On March 21, an online auction closed selling the first-ever 2006 tweet by Twitter CEO Jack Dorsey as a non-fungible token for $2.9 million.
To those not familiar with it, the idea of exchanging something as trivial as a tweet for a monetary amount might seem absurd, though the core value of non-fungible tokens, or NFTs, is determined by any amount a buyer is willing to pay for something they desire. Still, what is an NFT?
“Non-fungible” means something is unique and can’t be replaced by another item. For example, a bitcoin is fungible because it can be exchanged for another bitcoin.
According to one co-founder of Valuables by Cent, the online platform used to “mint” Dorsey’s tweet and transform it into a one-of-a-kind token, an NFT is “a digital receipt of something that happened or something that exists that is put on the blockchain and cannot be edited,” chief of strategy Katie Geminder told the Washington Examiner.
JACK DORSEY AUCTIONS FIRST-EVER TWEET FOR NEARLY $3M AS AN NFT
When someone wishes to mint a tweet as a digital item to auction on Valuables, users can link their Twitter accounts with the platform and select which post to list for sale by pasting a URL into the search bar on the webpage.
Alternatively, if a potential buyer sees a tweet they would like to purchase as an NFT, they can make a proposal offer to the owner of a tweet and initiate an auction this way. Anyone can bid on a tweet once there is an auction.
“Whether or not a tweet is worth $2.9 million is not up to us,” Geminder said. “That’s up to the person who’s offering to pay for it and the person who’s offering to sell it.”
The man who purchased Dorsey’s first-ever NFT tweet for nearly $3 million, or more specifically, 1630 Ethereum tokens (a cryptocurrency most NFT platforms exchange when making transactions), explained his decision in a statement to the BBC.
“It’s a piece of human history in the form of a digital asset. Who knows what will be the price of the first tweet of human history 50 years from now,” Malaysia-based Sina Estavi said.
An NFT is backed by a proprietary digital signature, which serves as a public ledger, allowing anyone on the internet to verify the asset’s authenticity and ownership. Anyone who views Dorsey’s account page on Valuables will notice the user “@sinaEstavi” is listed as the owner of the tweet.
The NFT ledger exists on the blockchain, which serves as a digital record of transactions, and each transaction added to a blockchain is validated by multiple computers on the internet.
“You can also think of it in a way like a signed baseball card,” Geminder told the Washington Examiner.
In fact, NFTs and sports go hand-in-hand. The NBA started its own line of collectible NFTs called “NBA Top Shot” in 2020, selling short clips of NBA moments as digital collectibles for fans who want bragging rights to say they own their favorite player’s biggest moments on the court.
NBA Top Shot maker Dapper Labs just nabbed another $305 million investment from the likes of Michael Jordan and Will Smith https://t.co/IdVOkgi9Sx
— Business Insider (@BusinessInsider) March 30, 2021
Like baseball cards, the value of NFTs can go up or down depending on the circumstances surrounding the asset. Cryptocurrency markets follow a comparable pattern of bearish and bullish trends, as do stocks and bonds.
“When the player is a rookie [his baseball card] is not worth a whole lot at that moment in time, but when they break a record or hit 300 home runs, later in their career, owning a rookie card has a lot more value then,” Geminder said.
While her company specializes in the minting and auctioning of tweets, the NFT world encompasses many more digital assets, including images, videos, GIFs, and other forms of digital files that possess metadata that can be tied to a node on the blockchain.
The latest NFT auction that took the world by storm was the sale of the artist Beeple’s “The First 5,000 Days” at Christie’s, a British auction house known for premiere artwork sales and founded in 1766. The artwork is a collage of images that the artist has made daily for the past 13 1/2 years.
Digital artwork sells for record $69.3 million.
“Everydays: The First 5,000 Days” by US artist Beeple becomes the most expensive “non-fungible token” (NFT) – a collectible digital asset that uses blockchain tech to turn virtual work into a unique itemhttps://t.co/qK9dIo8rDb
— AFP News Agency (@AFP) March 12, 2021
Beeple, otherwise known as 39-year-old Mike Winkelmann who lives in Ladson, South Carolina, sold his piece in Christie’s first-ever NFT auction for approximately $69 million, making it the third-most-expensive price paid at auction for work by a living artist.
Following the sale, Winkelmann told Fox News in an interview in March he “absolutely” thinks NFT prices are a bubble, which is when market participants quickly drive asset prices above their typical value and subsequently results in a crash or deflation.
“I go back to the analogy of the beginning of the internet. There was a bubble. And the bubble burst,” Winkelmann said, adding, “But it didn’t wipe out the internet. And so, the technology itself is strong enough where I think it’s going to outlive that.”
According to Matty Monahan, a Santa Fe-based contemporary artist and entrepreneur known for creating the global art collective “The Most Famous Artist,” NFTs are a gateway toward providing living income for artists who “haven’t necessarily found a spot amongst the blue-chip galleries.”
“I know that at least a dozen artists in my community, maybe more, have made considerable sums of money for themselves … like an extra $10,000 because of NFTs,” Monahan told the Washington Examiner.
Monahan said he had experience minting some of his artwork into NFTs, saying platforms such as OpenSea.io, a popular NFT auctioning website, provided new opportunities for art enthusiasts to explore new mediums for collection.
“There are folks who would have never bought art from me that are buying NFTs from me because it kind of speaks their language and it appeals to their cultural and aesthetic sensibilities,” he said.
Los Angeles-based art collector and curator Stefan Simchowitz spoke to the Washington Examiner on the emergence of NFTs in mainstream culture, likening it to the advent of Betamax and VHS video stores.
“You had essentially a very low-quality production happening, then that changed, and you had more sophisticated movies be produced. They became more competitive as people’s appetites for content got educated, I think the same thing will happen in the NFT space,” Simchowitz said.
