had two parts, one for Trump’s success and one for his failure. Created by Beeple (Mike Winkelmann), Crossroads was auctioned on Nifty Gateway and fetched $6.6 million.
This particular CryptoPunk is part of the alien collection which is the rarest of the punks. It is also the only alien that has a mask which is symbolic of Covid. The NFT was purchased by Shalom Meckenzie, the largest shareholder of DraftKings with Ethereum (ETH).
Genesis estate NFT
Axie Infinity has sold Genesis land plots in the center of the world of Lunacia, a central element for gameplay within Axie Infinity. Danny (Flying Falcon) is the seller, an NFT collector who is active in both Hashmasks and Crypopunks.
World Wide Web Source Code NFT
The original source code for the world wide web written by it’s inventor Tim Berners-Lee was sold at Sotheby’s during an auction. The NFT represents ownership of digital items from when the world wide web was created in 1989.
How to produce a NFT
There are multiple NFT marketplaces where you can make NFT for your artwork with minimum technical knowledge such as OpenSea, Rarible or Mintable.
First you will need to get your media ready. NFTs can support visual files (JPG, PNG etc), music files (MP3 etc) and more.
Once this file is prepared you need to add it to a minting platform to label it as an NFT.
You do this by connecting your crypto wallet to a marketplace for NFTs. The next step is to go to the create section within your market place and upload your artwork as a single or multiple collectible. Enter the price or put it on sale. Choose a name and create a description. Connect your wallet and launch your NFT artwork into the world. Just like that your art will be tokenized as an NFT.
Alternatively there are exclusive membership only minting platforms that creators have to apply for and be accepted before they can create their own NFTs, for example SuperRare and Async Art.
To sell an NFT you will connect your Ethereum wallet to the platform you choose to use and as you’ve created your NFT you can click on it and will be prompted by the ‘sell’ option to complete your transaction. You will use a similar process if you are selling someone else’s NFT that you have collected.
NFTs are not environmentally friendly with the most popular blockchain, Ethereum, using about 31 terawatt-hours (TWh) of electricity per year, equivalent to the whole of Nigeria (TRG Study). A single Ethereum transaction has a carbon footprint equivalent to 140,893 Visa credit card transactions.
The future of NFTs could be for practical business use rather than expensive art collectibles. Virtual real estate is a serious consideration in our digital world and NFTs can provide more efficient transactions in the business world. NFTs are still a relatively young technology and watching them evolve over the coming years will be something to watch especially as blockchains make commitments to reduce their carbon footprint over the coming years.