The mysterious buyers of Beeple’s $69 million crypto art piece revealed their real names: ‘these pseudonyms were never meant to be masks’

Beeple V5
  • The buyers of Beeple’s $69.3 million piece dropped their real names in a blog post.
  • The buyers said they wanted people of color to know they could use crypto as “an equalizing power.”
  • Vignesh Sundareson and Anand Venkateswaran have created the world’s largest NFT fund.
  • See more stories on Insider’s business page.

The buyers who spent nearly $70 million on Beeple’s crypto art piece revealed their identities in a blog post about a week after the purchase.

Earlier in March, the auction house responsible for the sale announced that the pseudonymous founder of an NFT fund, Metakovan, had bought the piece. In a blog post on Metapurse, millionaire entrepreneur Vignesh Sundaresan came forward as one of the buyers.

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.

Sundareson told CNBC on Tuesday that he would have paid even more for the piece if he had to. The bidding war for the Beeple piece came down to the last minute, as Sundareson and Venkateswaran beat out Tron CEO Justin Sun during the final moments of the auction.

“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.”

Read the full post on Sundareson and Venkateswaran’s NFT journey on Metapurse.

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Superstar artist Damien Hirst to sell 10,000 NFTs using a new Ethereum technology called Palm

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Damien Hirst is famous for pickling sharks and encrusting skulls with diamonds

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.”

The artist, famous for putting a shark in formaldehyde and encrusting a skull with diamonds, will release his latest works on a new technology called Palm, which will be connected to the Ethereum network that supports the world’s second-biggest cryptocurrency, ether.

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.

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The SEC’s ‘Crypto Mom’ Hester Peirce says selling fractionalized NFTs could be illegal

Commissioner Peirce participates in a U.S Securities and Exchange Commission open meeting
  • SEC commissioner Hester Peirce reminded issuers not to accidentally create investment products.
  • Selling fractionalized NFTs, or NFT baskets could turn them into securities, which are tightly regulated.
  • ‘Crypto mom’ Peirce also thinks the Howey test is not a good way to see if digital assets are securities.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The Securities and Exchange Commission ‘crypto mom’ Hester Peirce said issuers of non-fungible tokens must be careful they do not accidentally create investment products when selling fractions, or derivatives, of these digital collectors items.

“People are being very creative in the types of NFTs they’re putting out there,” Peirce, who is an SEC commissioner and cryptocurrency supporter, said at Draper Goren Holm’s Security Token Summit on Thursday.

NFTs are designed to be unique and non-fungible, so they are less likely to be securities, Peirce said. However, considering the creative approaches some issuers have been developing, people should be asking questions and being careful, she said.

When selling fractions of individual NFTs, or NFT baskets, “you better be careful that you’re not creating something that’s an investment product, that’s a security”, the so-called “Crypto Mom” said. “The definition of security can be pretty broad,” she said.

NFTs, or non-fungible tokens, have soared in popularity recently and are selling for large sums of money. NFTs are data units, often digital content like a tweet, a meme, a piece of art, or music. Twitter founder Jack Dorsey’s first ever tweet, for example, sold for $2.9 million as an NFT and digital artist Beeple sold a work for almost $70 million, a record high for digital art.

Peirce said the Howey test, which is used to determine whether or not an asset is a security, does not work well for digital assets, as its basic logic does not apply in the same way as it does to physical assets.

Peirce stated the SEC is considering how, and whether, to refine her proposed safe-harbor policy and a revised plan would likely be presented soon. She said she hopes to collaborate with incoming SEC chairman Gary Gensler on this topic and is engaging with the approaches followed by other countries and regulators to help devise a potential regulatory framework.

Peirce’s safe-harbor policy would allow issuers of crypto assets and funds to claim exemption from SEC regulations for three years to protect them from token distribution being classed as securitization immediately. Digital asset investors and creators have shared concerns that SEC regulation would prevent them from being able to set up a broad, decentralized financial system.

