People are paying millions for NFTs; while some of them are good art, others are pixelated drawings even a 10-year old can make. Hence, the question is, who is paying for the most expensive NFTs being sold and why. It is important to understand the psychology behind these purchases and if there is some other reason for this as well. So, let’s take a dive deep into the world of NFTs and understand everything in detail.
What are NFTs?
Have you ever imagined before that you will be buying jpeg files online? Well, NFTs has made that possible with the use of blockchain to verify your identity and give you ownership of the NFT you buy. NFTs stand for non-fungible tokens, which means they are unique and are non-exchangeable. They are a boon for artists and have given them a new way to reach the entire world and sell their artworks for millions of dollars.
To understand the term non-fungible a little better, let me give you an example. Let’s say you have pokemon cards and you trade them with your friends. You definitely get a different card after trading and whatever you have is unique and non-replaceable. This is unlike cryptocurrencies as 1 ETH can be exchanged for BTC and swapped for ETH again, but NFTs don’t do that. This is in fact their primary USP. The whole idea is to have the ownership of a digital asset that doesn’t exist elsewhere but only with you.
10 most expensive NFTs and their buyers
1) Everyday: The First 5000 Days
Paying a few million dollars for NFTs was one thing, but buying Beeple’s artwork for $69.3 million was on another level. It is the most expensive NFT ever sold and is expected to stay so for quite a while. Beeple, the artist behind the painting, made this NFT by stitching 5000 artworks that represent 5000 days of his work. This is truly a masterpiece, and the price is justifiable for someone who is an enthusiast.
Vignesh Sundaresan purchased the NFT. He revealed that the purchase was to show that Indians could also be enthusiasts and are interested in this field. Vignesh also said that this is a shift in how art will be perceived in the future, and he didn’t want to miss the opportunity to be a part of it. He understands that people could take time to realize the worth of this purchase, but they will certainly do it one day.
Another interesting fact regarding this purchase is even Justin Sun participated in the bidding. His bid was the 2nd highest at $60.3 million before Sundaresan barged in at the last moment.
2) CryptoPunk #7523
CryptoPunks gave NFTs a whole new life. They have become so popular that out of the top 5 NFTs sold, 3 are CryptoPunks. They are 10,000 unique characters that are based on the Ethereum blockchain. Cryptopunks are being traded quite a lot, and their speciality is their limited nature and immense fame. All of them are randomly generated and is not made by anyone.
Now CryptoPunk #7523 is the most expensive of the 10,000 units and sold for $11.8 million. It was purchased by Shalom Meckenzie, who is also the largest shareholder of DraftKings. When interviewed, he said that CryptoPunks was symbolic of the popularity of NFTs, which is why he made the purchase. If you look at the picture carefully, it also has a mask that symbolises the COVID outbreak.
3) CryptoPunk #7804
The image that you see here sold for a whopping $7.56 million back in March 2021. It is another version of the popular Cryptopunks everyone is talking about. In fact, it is the only one to have a smoking pipe and a forward cap. This is what makes it even more special than other units.
It was purchased by Dylan Field, the CEO of Figma. After making the purchase, Dylan did think that he made a rash decision, but after a while, he got along with the idea that this was the future, and the purchase will turn out good. He also said that “Owning #7804 is a paradox and a curse”.
4) CryptoPunk #3100
The Crypt0punk #3100 was sold for $7.51 million because he is wearing a headband. Yes, that is the USP of this drawing, and the buyer paid 4,200 ETH for this. The owner of this NFT is unknown, and we have no idea who he/she could be. Apparently, the new owner of the NFT has put it on sale again for a whopping $90.5 million. It will become the most expensive crypto punk and NFT ever sold if the sale happens, surpassing Beeple’s masterpiece.
Crossroad is another masterpiece made by Beeple that sold for $6.6 million. It features Trump lying done in a garden that’s adjacent to a sidewalk. His body has written all types of insults all over it, making this painting a really polarising NFT. But do note this is not the only speciality of Crossroad.
The NFT was made so that if Trump won the elections, it would have shown him wearing a crown and depicted as the hero. Beeple made the sale on Nifty Gateway, which comes just after Opensea as the most popular NFT platform. The first buyer of the artwork was a Twitter user Pablorfraile, and the 2nd buyer was anonymous. Pablorfraile made a 10x gain over the sale of the NFT Crossroad.
