The rising popularity of NFTs

From art to sports trading cards, people are spending millions of dollars on digital collector’s items.

These crypto collectibles, known as NFTs, have exploded in popularity lately. A video clip created by digital artist Beeple, whose real name is Mike Winkelmann, was flipped for a record $6.6 million last week. It had originally been bought for around $67,000.

Meanwhile, one of thousands of computer-generated avatars called CryptoPunks recently sold for $2 million. And a crypto art rendition of the Nyan Cat meme from 2011 sold for about $590,000 in an online auction.

Proponents of NFTs say they fix a big problem with the internet: artists not getting paid for the distribution of their content online. At the same time, critics see the NFT craze as another potential speculative frenzy in crypto that’s sure to fizzle out eventually.

So what exactly are NFTs? And why are they suddenly being sold for millions? CNBC runs through everything you need to know.

What are NFTs?

NFTs, or non-fungible tokens, are a new type of digital asset. Ownership of these assets are recorded on a blockchain — a digital ledger similar to the networks that underpin bitcoin and other cryptocurrencies.

But unlike most virtual currencies, you couldn’t exchange one NFT for another in the same way that you would with dollars or gold bars. Each NFT is unique and acts as a collector’s item that can’t be duplicated, making them rare by design.

You can think of them like the crypto alternative to rare Pokémon or baseball cards.

The rise of the internet meant that anyone could view images, videos and songs online for free. People are buying NFTs out of the belief that they’ll be able to prove ownership of a virtual item thanks to blockchain.

NBA Top Shot, an NFT platform based on the U.S. basketball league, lets users buy and sell short clips showing match highlights from star players. The NBA licenses the reels to Dapper Labs, a start-up which digitizes the footage, making a limited amount to create scarcity. NBA Top Shot has facilitated over $280 million in sales to date, according to the website CryptoSlam. Dapper Labs earns a cut on each transaction while the NBA gets royalty payments.

Basketball isn’t the only sport getting into crypto. French start-up Sorare lets users collect and play officially licensed soccer cards in fantasy games. According to NFT data tracker NonFungible, Sorare’s marketplace has generated over $22 million worth of sales to date. Sorare last week announced it had raised $50 million from investors including Benchmark, Accel and Reddit co-founder Alexis Ohanian.

“It is an obvious industry use case for NFTs,” said Lars Rensing, CEO of blockchain firm Protokol. “Trading cards and collectibles have always been a profitable revenue stream for clubs.”

Meanwhile, art dealers are also getting in on the action, with auction house Christie’s running an auction for a virtual art piece from Beeple. The auction is yet to close but the work has already been bid up to $3 million.

NFTs aren’t a new phenomenon. CryptoKitties, one of the earliest examples, were once so popular they clogged up the network of digital currency ether. To date, these colorful online cats have generated sales of over $40 million, according to NonFungible.

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[Denois]

There are much better use cases for NFTs than tokenized art or collectibles. Once we see major digital content platforms adopting the use of NFTs that is when it's going to explode. True ownership of digital goods, a second hand market for digital goods, implementation of royalties for second hand sales for either the platform or content producers, that is what NFTs are really about. You don't really own digital content you buy, you can't resell a game you buy on steam / playstation store. You're irreversibly binding them to an account and you are buying access to the files on the platform's servers.

[vietimports]

i think the world of high end art got too much heat so they decided to launder money with memes

[johnM-Jr]

Waxp is defi crypto is designed for NFT. It is slowly gaining. at 18 cents. it is in accumulation. hope it will rip up to a buck..

[sbkpilot]

so in other words an NFT is just a statement saying you own something but totally unenforceable... so we already have Copyrights are the current moment, what extra value does an NFT provide? Nothing.

[ChaceBonanno]

People need to stop thinking of NFTs as "posters" or "pictures" when they're more like contracts. Who owns the Mona Lisa? The one who holds the physical artwork, or the one with the paperwork to prove their ownership?

[habibbialikafe]

why do tv hosts look like dolls lol. ever heard of too much makeup and accessories? like putting all filters to 100 on instagram lol

[xpengfangirl]

NFT a new sheep reeling in tool, slaughter the sheep kindly, all the rich already structured the financial structure bait for hype and then sell off at 20X

[yegersr]

Like I said I would hit a Pawn Stars for values on systems like this

[cheesefactorygaming]

4:14 when she realizes her business model is out of date lmao

[amvorv]

Because I'm alive and I'm exists in this world

[mtgrabbitwizard]

isnt art infinite? Are they throwing money at a product that can only be limited by human imagination that does not even exist in the real world?
Why not wait for a matrix or ready player 1 upgrade to invest in a forever digital world :P

[mrpmj]

Eventually other businesses and consumers buy from Amazon, Apple, Facebook, Nvidia, Microsoft so these are the stocks you want to

[mistercat]

people had a hard time on Covid stuff, most asset on all time high and people willing to buy jpegs for thousands of dollar...