NFTs?!?

 

Yesterday, Melania Trump jumped into the NFT marketplace.

NFT?  What the heck is an NFT?

It is an acronym that stands for Non-Fungible Token?  Gee, that doesn’t really make things any more clear.

Per Wikipedia:

In economics, fungibility is the property of a good or a commodity whose individual units are essentially interchangeable and each of whose parts is indistinguishable from another part.

 

For example, gold is fungible since a specified amount of pure gold is equivalent to that same amount of pure gold, whether in the form of coins, ingots, or in other states. Other fungible commodities include sweet crude oil, company shares, bonds, other precious metals, and currencies.

An item is not fungible, if it cannot be substituted with something identical or like kind.  A work of art, that is not mass produced is considered nonfungible e.g. the Mona Lisa. 

So, what is a Non-Fungible Token?  Per ArtNews.com:

 

An NFT, which stands for non-fungible token, is a unique unit of data employing technology that allows digital content—from videos to songs to images—to become logged and authenticated on cryptocurrency blockchains, primarily Ethereum. Once content is logged onto the blockchain, every transaction from transfers to sales is recorded on-chain, creating an easily accessible ledger of provenance and price history. The main impact of NFTs is making it easy to own and sell digital content.

Cryptocurrency is fungible.  They are fungible tokens.

So, digital art.  In the world of NFTs, the transactions are done via blockchain using cryptocurrencies.  Ownership can be tracked.  Artists or creators collect royalties each time a work of art, and NFT, changes hands.  It is cool.  It is different.  And thus, there is a market for it in spite of the fact that… anything digital could be copied.

It seems the market was created by collectors.  I imagine that is true of all such markets.  People have to want and be willing to pay for things for there to be a market.  People are willing to pay thousands of dollars for, essentially, a purse or hundreds of thousands for a car.  The demand for sports and film entertainment result in athletes and movie stars being paid incredible sums for being the best at what they do. 

My sister Laura was an early promoter of Techno Music.  She would complain about musicians who catered to the masses made millions while others creating music with higher levels of artistry, composition, and meaningful lyrics were struggling.  Is that not always the case?  The writers that make the most money sell the most books which is not necessarily the best literature. 

Then there are the luxury markets which these NFTs might fall into.  I luxury markets exclusivity is a key factor.  “I can afford this, and you can’t” plays a large role in these markets.  People who want that exclusivity and are willing to pay three to ten times or more what the masses pay will do exactly that when buying cars, watches, homes, meals, or whatever.  To boot, it is all relative.  One person’s extravagance is another person’s norm.

The art world is another whole thing.  People are willing to pay crazy amounts of money original pieces   I recall growing up and hearing folks express astonishment at how abstract art, “that looked like scribbles,” could sell for millions of dollars.  I can hear my family and friends from my childhood saying, “anyone can draw that.”  Well, it is not as easy it might appear.  Try to be Piet Mondrian, Jackson Pollack, or Jaspar Johns.  Good luck with that. 

People get into a variety of different interests and hobbies.  I am not about to get into and buy NFTs, but I do have a collection of ouds that I have made a large investment in… relatively speaking.  So, if folks like NFTs and want to invest… let them.  More power to them.  It is not for me, though I do have a favorite collection of what I think are amazing photos.  They’re digital.  I admire them now and then.  And, as I did not pay a cent for them and have no blockchain certification and proof of ownership, I guess the aren’t NFTs.  I can live with that quite easily.

First 5,000 Days

Here is an example, the NFT that sold for the most money to date.  A graphic designer, Michael Winkelman also known as Beeple, produced a graphic piece every day for 5,000 days.  He then took all 5,000 and created a digital collage:  the First 5,000 Days.  It sold for $69.3 million!  Not a bad pay day for a 13-year effort.  Until then, the most he had sold a piece for was $100.  I imagine that in the actual NFT piece, unlike the digital copy here, the owner could click on and blow-up each of the 5,000 images. 

Back to Melania Trump’s NFT.  It is a watercolor of her eyes.  Per Rolling Stone, “The approximately $150 piece of digital artwork — a watercolor of Melania Trump’s eyes — reeks of a cash grab by someone who is just ‘trying to look busy,’ this person told CNN on condition of anonymity.”  In this case, they are planning to sell them like mass produced Farrah Fawcett posters back in 1976.  That sound more fungible than not.