Record-breaking digital artist Beeple, who sold a piece of digital art for a record-breaking $69 million, thinks the non-fungible token (NFT) market will evolve in the same way the internet did during the dotcom bubble of the late 1990s.
He told The Street that during the dotcom bubble, people realised there were a lot of worthless internet pages being set up, which they then stopped using and that he believes it will be similar for NFTs.
“There was a bubble with the internet, it didn’t kill the internet. People kept using the internet, it just kind of wiped out all the c***”, he said.
NFTs are digital items such as videos, visual elements or audio that are based on blockchain technology. They are unique and not exchangeable, so they are often viewed as collectors items. Usually, anyone can still see the NFT online, but only one person can own it.
Beeple believes digital art can have the same value as traditional art and that it will continue to be highly priced after the NFT hype is over and lower value content has been weeded out.
“If it creates emotional connection with people, it will have value,” he said. Creators and buyers can ensure that their work and investments will be worthwhile by keeping this in mind, Beeple said.
In March, a piece of Beeple’s digital art sold for a record-breaking $69 million at a Christie’s auction. The buyer later said investing in digital art was highly risky and he believed NFTs were in a bubble. Beeple himself has also echoed this and said a lot of crypto art will sink in price to the point where it becomes worthless.
Based on data collected by nonfungible.com, an NFT tracking and analysis hub, the value of art NFTs has been trending downwards for the past month. The number of sales, as well as the amount of money paid for them, have steadily been declining, as have the amount of unique sellers and buyers.
“The NFT craze is not so much about prices and quick profit as it is about a new model of creative monetization, a new type of engagement with fans and a new cultural ‘experience’ for users,” Acheson said.
While the average price of NFTs have fallen from their highest point in February, average crypto art prices have been fluctuating in recent weeks. Between February and the end of March, prices dropped 70% but have since climbed 30% from a low around $1,200 last month.
Melissa Gilmour, the founder of the London-based NFT agency Lily & Piper told CNN the price drop is likely not permanent.
“There are elements of a hype cycle in this one, but we still see it as an immense long-term opportunity,” she told CNN.
Still, March’s lows were far above where the NFT market was just four months ago. In January, the average price for a crypto art piece was about $195 – the year before it was $30.
Acheson told Insider prices evening out could actually be a good sign for the longevity of the NFT market.
“Just because something is settling down doesn’t mean it’s over,” Acheson told Insider. “Sale prices may very well continue to go down from these spikes we saw in February, but just look at where the market is from just three or six months ago.”
More people appear to have gotten into NFT trading. Data from CoinDesk’s Quarterly Review shows that NFT trading volumes rose to 25 times December volumes in March and they don’t appear to be slowing down. March sales volumes were up nearly 40% from February on top NFT marketplaces, according to CoinDesk’s data.
Acheson said the decrease in the average sale price of NFTs could be attributed to less outlying sales, driving up the overall average.
As NFT sales become more democratized and accessible, average sale prices will likely go down
Data from NFT-tracking site DappRadar shows the volume and number of users across most popular NFT marketplaces is continuing to go up. Data from theblockcrypto.com shows the weekly number of NFT transactions are near February levels, with thousands of buyers and sellers trading every day across top platforms like NBA Top Shot and Sorare.
While mainstream sites like NBA Top Shots – a platform that recently received a $2 billion valuation from DappRadar – have largely driven sales volume, more accessible marketplaces like OpenSea and Rarible have become increasingly popular in recent months.
Investors have also turned their interest toward less curated sites like OpenSea, Rarible, and Mintable. In March, OpenSea received $23 million in funding from investors like billionaire Mark Cuban. Other platforms like Topps have already begun planning to launch an IPO.
As new buyers enter the space drawn in by big names, SNL skits, and flashy sales, they might be more inclined to invest more conservatively in NFTs. Music industry expert Cherie Hu told Insider newcomers to crypto investing will have more difficulty identifying valuable NFTs and will likely be less willing to spend large amounts of money on crypto-art drops.
“In most cases, it’s not your typical fan making these kinds of big purchases,” Hu told Insider. “Artists like 3LAU have built up a network of buyers in the crypto space.”
Furthermore, NFT creators that are new to the space may need more time to build up their credibility in the crypto world.
“[Investing in crypto art] is for people who are looking to take some risks,” Winkelmann said in an interview with The New York Times’. “Just making an NFT does not give it any value.”
Much like the internet bubble, NFT creators like Winkelmann and buyers such as NFT investor Pablo Rodriguez-Fraile believe that NFT prices will eventually drop, but the phenomenon of NFTs as viable investments will not go away.
