If the media hype is to be believed, then it seems like everyone is shilling for non-fungible tokens (NFTs). The array of intangible digital ‘products’ on offer include those from hip hop artist to popular beauty brands.
The Ascent, a Motley Fool service has recently created an NFT market guide. This guide gives an indication of the recent history of these tokens in assessing historical NFT data. Such data relates to pricing, sales, volume, and the most expensive NFTs sold.
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This report shows some figures that emphasise the high-value (at least currently) of NFTs, as they continue to be aimed at the wealthy collectors’ market. For example, the most expensive NFT sold is “The Merge,” developed by the artist Pak. This sold for $91.8 million in 2021 (albeit that Pak’s NFT was collectively sold to over 28,000 collectors, given that the artwork can only be fully visualized when each element of the collection comes together).
While ‘The Merge’ may occupy top spot, most NFTs are selling for sums beyond the affordability of most people. The current average price on an NFT is $3,257 and the total trade volume of NFTs in 2021 was $24.9 billion.
In terms of the typical costs, there are signs that the artwork or other collectable may not be the only factor driving the prices, for NFT prices generally track with Bitcoin and Ethereum and therefore the current focus on securing NFTs is not wholly like an art auction of it is influenced by wider cryptocurrency developments.
This is not to infer that activity is slowing down for 2.4 million NFTs (worth $4.8 billion) were exchanged on OpenSea (currently the largest NFT marketplace) in January 2021 alone. The NFT craze shows no signs of slowing down.
As to whether NFTs are secure and worth the cost, the security question is straightforward. NFTs are secure and safe. They can be programmed, stored on transferred on exchange or wallet that is based on ERC-721 or ERC-1155 which is the platform that Ethereum is also based on the blockchain technology. This is until quantum computers progress, at least.
There are, unfortunately, scams where fake or copied NFTs are sold. NFTs are also used as part of phishing scams, to lure the unsuspecting into clicking a malicious link.
With the costs, are NFTs worth the money? Many will lose their value and there are risks of the whole trading arena crashing down.
Also, what is reality? As Digital Journal discussed “if an original piece of digital art is created someone could take a copy but it would only ever be a copy. The original artwork would be authenticated on a digital ledger and there can only be one owner.”
Therefore, do you actually have something of value if you purchase an NFT?
