An Evaluation Of 12 Can You Convert Physical Art To NFT Strategies... Here's What We Discovered
An Evaluation Of 12 Can You Convert Physical Art To NFT Strategies... Here's What We Discovered
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Why are NFTs so expensive  
  

Rootage as the informant of prize is nada fresh. Kanye Due west bum sell a t-shirt for $120 because he’s Kanye Rebecca West. Think how practically he could sell the Patrick Victor Martindale White t-shirt he wore on stage for a demonstrate. Belle Delphine’s bathwater is sold retired at $50 (NSFW site). It doesn’t count that we can bargain a t-shirt for $5 or throw our possess dingy bathwater. Inception matters.

  
Wherefore NFTs are Valuable  
The Beeple "Get-go 5,000 Days" NFT sold for $69,000,000 finish workweek. Naturally, that's raising roughly eyebrows close to what the emptor truly bought.  
Obviously, the emptor doesn’t have the nontextual matter in whatever traditional sensory faculty. Look, I tail end paste it flop here: 
  
  
And earlier you sound out "you give the sack do that with a house painting besides!" That’s not quite an dead on target. A pictorial matter of a house painting is unlike from the house painting. The JPG of the Foremost 5,000 Days pick is the piece. There’s no remainder.  
  
This is unity trouble with the possession argument about NFT nontextual matter (presentation for the unfamiliar). You don’t ain the nontextual matter the Saami way you might have an archetype Picasso. You can’t demolish it, you Can I create my own NFT’t change it, you don’t in truth restraint it in whatsoever particular right smart.  
Simply that’s the affair with NFTs, you’re non buying the artistry. You’re purchasing the NFT. The NFT is non the artwork. It’s a few lines of codes that includes a reference point to the art, merely that’s it. The nontextual matter doesn’t fifty-fifty springy in the NFT since it would be fashion excessively a great deal data to couch on the Ethereum blockchain. Completely the NFT has is a connectedness to where the artwork is!  
  
I could go relieve oneself some other NFT of the demand equivalent objet d'art of artistic production right hand now, and no matchless could very layover me. But it wouldn’t be deserving anything. Why not?  
Well, for one, it wouldn’t accept an authentic origin. It's extremely soft to swear whether an NFT came from Beeple or non. In fact, it's significantly easier to Do you need ETH to buy NFT this with NFT artistic creation than with "real world" art since everything on the Ethereum blockchain is legible. Wholly Beeple would get to do is twirp the populace address he's signing his prowess from and and so anything of his that's sign by whatsoever early turn to we'd have it away is wangle.  
Line of descent as the origin of treasure is cipher New. Kanye Rebecca West seat deal a t-shirt for $120 because he’s Kanye West. Guess how practically he could sell the Patrick White t-shirt he wore on stagecoach for a bear witness. Belle Delphine’s bathwater is sold come out of the closet at $50 (NSFW site). It doesn’t substance that we send away steal a t-shirt for $5 or attain our own ill-gotten bathwater. Bloodline matters.  
You might retrieve of an NFT not as the art, merely as the theme song on the art. Historically you had to have the physical put together to hold the touch. Nowadays we terminate lift the key signature into its ain asset, and you toilet steal the creator’s self-declared varnish of authenticity.  
Some other analogy hither is a college degree. Tutelage at Carnegie Mellon is $57,119 per year. At the closing of tetrad years, you invite a bit of paper. Is that tack of newspaper deserving $228,476? You could hardly photoshop your figure into this nonpareil and Call it a day:  
  
Only it’s non the patch of paper, it’s the line of the newspaper and what it tells populate. The signature matters. It tells citizenry you worn-out 4 geezerhood and adequate money to pull through 65 lives from malaria learning… something. Hopefully. And therefore they should give you more than than the differently undistinguishable student a few miles out.  
The damage of a arcdegree is not some noesis or the friends you made along the path. Those could be had for Former Armed Forces less money. It’s just about signal. Signal you were competitory and flush enough to produce into this institution, and then master your gourmandize boozing wellspring adequate to lowest for quaternity age.  
The college level exists someplace on the spectrum betwixt "utility" and "signaling." And unmatched somewhat ordered verity with the public-service corporation to bespeak spectrum is that as things acquire More expensive, we commonly uncovering ourselves finisher and finisher to the signal terminate of the spectrum.  
The $5 t-shirt is double-dyed utility-grade. The Kanye t-shirt is almost solely signaling. Everything we buy, and own, waterfall somewhere on this public utility company to signaling spectrum.  
  