“When the [internet] bubble burst, it didn’t wipe out the internet,” Winkelmann told The Times. “It wiped out the crap.”
Mick Jagger and Dave Grohl have joined the crypto frenzy, collaborating with 3D artist Extraweg on a non-fungible token (NFT) that is being auctioned in aid of music and environmental charities.
Jagger and Extraweg collaborated on the audio-visual NFT, which includes a custom loop from Jagger’s lockdown-inspired song “Easy Sleazy”, featuring Foo Fighters frontman Grohl. Extraweg contributed the visual element, which shows a human figure running through human heads as they shatter.
The NFT is being sold at a 24-hour auction, which started on Thursday evening, through digital token trading site Nifty Gateway. At 07:45 ET, around 5 hours before the auction will end, the highest bid was $10,200.
The auction will benefit various charities, selected by Jagger and Grohl, including Back Up, the UK’s Music Venue Trust and the American National Independent Venue Association. Back Up supports “industry technical professionals, crew/production personnel and people working in the technical supply chain” in the UK financially, whereas the other charities aid independent music venues and their workers.
Further charities in the music and environmental sectors will also be supported, but they remain unnamed so far.
NFTs are visual and audio data units that are built on blockchain technology. They are unique and cannot be interchanged. NFTs are often treated as collector items and can usually be seen by anyone online – although just one person can own them.
Jagger and Grohl have become the latest celebrities to join the NFT craze.
“NFTs as elite art-forms are definitely here to stay: this is the beginning of a huge new trend” Viktor Prokopenya, founder of cryptocurrency trading platform capital.com, commented on Jagger getting involved in the NFT market.
DJ Steve Aoki sold an NFT through Nifty Gateway in early March which brought in almost $900,000. Also in March, the band Kings of Leon sold an album as an NFT for the first time. Shawn Mendes has sold digital versions of his signature accessories. And Snoop Dogg and Lionel Richie have committed to producing NFTs for the crypto exchange Crypto.com’s NFT marketplace.
After buying a Beeple artwork for a record-breaking $69 million early in March, the buyer said investing in the digital tokens was a “huge risk”. Beeple himself also told Coindesk TV that he believed NFTs were in a bubble.
The New York Stock Exchange (NYSE) announced on Monday that it was getting into crypto art by minting its own digital collectibles designed to commemorate the first public trade of six stocks.
The NYSE is not only the largest stock exchange in the world, but it is also the first to get into crypto art. The collectibles will represent the first trades of Spotify, Snowflake, Unity, DoorDash, Roblox, and Coupang. NYSE said it plans to launch more first-trade collectibles in the future.
The digital collectibles will operate as non-fungible tokens or NFTs. NFTs are digital collectible tokens that allow the buyer to connect their name directly to the creator via the blockchain.
While the NYSE appears to be getting in on the NFT trend, the exchange’s tokens are not up for sale. The NFTs are housed on Crypto.com, a less than month-old NFT trading platform that has already launched crypto art sales for several celebrities including Snoop Dogg and Boy George.
A source familiar with the matter told Insider NYSE does not plan to sell its NFTs, but has already gifted them to the respective companies. The NYSE also plans to mint future NFTs and gift those to the memorialized companies as well, according to the source.
The NFTs for each company feature a short clip containing information about the first trade, including the sale price, date, and a string of numbers representing the first trade quote code.
Stacey Cunningham, the President of NYSE, said the NFTs will help commemorate the very first moments a company joins NYSE by highlighting the data from a company’s very first trade.
“NYSE technology is processing over 350 billion order, quote and trade messages across our markets on our busiest days, more than any other exchange in the world,” Cunningham said in a LinkedIn post. “Only one of those messages marks the NYSE First Trade: the exact moment a company became public, creating an opportunity for others to share in their success.”
Mike Novogratz said that NFTs could be worn like jewellery one day thanks to augmented and virtual reality.
The billionaire investor gave insight into his thoughts on how NFTs will be displayed in the future on his podcast Next with Novo following a conversation he had with Urs Fischer, a Swiss visual artist in a previous episode. Fischer released his first NFT artwork, a combination of an egg with a BIC lighter, earlier this week. It will be on sale from Sunday.
“I thought, what about that egg floating over my shoulder as I’m walking down the street”, Novogratz said on his podcast. “It’s the only one of its kind and just like people wear jewellery, maybe I’ll wear that egg”, he continued.
Passersby would be able to see it through their augmented reality glasses. Wearing NFTs as jewellery would allow people to show off their unique digital assets in the form of earrings or rings for example, said Novogratz.
