On March 11, 2021, a piece of digital art sold for $69,000,000.00 (yes, sixty-nine million United States dollars) at Christie’s Auction House (online, of course). That happened roughly five months after its original sale, meaning that the piece created by the artist known as Beeple sold for over 100,000% of its original price ($66,666.66), pushing Beeple to become one of “the top three most valuable living artists” according to Christie’s. Other than the price, what makes the Beeple sale noteworthy is the fact that the work was in the form of an NFT.
What Is an NFT?
NFT stands for “non-fungible token,” or a bit of digital code written onto a blockchain (also called distributed ledger technology). Through an NFT, a digital asset like a piece of art, a video clip, or the very first Tweet can be permanently registered on a blockchain forever. Ownership and provenance can be verified instantly. For the first time, digital scarcity can be achieved for digital items and, with it, the promise of higher prices for digital assets, outside of cryptocurrencies like Bitcoin. You might pay a small fortune for an authentic Ted Williams rookie year baseball card, but not for a reproduction made today that is physically identical in every respect. The same idea is fueling a boom in NFTs sold by artists, athletes, and others, because the digital item is registered and its quantity limited. As a result, the owner has “the one” (or one of 100 limited edition items, for example) and can prove it. In this context, ”digital” may now mean scarce, and therefore valuable.