“I don’t know how it will all play out, and again, I have a lot to learn from what’s going on in Europe, also what’s happening in Asia, what’s happening in the Caribbean. You know, there are a lot of places that are taking much more forward-looking approaches than we and by ‘forward-looking’, I mean really trying to provide some clarity.”

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Twitter CEO Jack Dorsey’s first tweet sold for $2.9 million on Sunday. The buyer said it’s the Mona Lisa of tweets.

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Twitter and Square CEO Jack Dorsey.

  • An NFT version of Twitter CEO Jack Dorsey’s first tweet sold at auction for $2.9 million.
  • The tweet was as valuable as fine art, like the Mona Lisa, said the buyer.
  • Observers said NFT buyers may be speculating, buying pieces they expect to resell in the future.
  • See more stories on Insider’s business page.

The buyer who paid $2.9 million for an NFT version of Twitter CEO Jack Dorsey’s first tweet said he’s valuing it like fine art – specifically the Mona Lisa.

On Sunday, Hakan Estavi, chief executive at at Bridge Oracle, had the highest bid in an online auction for the piece. Insider has reached out to Estavi for comment.

“This is not just a tweet!,” Estavi said on Twitter. “I think years later people will realize the true value of this tweet, like the Mona Lisa painting.”

Dorsey’s message – “just setting up my twttr” – clocked in at 24 characters, including spaces, placing its value at more than $100,000 per character.

What made a tweet from 2006 so valuable? Even in the form of a non-fungible token, or NFT, with a digital signature from Dorsey, it was still just a few lines of code.

“An NFTs value is largely derived as a function of scarcity and speculation,” said Tom C.W. Lin, a professor at Temple University’s Beasley School of Law.

The value of high-priced NFTs – like, say, the $69 million NFT sold this month – comes from the combination of high demand and rarity, as with any piece of art. An NFT version of Dorsey’s tweet is a digital object that can’t be duplicated, making it scarce.

Lin added: “An NFT itself does not have much intrinsic value beyond those factors.”

Demand for Dorsey’s tweet started slowly. According to Valuables by Cent, where the auction was hosted, the chief executive created the auction for his own tweet.

The first offer was made on December 15, coming in at one dollar. Within a few weeks, the top offer was $3,500. But that offer was canceled by the bidder, sending the price back to zero.

After Dorsey tweeted a link to the auction in early March, bidders quickly entered nearly 30 offers, sending the price to $2.5 million. As of midday Sunday, that was still the highest bid.

Dorsey said he would convert the proceeds from Sunday’s sale into bitcoin, then donate it to charity. He sent a tweet confirming his donation on Monday.

Skeptics and NFT novices may question whether a public tweet can truly qualify as scarce, commanding such a high price. After all, Dorsey’s Twitter post had been live for all the world to see since March 2006. And it will continue to be live on Twitter even after Sunday’s sale, so anyone can read it for free anytime they want.

It’s right here:

So what exactly did the buyer get with an NFT version? That version would add a digital signature, making it a one-of-a-kind moment, akin to a work of signed art, according to the Valuables FAQ.

Dominik Schiener, cofounder and chairman of the IOTA Foundation, said anyone who buys an NFT version of a tweet is basically getting the “essence” of the tweet’s value.

It’s important that the buyer trusts both the auction website and the seller. Otherwise, they could just post a new NFT version someplace else, he said.

Twitter HQ in San Francisco
Twitter’s San Francisco headquarters.

“In order for the tweet-NFT to be valuable, there has to be consensus that the platform and technology is a de-facto representation of scarcity,” Schiener said via email. “If the world comes to an agreement that the NFT version of an asset on blockchain is ‘real’, then it means you are acquiring the ‘essence’ of that thing’s value.”

Dorsey’s tweet might also be worth $2.9 million for collectors simply because they could resell in the future for an even higher price, said David McCarville, a director at Fennemore Craig.

He said the rise of the NFT market is being driven by early adopters who’ve made money from cryptocurrency. They may be seeing similar opportunities in the NFT market.

McCarville said: “These early adopters believe that they are in a position to be the first movers in a market that is still very new and therefore should enjoy significant appreciation in value.”