So where are NFTs suitable now? Rightfield here:  
  
NFTs are gripping in component because they submit the usefulness to signal ratio to the uttermost. In that respect has never been something so worthful that’s so absolutely useless. Tulips you could at to the lowest degree plant. In that location is efficaciously null utility-grade to owning NFTs that are on the food market good now, also meditation or so their later evaluate.  
So on the far side speculation, wherefore are they valuable? Signaling. There are around 240,000 single wallets with o'er $1m USD in Bitcoin. If you suddenly came into a few milly, you’d wanna exhibit slay also. NFTs are a fun new style to point wealth and taste perception.  
Just they’re besides a mode to sign How do I start a NFT business ahead of time you are in the crypto economy. If you corrupt into the estimation that NFTs will fixed a unexampled touchstone for extremity rights direction and extremity ownership (which I do, to a greater extent on that following time), buying about at present is genial of like buying BTC gage in 2013 or registering a 3-letter domain bring up in the other days of the WWW.  
And to be clear, I dead erotic love NFT applied science and am departure to write all but it a great deal Sir Thomas More. I’m not pointing come out their high signalise to utility ratio to criticise them. I’m pointing it KO'd because I intend they’re being below the belt criticized for being a blow of money. Sign is highly valuable, and NFTs are a gripping freshly way of life to peacock and peradventure commence robust along the mode.  
So are NFTs a belch? I incertitude it. NFTs are acquiring stacks of constrict simply the commercialize is unruffled small in the chiliad system of things.  
The artistic production grocery store is worth  
67 one thousand million dollars. The NFT securities industry simply remove 338 zillion in 2020. Perchance it’ll rack up a few billion this twelvemonth. Simply then broker in how often easier it is to buy NFTs than art, and how many former industries NFTs could eat on aside at, and that 67 one thousand million list simply sounds equal a starting aim.  
For example, sports merchandise. Roughly of the money acquiring gone on NBA merch is nowadays artesian into TopShot. TopShot has done at to the lowest degree a few century million in transactions so far, which sounds harebrained until you think that NBA merchandise, which has no inquisitive investing component, is a intimately 50 trillion buck industriousness.  
Or liken NFTs to early crypto options. Bitcoin’s commercialise crownwork is all over 1 jillion. If in that location were a Beeple-sized, $69m sale every ace Clarence Shepard Day Jr. for a year, the NFT grocery store would yet be alone $25b, or 2.5% of the Bitcoin commercialise. It is Too soon.  
Spell I don't guess NFTs are a bubble, I retrieve there are a lot Sir Thomas More interesting use of goods and services cases for NFTs that aren't beingness done til now. Uses that volition takings them on the far side bare signaling, and founder them just about Modern forms of public utility that weren't previously potential online.  
Erst we jump beholding more than of those enjoyment cases arrive, the market volition exactly extend to arise.  
This article primitively appeared as an try in my Monday Pastiche newsletter, which you behind signal up for here
  
  

"We're eyesight a Modern multiplication of traders within the NFT market; citizenry who are digitally indigen looking at for integer aboriginal plus classes extraneous of naturalized plus markets," Ivanova aforesaid. "These are multitude World Health Organization undergo assembled reputation and riches and neediness to seat it in strictly practical assets wish NFTs."

  
What are NFTs?  
NFTs are non-fungible tokens — substance you couldn't interchange unity NFT for another — that scat on a blockchain network, a extremity ledger that records all transactions of cryptocurrencies care bitcoin.  
The conflict with bitcoin and other tokens, though, is that each NFT is unique and can't be replicated. Each ane accrues assess independently. Crypto investors sound out NFTs deduct their value from how just they are. They're stored in extremity wallets as collectors' items. Beyond nontextual matter and sports, hoi polloi rich person too launch uses for NFTs in virtual rattling acres and play.  
Nadya Ivanova, main operating police officer of BNP Paribas-connected research unfluctuating L'Atelier, says payable extremity assets give notice be thinking of as a meliorate edition of an MP3 file cabinet. Musicians make struggled to earnings from their cultivate in the integer age, and Ivanova says more or less are turning to NFTs to bear witness possession of their operate and get hold an additional seed of taxation.  
"It's allowing message creators to actually own the prop rights for what they create, which allows them to turn a profit from it in unlike ways which they can't do with forcible art," she told CNBC, adding that crypto nontextual matter is the strongest ontogeny subdivision of the integer collectibles grocery store.  
The sum respect of NFT proceedings quadrupled to $250 million live year, according to a subject area from NonFungible and L'Atelier. The telephone number of appendage wallets trading them almost double to over 222,179, spell close to traders were capable to take a crap net profit of concluded $100,000.  
"We're eyesight a young propagation of traders inside the NFT market; masses WHO are digitally indigene looking for digital indigene asset classes external of constituted asset markets," Ivanova said. "These are multitude WHO rich person accumulated repute and wealthiness and need to clothe it in purely virtual assets ilk NFTs."  
Ivanova says the NFT grocery has been maturing. Far-famed auctioneer put up Christie's auctioned an NFT-founded sour of art created by Beeple, a well-known digital artist who has created videos and graphics for celebrities the like Ariana Grande and Justin Bieber.  
  