NFTs, or non-fungible tokens, are digital artworks that include images, videos or audio that are unique and registered on a blockchain. NFTs have surged in popularity recently, as more artists flock to the digital space and auction houses sell pieces for sky-high prices.
Auction house Christie’s announced on Thursday that it would be presenting a set of nine so-called CryptoPunks, some of the first crypto artwork at an auction next month and were expecting the digital asset to sell for $7 million-$9 million. The auction house was also behind the sale of an NFT by Beeple, which was purchased for a record-breaking $69 million.
Novogratz, who is bullish on crypto assets generally, said he believes that NFTs will be displayed in virtual and physical reality, for example “in your little digital man cave” but also on screens in physical spaces.
“None of us really know how far this NFT thing can go”, the billionaire investor said. But he believes that the way reality is experienced will change in the coming years, as different screens and versions of reality come together and interact with each other.
“NFTs are going to be much bigger than everyone thinks they’re gonna be”, he ended.
NFL star Tom Brady is launching a company for digital collectibles called “Autograph.”
The platform will sell crypto memorabilia from sports icons and celebrities like Brady, according to the company’s site.
“Autograph will bring together some of the world’s most iconic names and brands with best in class digital artists to ideate, create and launch NFTs and ground-breaking experiences to a community of fans and collectors,” co-founder and CEO of Autograph Dillon Rosenblatt told CNN.
Brady and millionaire entrepreneur Richard Rosenblatt will act as co-chairs of the company. Autograph boasts a team with several big business names, including Lionsgate CEO Jon Filthier and Live Nation Entertainment CEO Michael Rapino, as well as three of the founders of DraftKings.
The items operate as unique digital assets. When someone buys an NFT they gain the rights to the unique token on the blockchain that acts as a digital certificate of authenticity. The token can gain value due to its relation to its creator or content. For example, tokens that represent memes like the Nyan Cat can gain in value as they increase in popularity online, though the NFT buyer is not be able to control the image’s distribution.
A digital home sold for over $500,000 online in March.
The house was sold as a non-fungible token, or NFT, on the SuperRare marketplace. In exchange for about $512,712 worth of ether, the Toronto buyer received 3D files and clips of the NFT piece, called “Mars House,” set to music.
The files can be uploaded to the buyer’s metaverse and used as a home for their avatar. A metaverse is a virtual world similar to “SimCity” or “Minecraft.” In the metaverse, users can buy digital assets including homes and clothes while living and interacting with other users via an avatar in the virtual world. One of the most popular NFT metaverses is Decentraland, a community-owned site where users can build their own reality.
The NFT is the first blockchain-based digital house in the world, according to SuperRare. The artist Krista Kim worked with Jeff Schroeder from the band Smashing Pumpkins to generate the music for the clip.
The house, which is set on Mars, appears to be made up almost entirely of glass.
The artist said she was inspired during quarantine to build the digital house.
“Kim ventured into NFTs while exploring meditative design during quarantine; her hope was to use the influx of digital life as an opportunity to promote wellbeing,” the press release said. “Comprised entirely of light, the visual effects of her crypto-home are meant to omit a zen, healing atmosphere.”
Janine Yorio, the head of the real-estate group Republic, said NFT real estate could be the future of home-buying.
“I predict that the best parcels of virtual real estate will appreciate faster than real-world real estate,” Yorio said in a post on CoinDesk, showing how NFTs have already gathered value in recent months.
Winkelmann may be facing a tax bill worth tens of millions of dollars. As an artist, Winkelmann will also have to pay federal and state income taxes on his earnings from the sale, in addition to reporting the cryptocurrency gains on his 2020 tax return.
The Internal Revenue Services sees buying and selling NFTs as a realization of investment gains, and therefore subject to the capital gains tax.
There are multiple ways you can get taxed when buying and selling an NFT. Capital gains taxes apply to NFTs, in much the same way they apply to selling stocks. However, because NFTs are considered collectibles they are also taxed at an even higher rate of 28%.
NFT buyers and sellers also need to be aware of how the cryptocurrency they used to buy the NFT will be taxed.
Most crypto-art pieces are bought using digital currencies, including ether and WAX. These cryptocurrencies are also subject to a capital gains tax, depending on how much they’ve gained in value since they were originally purchased and how long the buyer held the digital currency.
If the buyer held the cryptocurrency for over a year, they would be subject to a long-term capital gains tax. Long-term capital gains are taxed at 15% for individuals who earn between $40,000 and $441,000 – and 20% for individuals that make more than that amount. Holding the digital asset for less than a year will create a short-term capital gain, which is based upon the effective tax rate for the taxpayer.
