Ok, so why is a meme worth $595,000?
Last week as I listened to Jon Lovett’s podcast “Lovett or Leave It” (which, by the way, I highly recommend), I was introduced to a new concept. Lovett’s guest, almost laughing at himself, described how he had waited in a digital line for several hours hoping to purchase what I could only discern was some sort of digital basketball card. They were being sold by Topps, whom you might remember from your days as a kid (or adult, no judgement here) collecting actual, physical sports trading cards.
According to this man, he was hoping to acquire one of the thousands of digital cards being released that day. However, much to his dismay, he not able to make his purchase, as when he signed on to the site he was placed somewhere around 170,000th in line. A position he still considered close to the front.
Again, this was for a virtual basketball card.
What I’ve come to understand is that I was actually being introduced an upcoming and by now well established trend in Ethereum blockchain currency— Non-Fungible Tokens.
Other than being my new favorite word, fungible is a relatively straightforward financial term. As Bobby Allyn of NPR writes “A $10 bill can be exchanged for two $5 bills. One bar of gold can be swapped for another bar of gold of the same size. Those things are fungible.”
Conversely, something that is non-gungible cannot be exchanged for something of equal value; and in the circumstance of NFTs, this is exactly the case: each NFT is created with a unique token, making it one of a kind.
And this is what seems to have the internet in a tizzy over these NFTs, the fact that even more than a first edition Charizard autographed by Michael Jackson (hypothetically, that’s not real…) or an original charcoal sketch by Salvadore Dali, these tokens have unique value that can only be held or sold by one person. This exclusivity is driving up some very real prices for NFTs, like for example this piece called EVERYDAYS: THE FIRST 5000 DAYS being auctioned by Christie’s:
The current bid on this certified NFT is $4,000,000.
Or this one entitled Nyan Cat:
Which sold for $450,000.
As you may have guessed, these pictures are not in fact the NFTs that are on sale/have been sold. They are just pictures from the internet, and you may want to think of them in the same way you would a Monet print you purchase in a museum gift shop.
Personally, though, I would not be able to tell the difference. This begs the question then: what is someone actually buying when they purchase an NFT. As Donna Redel, a professor of crypto-digital assets at Fordham University explains “The underlying thing that you’re buying is code that manifests as images… You’re buying a different format of art.”
So then what, in essence, is the point? Well, it really depends on your perspective. The creation and popularity of NFTs could be seen as an artistic commercial renaissance. Buyers on the internet have begun to scoop these things up at high art prices, and therefore artists can view this as a reasonable source of income and profit.
From the side of the buyer, the idea is a bit more cynical than that — perhaps the best way to understand this new version of art on the internet is to think of it like crypto-currency — something which is itself difficult to understand. At this point in our society, a revolution aimed at moving away from the “fiat-based” version of money has begun, and is in fact well underway. Some view it as a sort of hyper-capitalism, based around the idea of decentralizing capitalism as we have come to understand it.
Essentially, those who believe in the future of crypto, and now by extension of NFTs, believe that a new economy is being constructed. One in which everything’s core value is transparent and accessible on the blockchain as opposed to being shrouded by what is seen by some as a corrupt world economy.
Is this, then, the definite way of the future? As New Zealand artist and public speaker Simon Denny put it ““It’s not, but there’s this idea of hyperstition that’s popular in crypto: repeating something enough makes it true.”