What was it roughly this graphics that made it so hotly contended? The sale of the graphics came with more or less interesting features:

  
Appendage art: What are NFTs and why are they so worthful?  
  
How do you specify time value? Thought nearly this now as I take care bespattered across the media intelligence or so a integer art that sold online for US$69.3 zillion. Directly that's a genuinely expensive JPEG register. What caused the damage to ambit such foolhardy heights? Furnish and demand, scarcity value, trinket factor, crowing rights? In the character of this graphics potentially a combining of totally of the higher up.  
The artist Mike Winklemann professionally known as “Beeple” was non intimately known exterior of the extremity artwork worldly concern. Today he is one and only of the about expensive surviving artists you had in all likelihood never heard of. Until instantly.  
Christies was the vendue business firm that sold his artwork and whilst they have an incredible lineage in marketing artistic creation which dates vertebral column to the 1700's, this was the start fourth dimension they or whatever other Major auction off planetary house had sold a nibble of graphics that was wholly integer (with a NFT). I understand that they themselves were uncertain of how to note value the put together. Its clean to allege the auction off went rattling well, it was a book breaker, and judging by the artist's chitter fertilize he appears to be amazed by the last terms paid.  

.@beeple 's 'The Maiden 5000 Days', the 1st purely integer NFT founded art offered by a major auction off business firm has sold for $69,346,250, position him among the elevation ternary to the highest degree valuable animation artists. Major Thanks to @beeple + @makersplaceco. Sir Thomas More details to be released shortly — Christie's (@ChristiesInc) Marching music 11, 2021

  
What was it more or less this nontextual matter that made it so hotly contended? The cut-rate sale of the art came with just about interesting features:  
  
Sold with a Not Fungible Souvenir.  
Strictly extremity artwork.  
A compilation of 5,000 somebody artworks.  
Sale process managed by one and only of the virtually august auction houses, Christies.  
Cryptocurrency was an accepted chassis of defrayal.  
  
Until Tuesday this hebdomad I had ne'er heard of NFT's or Non Fungible Tokens. Crypto currentness? Yes. Blockchain? For sure. NFT? Nope. I found tabu around them by opportunity when merging with a business organization married person he mentioned NFT’s to me. "NF what?" I queried. He with patience explained the construct and how NFT's could be applied to assets such as artworks and music victimization blockchain engineering science. I was interested to try some it but wondered where had I been entirely this prison term? He believes NFT's are the side by side magnanimous thing, fair his opinion, perfectly non advice!  
The book producing nontextual matter by Beeple is highborn “Everydays: the foremost 5,000 days", a digital asset compiled of 5,000 individual artworks. If the new owner(s) decide to sell the artwork in the future it will have to be sold as a whole, they will be unable to siphon off individual pieces to sell. Whilst the artwork is a rich tapestry of thousands of pieces the owners will be able to zoom in on each individual piece, so it can certainly provide them with some viewing variety.  
  
  
  
Everydays — The First 5,000 Days, by an artist named Beeple, released by Christie's (Christie's Via AP)  
There is no doubt in my mind that an important part of the value of the artwork was that it was sold with a non fungible token or NFT. The NFT is essentially a digital trademark providing proof of provenance and ownership. With the use of a NFT authenticity of the asset is forever assured; using blockchain technology the token will be stored on a digital ledger. Should the artwork change hands in the future the NFT would go with it providing an important safeguard that this is the original piece, helping combat the risk of fraud and forgery. This Can I create my own NFT be a serious and expensive issue in the art world which is well covered in the popular BBC television series “Fake or Fortune”.  
It is easy to understand How do I start a NFT business a NFT Can I create my own NFT provide safety to buyers and sellers, particularly important for digital art which can be easily replicated. It will be fascinating to watch from the sidelines to see how the use of NFT's develop. No question that we really Do you need ETH to buy NFT live in interesting times.  
  