Read the original article on Business Insider

Billionaire Mark Cuban is setting up a digital art gallery that allows users to display NFTs in any form, report says

Mark Cuban
Mark Cuban.


Billionaire entrepreneur Mark Cuban is developing an online art platform that allows its users to present digital art or collectibles, according to The Block.

The project, called Lazy.com, is already live and has a minimalist appearance. It has so far seen scores of visitors, according to the “Shark Tank” investor.

The nature of digital art means that it can be showcased on any online platform, such as social media sites or websites made for digital-collectibles. But Cuban says there isn’t a simple way for art creators to exhibit their work as NFTs.

“I wanted an easy way to show my NFTs and a way to put them in my social bios, my email signature, and any place I can stick a URL,” he told The Block. “People are curious about what other people collect. There wasn’t a super-easy way to do it.”

Non-fungible tokens act as a certificate of authenticity for digital goods like GIFs, JPEGs, MP3s, or other forms of digital art. In the past month, data from CryptoSlam shows people have spent over $1 billion on digital assets.

“People bought NFTs, they created them, they need a lazy way to show them off,” Cuban said. “There really was not an easy way to do it before Lazy.com.”

The digital artist Mike Winkelmann, or Beeple, made history when he sold an art piece for $69 million earlier this month. Other artists like Grimes and DJ 3LAU also made between $5 million and $12 million within minutes of auctioning their digital collections. More recently, rapper Snoop Dogg and Lionel Richie have signed up to produce work for Crypto.com’s new NFT marketplace.

“The NFT market is on fire,” Cuban said.

Read the original article on Business Insider

The New York-based crypto exchange owned by the billionaire Winklevoss twins added 7 new tokens to its platform after an explosion of interest in digital art and NFTs

Tyler Winklevoss Cameron Winklevoss
Tyler Winklevoss and Cameron Winklevoss.


Gemini, the digital currency exchange founded by the Winklevoss twins, announced on Monday that it added seven new digital tokens that support decentralized finance, gaming, NFTs, and the decentralized web.

The six tokens that are entirely new to its platform include Bancor, 1inch, Loopring, The Sandbox, Skale, and The Graph. The token Enjin is already supported for custody purposes, but will now be available for trading.

The latest additions raise Gemini’s total supported cryptocurrencies to 33. Another 10 are supported under its custodial services.

A fresh interest in the DeFi revolution, digital art, and NFTs has contributed to Gemini’s expansion into crypto projects. The exchange only recently counted more than $20 billion in crypto under custody.

Bancor is a payment token that allows users to convert virtual currency tokens without the need for a counterparty to facilitate the exchange. The 1inch token is associated with a platform that provides the best crypto prices across decentralized exchanges. Loopring offers a pool of open-sourced software to help build decentralized exchanges. The Sandbox is a virtual world where users can monetize their gaming experiences, similar to Enjin. Skale and The Graph allows developers to build decentralized apps in cost-effectively.

Enjin last month launched a web game with Microsoft that introduced NFTs for use on one of the world’s most popular games, Microsoft.

“We look forward to providing further access to new crypto projects as our industry grows to new heights, and as we continue to build the infrastructure to support the future of finance,” Gemini said in a statement.

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Twitter CEO Jack Dorsey’s first tweet is expected to sell for $2.5 million on Sunday. Here’s why the NFT is so valuable.

Twitter CEO Jack Dorsey.JPG
Twitter and Square CEO Jack Dorsey.

  • An NFT version of Twitter CEO Jack Dorsey’s first tweet is expected to sell for $2.5 million.
  • Bidding on the tweet ends on Sunday, Dorsey said.
  • Observers said NFT buyers may be speculating, buying pieces they expect to resell in the future.
  • See more stories on Insider’s business page.

When the auction for an NFT version of Twitter CEO Jack Dorsey’s first tweet ends on Sunday, a buyer is expected to pay at least $2.5 million for it.

The message – “just setting up my twttr” – clocks in at 24 characters, including spaces, placing its value at more than $100,000 per character.