6) Ocean Front
Ocean Front was purchased for $6 million in March 2021. It was purchased by Justin Sun, the CEO of Tron and the 2nd highest bidder of the “Everyday: The First 5000 days”. It is yet another expensive NFT that Beeple sold. But do note that the artist did not keep the amount. He donated the same to the Open Earth Foundation that works for the environment.
Till now, you must have realised that if people are paying millions for some NFTs, it’s either Cryptopunks or some masterpiece by Beeple. Well, I must say that the art pieces are really awesome and are worth every dime.
7) CryptoPunk #5217
CryptoPunk #5217 falls under the ape category of the collections of cartoon characters. It was sold for $5.44 million to an anonymous buyer in July 2021. The payment was made in Ethereum, and the buyer paid 2,250 coins for the same. According to the on-chain metrics, the last seller bought the NFT for just $10,605 in December 2020. This means he/she made over 500x profits in less than a year.
This shows that the Cryptopunk NFTs have a lot of potential as of now. And anyone who is buying and holding them assumes they will sell for a lot more in a few years from here on.
8) World Wide Web NFT
This is one of my personal favourites. Tim Berners-Lee, the creator of the worldwide web, transformed the code of the same into an NFT. It was sold in an auction at Sotheby’s for $5.43 million. Along with the source code, the buyer of the NFT also got a letter from Tim Berners-Lee and a visualization of the code.
Do note that the buyer is anonymous, and the sale of the NFT doesn’t give him/her ownership of the web. Tim has made it clear that the web was and will be free to use in the future. It is also said that this particular NFT has become even more valuable after someone spotted a coding error in the same.
9) CryptoPunk #7252
When I see so many Cryptopunk NFTs getting sold for millions, I wonder why people are paying for them? Well, it could be FOMO, or they might actually find some value in it. When rich people see people like them are collecting NFTs, why not them? Most probably, that’s a valid answer. Just take a look at this CryptoPunk $7252 with red hair that was sold for $5.3 million. Its owner is also anonymous, and the person paid 1,600 ETH for the same. The last owner of this NFT purchased it for $2.5 million a few weeks back, which means they doubled their money in under a month.
10) Stay Free
Stay Free is a rather different kind of NFT and is one of the most creatives on the list. This one is also a little controversial as it shows the text of US appeals against the mass collection of surveillance data on American’s phone records by the National Security Agency. It was made by Edward Snowden, who has been a popular whistleblower.
StayFree sold for $5.27 million, and the entire funds went to the proceeds of the Freedom of the press foundation. The main goal of this foundation was to promote freedom of speech, press and journalism. It was bought by a decentralized organization, PleasrDao, that collects NFTs with a charitable angle to it for its investors.
Is the NFT hype subsiding?
I will give you the stats, and you decide if NFT hype has subsided. In 2020, the first half saw a total volume of $13.7 million, whereas, in the first half of 2021, this number has increased to $2.5 billion. Now, what do you think? Yes, there has been ups and down in volumes due to the market crash and dips, but if you look at it from a long term perspective, then no, the NFT hype is not subsiding. In fact, OpenSea, the largest NFT exchange, has reported $2 billion in revenue from sales in August 2021.
In-depth understanding of why people are paying millions for NFTs
At some point in time, we all must have wondered why rich people are spending millions on NFTs. They are obviously not dumb; else, they wouldn’t be rich. Most of them are in this market because they think someone will buy their NFTs for a lot higher than the price they are getting now. This is a big assumption, and there is no real guarantee if such a thing will happen or not.
The reason behind the purchases
A straightforward reason for this is the pandemic. Art has long been something rich people spend their money on. And more or less, they have passed the test of time and preserved the value of money. In the pandemic, when crypto became the new hype, NFTs became a replacement for physical art for the time being. It was surreal how anyone can sell anything as an NFT, and if people see value in it, they will pay for its ownership. This is what created a huge hype for NFTs, and they were being perceived as modern art and as a replacement to physical art in some cases.
The value proposition
A lot of things are being assumed in the case of NFTs. A pixelated cartoon character (Cryptopunk) that is seen as valuable now is doubtful to be able to preserve its value in the future. This is the reason that that the question arises if NFTs are here to stay. A lot of people do say that they are in a bubble because of the extreme prices. But a better explanation of this is given by Gary Vaynerchuk, who said that the popular NFTs sold initially were overpriced due to the new hype, so now the prices are more or less okay.
Gary did say that NFTs are in some form of a bubble, but this doesn’t necessarily mean that they don’t have value. For the buyer, they sure mean a lot. The idea of owning the video clip of an NBA shot could be meaningless to many but incredibly valuable to a fan who can afford it. And in the case of artworks made by famous artists, the value of the NFT lies in who made it. Brand value plays a big role in what gets sold and for how much. This is why most NFTs we hear about are from famous personalities. In order words, the value of NFTs is personal and cannot be exactly measured in any index or chart.