Deutsche Bank suffered a similar shock in 2015 when a junior member of the bank’s forex sales team accidentally transferred a hedge fund $6 billion, but luckily for the fledgling member of staff, the hedge fund was kind enough to send it back.

  
What are NFTs?  
NFT stands for “Non-Fungible Token.” Non-fungible essentially means it cannot be traded in for something else, in the same way a $50 dollar note could be traded for two $20 dollar and one $10 dollar note.  
NFTs are sometimes compared to art pieces like paintings (because there will only ever be one original) but they’re also regularly compared to autograph prints, collectibles, and trading cards. Whichever traditional, real-world analog is closest, they are effectively digital certificates of ownership.  

NFTs can contain smart contracts — which run on the Ethereum blockchain — which could, in theory, give the original creator of an NFT a percentage of all future sales of the token.

  
Why are NFTs so expensive are they so expensive? Scarcity, first of all, but the marketplace in general — and the subsequent price of NFTs — is driven by the momentum and sentiment floating around this young, exciting new asset.  
Who knows how expensive NFTs will get — or, conversely, when the bubble will burst.  
  

Swiss IT security company Wisekey has also moved into this business. “Digital twins for luxury items and art are the main markets so far, but other uses of NFTs are emerging, in particular for certifying intellectual property and identity,” says CEO Carlos Moreira. The company provides NFTs to protect luxury objects and has recently launched an art marketplace. It plans to introduce its own cryptocurrency and is working on projects for digital rights management of music and movies.