What makes a tweet from 2006 so valuable? Even in the form of a non-fungible token, or NFT, with a digital signature from Dorsey, it’s still just a few lines of code.

“An NFTs value is largely derived as a function of scarcity and speculation,” said Tom C.W. Lin, a professor at Temple University’s Beasley School of Law.

The value of high-priced NFTs – like, say, the $69 million NFT sold this month – comes from the combination of high demand and rarity, as with any piece of art. An NFT version of Dorsey’s tweet is a digital object that can’t be duplicated, making it scarce.

Lin added: “An NFT itself does not have much intrinsic value beyond those factors.”

Demand for Dorsey’s tweet started slowly. According to Valuables by Cent, where the auction is hosted, the chief executive created the auction for his own tweet.

The first offer was made on December 15. The bidder offered one dollar. Within a few weeks, the top offer was $3,500. But that offer was canceled by the bidder, sending the bidding back to zero.

When Dorsey tweeted a link to the auction on March 6, there was another one dollar offer. Users entered nearly 30 offers on the day of Dorsey’s tweet, sending the price to $2.5 million. As of midday Sunday, that was still the highest bid.

Dorsey said he would convert the proceeds from Sunday’s sale into bitcoin, then donate it to charity.

Skeptics and NFT novices may question whether a public tweet can truly qualify as scarce, commanding such a high price. After all, Dorsey’s Twitter post has been live for all the world to see since March 2006. And it will continue to be live on Twitter even after Sunday’s sale, so anyone can read it for free anytime they want. It’s right here:

So what exactly will the buyer be getting with the NFT version? That version will add a digital signature, making it a one-of-a-kind moment, akin to a work of signed art, according to the Valuables FAQ.

Dominik Schiener, cofounder and chairman of the IOTA Foundation, said anyone who buys an NFT version of a tweet is basically getting the “essence” of the tweet’s value.

It’s important that the buyer trusts both the auction website and the seller. Otherwise, they could just post a new NFT version someplace else, he said.

Twitter HQ in San Francisco
Twitter’s San Francisco headquarters.

“In order for the tweet-NFT to be valuable, there has to be consensus that the platform and technology is a de-facto representation of scarcity,” Schiener said via email. “If the world comes to an agreement that the NFT version of an asset on blockchain is ‘real’, then it means you are acquiring the ‘essence’ of that thing’s value.”

Dorsey’s tweet might be worth $2.5 million for collectors simply because they could resell in the future for an even higher price, said David McCarville, a director at Fennemore Craig.

He said the rise of the NFT market is being driven by early adopters who’ve made money from cryptocurrency. They may be seeing similar opportunities in the NFT market.

McCarville said: “These early adopters believe that they are in a position to be the first movers in a market that is still very new and therefore should enjoy significant appreciation in value.”

Read the original article on Business Insider

11 of the most expensive pieces of crypto art ever sold, from Beeple to Steve Aoki

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The market for crypto art is booming – everyone from Mark Cuban to Paris Hilton to Taco Bell has gotten in on the action.

Since NFTs, or non-fungible tokens, are mostly bought and sold via cryptocurrency transactions that are tied to the blockchain, which is by nature decentralized, rounding up the highest-value individual sales can be challenging. But per Insider’s reporting and data from the crypto-art auction site Nifty Gateway, here are some of the highest-value NFT transactions to date.

Are there any high-value sales you think should be included? Contact this reporter at awilliams@insider.com with any high-value single NFT transactions you’d like to see.

Nyan Cat by Chris, on Foundation – $590,000

An NFT featuring the popular piece of internet history that is the Nyan Cat meme sold for 300 ETH, or about $590,000, in February. Insider reported that a 24-hour auction took place on Foundation, a platform for crypto art.

THE COMPLETE MF COLLECTION by Beeple, on Nifty Gateway – $777,777.77

This NFT sale is unusual because it includes a physical component as well as the blockchain-based art. This collection of Beeple’s art includes many of the digital artist’s pieces along with a “physical artifact of the NFT featuring a signed, numbered titanium backplate.” Beeple even included a hair sample.

