London: In October 2020, Miami-based art collector Pablo Rodriguez-Fraile spent almost $67,000 on a 10-second video artwork that he could have watched for free online. Last week, he sold it for $6.6 million.
The computer-generated video sold by Rodriguez-Fraile shows what appears to be a giant Donald Trump collapsed on the ground, his body covered in slogans, in an otherwise idyllic setting.
The video by digital artist Beeple, whose real name is Mike Winkelmann, was authenticated by blockchain, which serves as a digital signature to certify who owns it and that it is the original work, news agency Reuters reported.
Non-Fungible Token
Rodriguez-Fraile’s windfall came thanks to the new concept of non-fungible token (NFT). It’s a type of digital asset that has exploded in popularity during the pandemic as enthusiasts and investors scramble to spend enormous sums of money on items that only exist online.
“Non-fungible” refers to items that cannot be exchanged on a like-for-like basis, as each one is unique, in contrast to “fungible” assets like dollars, stocks or bars of gold.
Examples of NFTs range from digital artworks and sports cards to pieces of land in virtual environments or exclusive use of a crypto-currency wallet names, akin to the scramble for domain names in the early days of the internet.
Blockchain technology allows the items to be publicly authenticated as one-of-a-kind, unlike traditional online objects which can be endlessly reproduced.
Booming Business
According to blockchain data, online business is growing exponentially on the NFT front.
OpenSea, a marketplace for NFTs, said it has seen monthly sales volume grow to $86.3 million in February, from $8 million in January. Monthly sales were at $1.5 million a year ago.
“If you spend 10 hours a day on the computer, or eight hours a day in the digital realm, then art in the digital realm makes tonnes of sense – because it is the world,” said OpenSea’s co-founder Alex Atallah.
Note Of Caution
Investors caution, however, that while big money is flowing into NFTs, the market could represent a price bubble.
Like many new niche investment areas, there is the risk of major losses if the hype dies down, while there could be prime opportunities for fraudsters in a market where many participants operate under pseudonyms.