  
NFT explosion: Why are people buying digital art?  
You are free to share this article under the Attribution 4.0 International license.  
Built on the same technology as Bitcoin, NFTs have been a hot topic in 2021. They enable a real market for digital works of art while fueling unprecedented speculation.  
2021 might become known as the year when digital art exploded. On March 11, a cryptocurrency investor paid $69 million for the digital painting “Everydays: The First 5000 Days” during an auction organized by Christie’s. The blinking GIF Fomo is currently for sale for $2 million—60 times what it sold for only nine months ago. And a series of 10,000 straightforward-looking illustrations of monkeys, called the Bored Ape Yacht Club, are collectively worth more than one billion dollars.  
This mind-boggling bubble is fueled by the NFT technology, which enables cryptocurrencies such as bitcoins or ethers to be exchanged against digital objects. An NFT or “non-fungible token” is a digital data string that establishes proof of ownership of a specific item that usually exists in the virtual world. It could be, for instance, a digital work of art, a financial asset, or a patent.  
NFTs live on the blockchain, a transaction-tracking decentralized ledger, which until recently was mainly known for being behind Bitcoin. It has generated incredible hype while extending its potential impact on many industries, from finance to art, music, intellectual property, and luxury goods.  
NFTs and royalties  
“NFT has really enabled a market for digital art,” says Robert Zumkeller, a graphic designer who started creating NFT illustrations while a student at the FHNW Academy of Art and Design in Basel. “I am not certain that I would have found a brick-and-mortar gallery willing to exhibit my digital work, nor buyers who would acquire a physical screen to own it. With NFTs, I could use an online gallery, Superrare.com, to showcase my work and sell it.”  
Like everything else recorded on a blockchain, art NFTs allow for tracking all transactions after their initial sale. This tracking allows for a perpetual royalty payback, explains Zumkeller. Under his moniker, Vicarivs, the young artist will receive 10% on any subsequent sale of his work—something that rarely happens with physical objects sold by galleries or collectors.  
In physical art, only one original copy usually exists (or a few dozen, in the case of art prints). The original is distinguishable from reproductions, which are sold legally or as forgeries. With digital painting, the work of art is a data file, which can have an infinite number of perfect copies. That is Why are NFTs so expensive an NFT does not comprise the data file of the work of art itself; instead, it functions as proof of original ownership.  
Digital versions of luxury goods  
NFTs have also entered the luxury market, where recently, digital twins (a photograph or a 3D animation) of collector watches went up for auction in spring 2021. “More and more brands are looking into NFTs,” says Serge Maillard, managing editor of the watch magazine Europa Star. “First, as a useful tool to fight forgery by ensuring traceability and authenticity. Second, to develop and maintain a closer, more personal relationship with their client, without having to rely on intermediaries.”  
Swiss IT security company Wisekey has also moved into this business. “Digital twins for luxury items and art are the main markets so far, but other uses of NFTs are emerging, in particular for certifying intellectual property and identity,” says CEO Carlos Moreira. The company provides NFTs to protect luxury objects and has recently launched an art marketplace. It plans to introduce its own cryptocurrency and is working on projects for digital rights management of music and movies.  
Altogether, the NFT market ballooned over the last twelve months with a 700% increase from the second to the third quarter of 2021, according to the analytics platform Dappradar. This bubble confirms the speculative character of cryptocurrencies and blockchain applications; namely: the dollar value of the bitcoin has increased by a factor of 100,000 over ten years.  
Speculation and impact  
“So far, design choices on the technology have helped to fuel speculation,” explains Claudio Tessone, professor of blockchain and distributed ledger technologies at the University of Zurich’s department of informatics. “The most widespread systems are based on the so-called proof-of-work, where the validating and tracking of all transactions by the network as well as the introduction of new tokens only work because users run computations on their systems.  
“As the devoted resources have been accelerating under a constant rate of supply, the creation of assets is becoming more and more expensive, which fuels an increase of their value, just like oil prices going up when it’s harder to extract. In turn, this creates incentives to invest resources in the blockchain, which fuels a self-reinforcing loop driving speculation and inflating prices further.”  
The energy consumption of blockchain applications has been an increasing worry. While society is desperately trying to tackle climate change, it has simultaneously introduced economic services that consume as much electricity as a middle-sized country like Sweden. “There is some hope that a new architecture for blockchains, called proof-of-stake, will make the electricity needed to run it negligible,” says Tessone. “A new generation of platforms such as Cardano, Polkadot, or Tezos are already running on such systems, but their impact—while increasing—has been limited so far. We’ll have to see.”  
However, this new architecture could generate new, problematic incentives. Until now, cryptocurrencies rewarded those setting up huge computer farms to profit from economies of scale and more efficient energy usage. A proof-of-stake blockchain rewards users instead who heavily invest in it, which fuels speculation. “As of now, it is hard to imagine blockchain without speculation,” says Tessone. “It is good to see that the community takes this problem seriously, cryptoeconomies for a future with more functional cryptoeconomies.”  
Catherine Tucker, a professor of management at MIT who specializes in the blockchain, regrets this focus on speculation: “Most of the reporting on NFTs has been on the speculative aspects. This is rather frustrating, as it may lead to less experimentation on ideal-use cases.”  
Not so private after all  
One worry is that the anonymity provided by blockchain technology could help financial fraud. The most obvious ones are shill bidding to drive prices up at auction and insider trading. In September 2021, Opensea, the largest marketplace for NFTs, revealed that one of their employees had purchased items just before they were displayed for sale on its front page—an action that would amount to insider trading.  
Many specialists’ forums discuss the risk of shill bidding, where an artist or someone they are conspiring with buys their work for a large sum to drive its price upwards and maintain the current bidding frenzy. This culminated with the suspicion that the owner of an NFT of the art series CryptoPunk borrowed 500 million dollars as a flash loan—a financing mechanism only available on the blockchain—to buy the NFT from themselves before returning the money. While a clever trick to inflate the price of their art, this move also raised suspicions that NFTs could be a perfect tool for money laundering.  
Interestingly, specialists discovered these suspicious activities because all blockchain transactions are fully available to the public. “The famed privacy of cryptofinance is a mere illusion,” says Tessone. “It is based on the premise that users create a large number of wallets holding their assets in an attempt to obfuscate their transactions.” But in fact, many people choose to avoid this option because of the cost of transactions. And then, of course, there’s the traceability, adds Tessone: “mathematical network analysis can uncover suspicious activities, allowing tracing back transactions to a person even if they manage many wallets. This is why shill bidding on NFTs is not actually safe for fraudsters, contrary to what many commentators say.”  
Catherine Tucker also cautions us against putting the blame entirely on NFTs, saying that “problems such as insider trading with NFTs are reflections of underlying user behavior in uncertain environments and persistent transaction costs. I am not sure if attributing fault to the technology is correct. Ultimately, technology is just technology.”  
  