Hairy by Steve Aoki, on Nifty Gateway – $888,888.88

Earlier this month, musician Steve Aoki collaborated with Antoni Tudisco to produce this high-value NFT with a clip of Aoki’s music and a dancing blue-and-purple figure. When it sold on March 8, it was a record-breaking single sale for Nifty Gateway.

Not Forgotten, But Gone by WhIsBe, on Nifty Gateway – $1 million

This 16-second clip of a spinning gold skeleton gummy bear sold for $1 million on Nifty Gateway. Artist WhIsBe sells several different gummy bear-based NFTs on the platform as well.

Auction Winner Picks Name by SSX3LAU, on Nifty Gateway – $1.33 million

Electronic music artist 3LAU has gotten into the NFT game and made a major sale in collaboration with Slimesunday. This sale allows the winner of the auction to name the song that plays in the music video NFT.

CryptoPunk #6965, on Larva Labs – $1.54 million

This token, which features a funky fedora, became the third-highest CryptoPunk sale to date when it was last sold on February 19. Several other CryptoPunk tokens have crossed the $1 million threshold, depending on the valuation of the crypto-currency at the time of sale. Find the full list here.

First Tweet by Jack Dorsey, on Valuables – $2.5 million or more

Though the auction closes on March 21, Jack Dorsey’s sale of the first-ever Tweet as an NFT is sure to break the top 10; the current bid is $2.5 million, and it’s been stagnant since March 6. Dorsey announced the auction earlier this month and plans to donate the proceeds to charity.

CROSSROAD by Beeple, at Nifty Gateway – $6.66 million

On February 24, the digital art platform Nifty Gateway announced on Twitter that a work from Beeple netted $6.6 million on the secondary sale market, brokered through the Nifty Gateway buying services. The NFT features an anti-Trump message.

CryptoPunks #7804 and #3100 at Larva Labs – $7.6 million each

These tradable CryptoPunk collectibles were both sold on March 11 for a value of 4.2k Ethereum, marking the top two sales of all time for CryptoPunk tokens. The Larva Labs website describes the CryptoPunks as “unique collectible characters with proof of ownership stored on the Ethereum blockchain.”

“Everydays: The First 5,000 Days” by Beeple, at Christie’s – $69 million

The highest-value NFT sale to date is a piece by crypto-artist Beeple put on auction at Christie’s. It was the first NFT to be sold at the historic auction house and pointed to a newfound institutional legitimacy for the burgeoning market. The art piece, titled “Everydays: The First 5000 Days,” was a compilation of 5,000 pieces of Beeple’s work.

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Billionaires, celebrities, and influencers from Mark Cuban to Lindsay Lohan are joining the NFT craze. Check out what they’ve auctioned.

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Elon Musk and Grimes attend the Met Gala in 2018.

  • Celebrities from Lindsay Lohan to the NFL’s Rob Gronkowski are jumping in on the NFT craze.
  • More celebrities and influencers are expected to join the space as it grows in popularity.
  • Tesla CEO Elon Musk planned to sell an NFT but later decided against it.
  • See more stories on Insider’s business page.

As the craze for crypto art continues, celebrities, billionaires, and influencers are getting in on the trend and selling some of their own.

NFL player Rob Gronkowski, rapper Ja Rule, Lindsay Lohan, and Mark Cuban, among others, have jumped on board. And Alex Atallah, the cofounder of NFT marketplace OpenSea, told Insider he expects to see even more celebrities joining the space.

NFTs, or non-fungible tokens, have allowed artists to sell their digital work for thousands and even millions of dollars. They’re gaining popularity as NFTs – which are generally digital assets that operate as a type of collector’s item and can’t be duplicated – are now a more than $1 billion market.

As for CEOs, Twitter chief Jack Dorsey sold his very first tweet from 2006 for millions and donated the proceeds to charity. And just this week Tesla CEO Elon Musk, who has been a big promoter of cryptocurrencies, said he would sell a techno song as an NFT. But he later reneged, saying it didn’t feel right. His girlfriend, Grimes, has made millions selling crypto art.

