Having dabbled in stocks, especially IPOs; having bought innumerable realty projects; FDs and bonds are even beyond count; gold and diamond is like passe; so when people like these have more surplus money to invest, where do the well-heeled High Networth Individuals (HNIs) put the money?
Well, crypto is one new avenue and many HNIs have surely dabbled in it, notwithstanding the legal or RBI status on the same. But a new ‘hotspot’ seems to have opened up and many HNIs are seen heading towards it – NFTs, which incidentally is a form of crypto.
An acronym for Non-fungible token, NFT. Errr… what does that mean? Fungible in simple English means that which can be replaced by another identical item. So non-fungible means irreplaceable, unique. So, NFT, simply put, is a unique token?
It’s in a digital, demat format and though there is really no definition as such to explain, what we understand is that NFTs can be anything digital – music, art, videoclips, even AI. Basically, anything which is digital, in the form of GIFs, tweets, virtual trading cards, images of physical objects, video game skins, virtual real estate and more; everything can be sold as an NFT. Your picture of a food gone wrong posted on Insta or child's drawing can become a NFT and can be sold as ‘digital art’. Its as simple as that.
This platform is being used mainly to buy and sell art. But then, if we are buying digital art, won’t there be like a zillion copies? Well, it’s something like a buyer owning the original Van Gogh and there being billions of copies – the worth is only with the physical owner of the original painting. NFT is something like that – the original digital work is what has value.
What NFTs do is transform works of art and other collectibles into one-of-a-kind, verifiable assets, easy to trade on the blockchain.
Anything and everything which has a digital image is being sold –
- Cofounder and CEO of Twitter, Jack Dorsey's first tweet sold for $2.9 million, a video clip of a Amercian basketball player, LeBron James slam dunk sold for over $200,000 and a decade-old "Nyan Cat" GIF went for $600,000. Other bizarre things sold –
- Canadian musician “Grimes”, also known as an artist and ex-girlfriend of Tesla CEO Elon Musk; her collection “WarNymph” sold as NFTs within 20 minutes for $5.8 million.
- US toilet paper manufacturer Charmin introduced the first digital loo rolls in March 2021 sold as NFT for $4100.
- You cannot smell the perfume, merely get the digital image of the fragrance but Berlin-based Look Labs sold “Cyber Eau des Parfum” as NFT for $18,000.
- Artist Emily Ratajkowski auctioned her own photo at auction house Christie’s as NFT and she herself bought it, calling it the digital one-of-a-kind “Buying Myself Back” for $175,000.
- There is a YouTube video of a young man lighting up an original print of “Morons” by artist Banksy, bought for $95,000. The art burns down to ashes and the live streaming of this burning down was sold as a NFT for $380,000.
Apart from these weird ones, there are the other ‘real’ HNI NFT traders – surreal digital artist, Beeple’s work was sold as an NFT at Christies for $69 million. And right from our very own Amitabh Bachchan to ace filmmaker, Quentin Tarantino, Warner Bros, Oscars, all are into NFTs.
Anybody can buy a NFT but before doing that, one needs to verify the marketplace, the type of digital wallet required and the kind of cryptocurrency needed to complete the transaction. The most popular NFT marketplaces are OpenSea, Mintable, Nifty Gateway and Rarible.
You will need to pay fees to these – which includes an energy fee – the energy required to complete the transaction on the blockchain and also the cost of converting dollars into Ethereum. And to sell your digital art, you will need to upload the image onto these sites and convert it into NFT and sell like the way we do on Olx.
Can you sell your digital work of art as an NFT in India? In India, NFT currently has no legal framework. It is basically a form of cryptocurrency and that makes it dicey, uncertain and risky at the moment.
Well, we truly live in a bizarre world and its getting weirder by the day. Good old stocks, gold, realty and FDs – we understand it, so we trade. If NFTs are the future, we cannot help but only hold on tighter to our stocks.
PS: Maybe one can see the digital picture of a physical share as NFT?