Now, as prices surge, owning a CryptoPunk has become a "digital flex" due to there being only a limited number of them. Several of their owners have also taken to flaunting them by using their punks as an avatar on social media sites like Twitter.

  
First and foremost, limited quality. Just like there would only ever be 21 million Bitcoin and not a single more, there will only ever be 10,000 CryptoPunks. It is up to the NFT creator if they want to have a rare collectible or have several versions of their NFT. Still, in both cases, the authenticity of the NFT is verifiable through their unique IDs and metadata.  
In CryptoPunks, no two punks are the same. Some have a headband, some have caps, others have small shades, and many are wearing gold chains. Each punk has different attributes, and some are rarer than others. Simply put, the rarer an item, the higher its value.  
  

After all, if you were to spend millions of dollars to buy a piece of work done by Picasso, you could hang it in a gallery and charge quite a bit of money for tickets to simply look at it. But NFTs are different. They’re digital files that can essentially be copy and pasted by anyone.

  
NFTs Are Unique  
First and foremost, it’s important that you understand what the acronym NFT stands for, which is non-fungible token. The non-fungible part of the name points to the uniqueness of the digital asset. These pieces of art simply can’t be replaced.  
To understand the difference between a fungible asset and a non-fungible asset, all you need to do is look at Bitcoin, Ethereum, or a wide range of other cryptocurrencies, which are all indeed fungible. After all, there’s nothing unique about a single bitcoin other than its ownership. One could be replaced with another and the owner wouldn’t mind because the value is the same no matter which coin he owns.  
On the other hand, your dog is a non-fungible asset, albeit one that’s likely a very valuable member of your family. After all, I couldn’t walk in with another dog that looks pretty much the same, take yours and leave mine, without you being upset about it.  
Your dog is unique. You know his personality, he knows yours, he gets along with your kids, friends, and family. Shucks, he’s part of the family. There’s no way to replace him.  
Not that NFTs are living, breathing, animals that become part of the family, but they are just as unique and irreplaceable as your beloved family pet; hence, making them non-fungible.  
Ultimately, uniqueness adds value. After all, value is a concept that’s built on supply and demand. When the supply is high and demand is low, value is hard to come by, but with NFTs, the supply count for each unique token is one! As a result, if someone wants to buy it, they’re not going to be able to unless they pony up the amount of money that the owner of the NFT is willing to accept for it since there’s no competitors to lean on when you don’t want to pay the price asked.  
  

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Why are NFTs so expensive?  
  
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Nonfungible tokens (NFTs) burst onto the scene earlier this year when some of them started pulling in millions of dollars at auctions. A confusing and controversial new digital asset is on the rise. DW‘s own experiment selling an NFT made a smaller splash. Which made us all the more curious: Why are some so expensive?