Let me give you an example regarding this. Assume you are a big football fan and your favourite player is Ronaldo. Now, let’s say his club mints an NFT that has the top 5 goals of the player in video format. The NFT could get sold for millions, and if you had the money, maybe you would have purchased it as well. But if the same NFT were of some other player or a different sport altogether, it would not seem that valuable to you. This is why I say that the value associated with NFTs are personal. So the idea is clear that the intrinsic value of an NFT is associated with how someone sees it. This is why some are paying millions for NFTs while most of us are unable to find value in them.
What are the sceptics saying?
Many sceptics are saying that NFTs are being used for money laundering. According to them, not a lot is visible when we look and hear about NFTs for the first time. First, it will seem only a way for artists to reach the masses, but when you see bizarre NFTs selling for millions, you question everything. For example, a single-pixel NFT sold for $1.36 million. One can easily use them to evade taxes and hide illegal money. This is why buyers of most weird NFTs are mostly anonymous.
Another fact that plays a big role in this is the subjective nature of art. Lawmakers can’t really tell anyone not to pay $1 million for an art piece. This is because, in the eyes of the buyer, it could be worth that much. This is why the space is not regulated much. And this makes it really easy to launder money. For example, if you have $10 million in illegal money, all you need to do is to make an NFT on your own and put it up for sale. Now using a 3rd party account, you can buy it using your own money and launder it.
This happens even in the case of physical art, but since NFTs do not exist in the physical world, the process is much easier. In the future, we could see proper regulations in the space and the need for proper visibility of buyers and sellers.
Are NFTs a good investment?
I look at NFTs in a very different way. When we talk about investments, be it real estate, stocks or crypto, we have a realistic idea of the plausible returns in the future. But in the case of NFTs, that is not the case. You see, what you buy today could be worth 100 times more or maybe nothing. For example, the seller of Cryptopunk #5217 made over 500x in just 8 months. Now seeing that if you purchase an NFT today and expect to make such returns, it is not necessarily going to happen.
NFTs should rather be seen as a form of collecting art. Yes, I know there is a market for resale, but not everyone is lucky enough to get such high bids. If you are okay with buying an NFT for the sake of keeping it, then it is a great buy. If you get a high bid sometime in the future, you could sell and make a lot of profits, but even if that doesn’t happen, it should be cool with you. So, buying NFTs as an investment is very risky as there is no intrinsic value of art. Someone can look at a painting and bid $5 million, and someone else says he will pay only $500. That’s how it is.
How will NFTs change the world?
Non-fungible tokens are going to change the way we deal with things. It removes the middle man that was required before when a change of ownership of anything used to take place. It has also made the lives of artists a lot easier as they do not need to track resales, and if their art goes up in value and is sold again, they get a portion of it automatically.
The best part of all this is having a secure place to store information for future references and proof. Literally, anything can be transformed into an NFT and traded as an asset making the process a lot easier. This could reduce the land ownership problems in the future; people can own their land as NFTs and have easy proof to show anyone.
And most importantly, it will change the way how art is sold and bought in the future. Artists will no more need to get their works auctioned physically and settle for low prices. They could now use NFTs and sell them digitally for millions of dollars as now they can reach the entire world. Another fascinating thing that happened recently was the Miami art festival selling their VIP tickets as NFTs, which shows how many use cases they could have.
The Future of NFTs
I think there is a bright future ahead for NFTs. We are moving on to a digital world, and NFTs will help us move further by giving us a proper way to own things online. Yes, I think many NFTs sold on the web are overpriced now, but in the future, it will be more than owning art and paintings. Many say that NFTs are in a bubble, and I wouldn’t agree or disagree with that, but I could say that even if the bubble bursts and prices of NFTs fall, they will still be in use.
We still have a long way to go battling a lot of negative aspects of this newfound technology. For example, the problem of money laundering and duplicating and mining artworks of other people is something that needs to be addressed. There are also a lot of legal issues to this. For example, smart contracts can be made in such a way that it hurts the buyer when he resells his NFT. All this will make the markets a lot more regulated in the future, but that is not necessarily a bad thing for NFTs. The future of NFTs is as bright as the sun, and we are all going to be a part of the revolution.
What do you think the NFTs market holds for us in the future? And what aspect of NFTs interests you the most? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.