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Crypto Art, Computer Cats, Toilet Paper: Where NFTs are Already Driving Prices Today

Crypto Art, Computer Cats, Toilet Paper: Where NFTs are Already Driving Prices Today

The auction house Christie's is auctioning off a digital painting for 69 million euros, a piece of virtual land is sold for 1.6 million dollars over the digital counter, and a pastel-coloured computer cat changes hands for more than 21,000 dollars. In the shadow of cryptocurrencies, digital collectables are currently becoming the market hype of the year.

They all consist only of computing power – you cannot hang up, touch, or caress the digitized values. And yet they are being traded for astronomical sums right now. The reason: Virtual possessions are the first unique items on the Internet. Blockchain technology, the so-called NFTs, makes it possible.

What are NFTs?

The acronym stands for "non-fungible token" and means "non-replaceable tokens." Therefore, it cannot be replaced with another token. As a result, the NFTs can now do something that has not been possible on the Internet before: a real shortage of digital content.

The principle behind it works like this: the blockchain assigns a unique identifier to each good by embossing it like a coin with a unique token number. It gives the virtual assets a rarity value that Internet content that can be reproduced at will with a right-click has not previously had. The owner then controls any use of this content.

Behind the record sales in the hope of high increases in value: Like physical collectables, NFTs do not generate any current income but can serve as an investment object for investors if they resell the tokens at a higher price. However, according to Crypto Genius, the market is still young, and there aren't enough transactions to estimate the future value of the collector's items. In addition, the price paid out in euros mostly depends on the price development of the ether - and as with most cryptocurrencies, it fluctuates hugely. More than a quarter gain or loss in value within a day is not uncommon.

For investors, this means that if you own a rare NFT, you can make considerable profits in online auctions – but at the same time, you are taking a high risk. An overview shows which crypto-collectables are particularly popular:

CryptoPunks: The Cave Painting of NFT Art

In 2017, the software company Larva Labs distributed them for free on the Internet. However, today, they are worth millions. Behind the CryptoPunks is a collection of around 10,000 unique portraits. All of which show pixelated faces.

The characters are reminiscent of the London punk scene with colourful hairstyles and rebellious style. Since the CryptoPunks are one of the first NFT projects on the Ethereum blockchain, they have cult status in the crypto world. According to the developer's website, the entire collection is currently trading for around $713 million. The cheapest punk is worth $59,000.

There is a veritable collective hype around the algorithmically generated little pictures. As a result, the prices of punks have risen significantly from the initial months of the year. For example, Punk 9378, a cigarette-smoking young man wearing pink sunglasses, went over the counter on March 21 for around $40,000. According to the platform, a user named "0x6f1724" bought the NFT portrait on August 28, 2018, for $35. The last bid from mid-May is now over $147,000.

The increase in value is even more significant with Punk 3100, a rare Alien Punk, with only nine in total. The highest bid was 1.2 Ether in mid-December, corresponding to $670. On March 11, the turquoise avatar changed hands for 4,200 ether, equivalent to $7.5 million. After Ethereum's recent record high, the value has spiralled to almost $14 million.

Even the world's largest auction house, Christie's, likes the colourful avatars. So in mid-May, a package consisting of nine CryptoPunks went under the hammer at an online auction. The final bid for the NFT collection was $14.5 million. Plus fees, that's a purchase price of nearly $17 million.

How Crypto Airdrop is a successful asset:

This is one of the keys to successful crypto assets. Without users, the currency would have no value. On the other hand, crypto airdrops have the potential to create a pump and dump scheme. This was conveyed by Pierre Rochard, founder of Bitcoin Advisory. In this scheme, cryptocurrency owners can artificially increase the value of money to make a quick profit.

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