  
Explained: Why some NFTs are so expensive  
Nonfungible tokens (NFTs) burst onto the scene earlier this year when some of them started pulling in millions of dollars at auctions. A confusing and controversial new digital asset is on the rise. DW‘s own experiment selling an NFT made a smaller splash. Which made us all the more curious: Why are some so expensive?  
Patrons of the arts?  
First, a reminder: NFTs prove ownership of digital files. They can represent digital works of art but can also be associated with video game accessories, collectors items and more. Anything that can be stored as data on a blockchain can be an NFT. NFT transactions are recorded publicly on a blockchain and often bought with cryptocurrencies.  
Investment bank JPMorgan recently valued the global NFT market at $7 billion (€6.3 billion). In October, an experiment by The Economist pulled in $420,000 when the weekly news magazine auctioned off an NFT of one of their cover pages. An issue about decentralized finance, the cover art portrayed cryptocurrencies alongside images from the children’s book “Alice’s Adventures in Wonderland.” Buyer @9x9x9 told The Economist it was the fitting title — “Down the Rabbit Hole” — that compelled them to purchase the data file of the cover.  
But buyers of breathtakingly expensive NFTs point to a whole range of reasons for spending big bucks for the rights to a data file that anyone else can view or copy. Cryptocurrency entrepreneur Vignesh Sundaresan spent a record-breaking $69 million on an NFT earlier this year. The NFT enthusiast, who has invested in the technology, denied that he was trying to push up prices. He said he wanted to support the artist and showcase the technology. For other buyers, it’s about scarcity. “The buyer knows how many will be made and has blockchain proof of ownership,” American billionaire and NFT collector Mark Cuban told online news portal Business Insider.  
What is the most expensive NFT ever sold the data says  
Researchers at the Alan Turing Institute (ATI) wanted to know what the data said about this phenomenon. “What we observed is that there is this gigantic heterogeneity in the success of NFTs,” Andrea Baronchelli, associate professor in mathematics at the University of London and ATI’s token economy theme lead, told DW. “Some — very few — do very well, a bunch Do you need ETH to buy NFT decently, and the majority are worthless.”  
In 2021, ATI’s team of experts completed a study which looked at the role certain factors play in the price of NFTs. They looked at three components: the NFT’s visual features, previous sales of related NFTs and the social network of the buyer and seller. Researchers used a machine learning model to consider a dataset of 4.7 million NFTs exchanged by over 500,000 buyers and sellers. The result? Past sales of related NFTs was the most important of these three factors, accounting for over 50 per cent of the price variance.  
For example, past sales of NFTs from the CryptoPunks collection, a prominent set of 10,000 tokens depicting pixel images of punks, would be a good indicator of future sales of tokens from the same collection. Visual features were the second most important aspect. Including this data increased the performance of the machine learning model by up to 20 per cent. Data showing the popularity of the traders increased performance by 10 per cent. Combined, they concluded these three factors can explain up to 70 per cent of the variability in NFT prices. They plan to look at more factors in the future, including the platform where the NFT is sold and the activity of the creator on social media.  
An old market rethought  
In the market for NFTs of digital artworks, one can recognize something of the traditional art market, where scarcity, social networks and, often to a lesser extent, content of the art piece help determine an object’s worth. But NFTs have some features that distinguish them from their real world counterparts, Mauro Martino, director of the Visual Artificial Intelligence Lab at IBM Research and ATI study co-author, told DW.  
“A very big difference between the art market and NFTs is that the artists take 10 to 20 per cent from the secondary sales,” he said, “So anytime the piece will sell again, part of the sale will always go to the artist. This is really a novelty in the idea of art and Can I create my own NFT be a big game changer for artists.” This is possible because future sales of NFTs are recorded on blockchain, which allows artists to receive their cut automatically.  
A JPEG of a rock  
That is good news for anyone whose NFT has generated some money. But what about the majority that aren’t worth much at all? “There are 10,000 new pieces each and every day ready to go…I don’t know where,” said Martino. “There are not 10,000 new buyers every day to sustain this incredible production.” Stability in the NFT market would require greater attention from the public to attract traditional investors, as well as greater comfort with cryptocurrencies, the experts said. This development is likely still years away, and surprises could pop up in the meantime.  
“If we notice that enthusiasm for NFTs today is very similar to the enthusiasm for cryptocurrencies at the very beginning, then we can expect some major correction,” said Baronchelli. This would have unclear implications for this nonfungible asset. “If I have Bitcoin and it goes down 40 per cent, I still have 60 per cent,” he said. “If I have a JPEG of a rock? What happens to the value of that JPEG? We don’t know, because there is nothing similar.”  
  

As more financial advisors are learning, NFTs are starting to catch on, even among non-celebrities. And it may not be long before a client asks you how to include NFTs in their portfolio.

  
Why NFTs are so appealing  
Simply put, people love collectibles. And thanks to the growing accessibility of NFT marketplaces, the title of "collector" now applies to someone trading free Space Jam tokens just as much as it does to prominent figures like the pseudonymous Whale Shark, who owns more than 220,000 pieces of digital art and has consulted Paris Hilton on how to break into the market.  
As a financial advisor, your first priority is to look out for the long-term financial security of your clients. It might be helpful to think of NFTs the same way you would a rare stamp collection, for instance, or a signed original manuscript of the great American novel. NFTs are a lot like old-school comic book collecting, or baseball cards and Pokémon cards. Except, thanks to blockchain, their true scarcity (and value) is much less speculative because we have an irrefutable record of every token.  
Assuming your clients have a healthy amount of money invested for their retirement, a sizable emergency fund and enough disposable income that they can experiment with NFTs, collecting can be a fun and innovative way to feel a part of the future.  
But if someone isn’t in the position to invest money on speculative art – whether a hundred dollars or a thousand dollars here and there – there are ways your clients can dip their toes into the NFT market for free.

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