Billionaire and “Shark Tank” star Mark Cuban sold an NFT of a motivational quote, that read, “Nobody ever changed the world by doing what everyone else was doing – Mark Cuban.”

Read more: Influencers are rushing to make money on NFTs using virtual avatars, digital collectibles, and one-off art

As for the music industry, Shawn Mendes teamed up with Genies, which makes 2D avatars, to make virtual versions of his guitar and gold ring and sell them as NFTs, Rolling Stone reported.

Hoping to get rid of bad vibes from his Fyre Festival days, rapper Ja Rule auctioned an oil painting that once hung in Fyre Media’s office as an NFT on a new platform Flipkick, and he offered to sign it for the purchaser.

Flipkick Fyre Fest painting
Flipkick is selling this Fyre Festival painting as an NFT

Other musicians have joined the trend, as well. The Kings of Leon was the first band to sell an entirely new album, titled “When You See Yourself,” as an NFT, Rolling Stone Reported. And in a tweet, DJ Steve Aoki announced his first-ever NFT collection.

In the sports world, Tampa Bay Buccaneer Rob Gronkowski, aka the Gronk, announced on Twitter he’d be launching an NFT collection of his very own. Four pieces of art commemorate his championship wins and one is a career highlight of him, according to his website. Kansas City Chiefs’ quarterback Patrick Mahomes sold millions of dollars worth of NFTs in just minutes, actionnetwork reported.

As for influencers, Paris Hilton sold a cat painting for $17,000, Decrypt reported. And Lyndsay Lohan sold her “Lightning” NFT for $50,000 and promised to donate the funds to charities that accept cryptocurrency, according to Decrypt.

With a lot of money to be made in NFTs, internet influencers are likely to continue joining the space. So far, YouTube stars like Logan Paul and Zach “ZHC” Hsiehn have already begun experimenting with the trend.

Do you know of more celebrities and influencers who are selling or planning to sell an NFT? Email the reporter of this story at ndailey@insider.com.

Read the original article on Business Insider

We talked to crypto-art investors to figure out what’s driving people to spend millions on NFTs, despite no guarantee their value will increase

Beeple V5
  • NFTs have generated billions of dollars and one NFT sold for nearly $70 million.
  • Many people question whether the digital assets will maintain their value over time.
  • Some investors compare the NFT boom to the dawn of the internet.
  • See more stories on Insider’s business page.

In the past month, people have spent over $1 billion on digital assets, according to data from CryptoSlam.

Crypto art has been around for over half a decade, but for many people outside of the crypto world, these digital assets, known as non-fungible tokens or NFTs, have seemingly come out of nowhere.

So, what’s driving people to get in on the NFT mania, investing anywhere from hundreds of dollars, to in some cases, millions? Crypto art investors say it’s a combination of several factors, including the pandemic, as well as the rise in bitcoin prices.

In the past few months crypto artists have been drawing more attention than ever before to NFT marketplaces with flashy sales.

Last week, digital artist Mike Winkelmann – more commonly known as Beeple – made history when he sold a crypto art piece for nearly $70 million. Other artists like Grimes and 3LAU have also made millions in a matter of hours dropping crypto-art collections.

On Monday, at the mere suggestion of Tesla CEO Elon Musk selling his own digital asset, bids for the piece topped $1 million, before Musk turned down the offer.

Creators and buyers alike have seen significant profit from crypto art. In February, Miami-based art collector Pablo Rodriguez-Fraile first showed just how lucrative the market can be when he resold a piece by Beeple for a nearly 1,000% increase over its original price.

Why are people buying NFTs now?

Rodriguez-Fraile told Insider the surging price of Bitcoin, impact of the pandemic, and distrust in the US dollar created a perfect storm.

Last week, Bitcoin hit a record high, topping $60,000. Since the pandemic started more people have been saving money. 59% of people with an income over $100,000 significantly boosted their savings in 2020. As faith in the US dollar seems to be at an all-time low, NFTs could be another way for people to invest.