In short, NFT buyers and sellers will be taxed when purchasing an NFT using a digital currency, selling an NFT for another NFT, selling an NFT for a cryptocurrency, as well as when converting the cryptocurrency used to buy and sell the item back into US dollars.
On the other hand, NFTs are not yet subject to the sales tax that would be applied to a physical piece of art – an issue that art law expert Diana Wierbicki told ArtNet state tax laws could soon catch up to.
The IRS has been cracking down on cryptocurrencies in recent months. This year, the IRS put a question about crypto investments on the first page of 2020 tax returns. People that fail to report digital assets or attempt to hide them could face serious penalties from the IRS.
Many NFT buyers and sellers likely do not know the hefty tax fees they will face. Shehan Chandrasekera, head of tax strategy at CoinTracker, told CNBC that there’s so many unknowns when it comes to the emerging market of NFTs that many people probably won’t know what to expect on tax day.
“People’s knowledge of this tax in the U.S. is very poor,” he said. “I just don’t think people know about it.”
Crypto investors Sundareson and Anand Venkateswaran have been going by their online usernames @Metakovan and @Twobadour. The two said they had been dropping hints about their identity ever since they made history with the $69.3 million Beeple purchase.
“These pseudonyms were never meant to be masks,” Sundareson and Venkateswaran wrote in their post. “The point was to show Indians and people of color that they too could be patrons, that crypto was an equalizing power between the West and the Rest, and that the global south was rising.”
Sundareson and Venkateswaran’s purchase became international news as it made the artist of the piece, Mike Winkelmann, one of the most valuable living artists. In the past two months crypto art has boomed, generating over $1 billion in less than a month, according to CryptoSlam.
The two entrepreneurs started out in crypto back in 2013. Sundareson said at the time he didn’t have enough money to fully invest in Bitcoin, so he offered escrow services. Since then, both Sundareson and Venkateswaran have become the founders of the world’s largest fund for non-fungible tokens or NFTs.
Before purchasing Winkelmann’s piece on Christie’s auction site, the two had already bought 20 Beeple art pieces.
While some critics think the Metapurse founders’ Beeple investment may be an effort to simply buoy the market or stack the cards in favor of their NFT fund, Sundareson told ABC News he expects the piece to continue to gain in value.
“This NFT is a significant piece of art history,” Sundaresan told CNBC. “Sometimes these things take some time for everyone to recognize and realize. I’m okay with that. I had the opportunity to be part of this very important shift in how art has been perceived for centuries.”
Superstar artist Damien Hirst is set to become the biggest player yet to enter the world of non-fungible tokens, with plans to sell 10,000 artworks tied to corresponding NFTs in a series called “The Currency Project.”
It is the latest sign of the craze for NFTs following the sale of a $69 million artwork using the technology earlier in March. Snoop Dogg and Lionel Richie are among the artists getting involved in the hottest new thing in the crypto world.
Non-fungible tokens, or NFTs, are a special class of digital assets that cannot be exchanged with one another for equal value, or broken down into smaller bits. They often operate as a type of collectors’ item and cannot be duplicated.
Hirst said in a statement his new project “challenges the concept of value through money and art.” He will produce 10,000 works on paper that will be tied to corresponding NFTs.
The 55-year-old was briefly the world’s most expensive living artist in 2007 when he sold Lullaby Spring, a medicine cabinet containing 6,000 painted pills, for $19m. He spent around $24 million encrusting a skull with diamonds in 2007, which he sold for $100 million to a consortium.
The artist’s series will be the first release on Palm. It is a new crypto technology and token created by ConsenSys, a developer group at the heart of Ethereum, working with film studio Heyday Films and art company Heni Group.
Hirst said: “Palm is by far the best platform for me. It’s new and art focused, it’s the most environmentally friendly, and it is quicker and cheaper to use. With Palm, artists can invent the future.”
Palm will be connected to the Ethereum network and enable artworks to be encrypted and secured in a more environmentally friendly way, its developers said.
NFTs exist on a blockchain, a public ledger which allows people to verify who owns the token. But the technology involved can be slow, expensive and very energy-intensive.
ConsenSys said its research and development suggested Palm will be 99% more energy-efficient than Ethereum’s main system by reducing the need for computing power, and will have lower costs and faster transactions.
It is not Hirst’s first foray into the crypto world. The artist sold more than 7,000 prints of Japanese blossom paintings in a sale ending in March, with payment possible in bitcoin or ether.