“People have long used art to store value,” Rodriguez-Fraile told Insider. “Crypto extends easily into digital art. This is just a more modern approach to investing in art and using it like someone would use gold or bitcoin.”

He thinks the NFT boom was accelerated by the pandemic, but ultimately inevitable – a product of the tech boom that younger generations would have eventually driven anyway.

For many artists, especially in the music industry, multi-million dollar sales by 3LAU and Grimes have captured the spotlight and created a sort of gold rush, but for buyers the reasoning is less clear.

Will NFTs maintain their value?

Investor Gary Vaynerchuk, the CEO of VaynerMedia, told CoinDesk he believes NFTs are operating under a bubble, but it doesn’t mean they won’t have staying power.

“A lot of people talked about the internet being a fad,” Vaynerchuk said. “In reality, the internet was this game-changing revolution of technology, but a lot of the early projects were just overpriced on the excitement.”

Even Winkelmann admits NFTs are likely overinflated.

“If it’s not a bubble now, I do believe it probably will be a bubble at some point because there’s just so many people rushing into this space,” Winkelmann told CoinDesk.

What do you get when you buy an NFT?

When someone buys an NFT they gain the rights to the unique token, but only on the blockchain. If someone buys a image or meme, they can own it on the blockchain, but they have no control over rights to its distribution.

When you buy an NFT in most cases you’re not buying content, but rather a token that connects your name with the creator’s art on the blockchain.

However, the digital tokens operate on the same deflationary principles as bitcoin. NFTs cannot be duplicated, can be easily authenticated, and are immutable, but there’s no surefire way to know whether they will maintain their value over time.

Billionaire Mark Cuban told Insider buying NFTs is about scarcity.

“The buyer knows how many will be made and has blockchain proof of ownership,” Cuban told Insider.

Cuban has been a proponent of NFT investing, from buying NBA Top Shot clips to investing in Mintable, a community-controlled digital-asset marketplace.

The CEO of SuperRare, another NFT site, told Insider people are motivated to buy NFTs because it provides a unique connection to the creator that does not exist with any other art form.

Crypto art has also spawned entire communities online. Robert Martin, a senior content strategist at Kapwing, told Insider there’s a lot of pressure right now to buy and even create your own NFTs within the crypto community.

NFT buyers are not necessarily fans

Music Industry expert Cherie Hu told Insider an artist’s fan base does not dictate their NFT sales. How could it? How many fans would be able to drop thousands if not millions of dollars on a single digital token?

Musician Justin Blau, known by his stage name 3LAU, and André Allen Anjos, known as RAC, have been members of the crypto community for over half a decade. They told Insider a lot of their buyers are already investors in the crypto world. As artists they make a point of buying other creators’ NFTs as well.

“The crypto community creates and sells these artworks for each other,” Hu told Insider.

While NFT investors hardly account for a large portion of a creator’s fanbase, involvement from outside the crypto community is on the rise.

Platforms like NBA Top Shot are spreading awareness and present broader audience appeal. Hu told Insider that she believes the NFT space will continue to grow, but will need to become more accessible in order to generate mainstream appeal.

Read more: Here are 4 NFT startups transforming the way we buy art and sports memorabilia

NFTs still face several barriers to mass adoption. Most NFT marketplaces require buyers to use a crypto wallet. Only about $70 million people – less than 1% of the world’s population – have a crypto wallet, according to Blockchain.com.

Creators and buyer also have to deal with gas fees associated with minting and buying a product off the blockchain. These hidden fees can cost hundreds of dollars.

Co-founders of NFT platform Nifty Gateway, Duncan and Griffin Cock Foster have been working to make digital assets more attainable for the general public. They are one of few platforms that allow users to buy NFTs off the site using their credit card.

“We’re trying to make a space where anyone can be an art collector,” Griffin Cock Foster told Insider.

Rodriguez-Fraile said NFTs represent the future of the art world.

“A few years from now this could just be how people own art,” he told Insider.

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