Non-fungible token

A non-fungible token (NFT) is digital data that is stored on a blockchain. The digital data can be expressed in several forms, like paintings, music, movies but currently the most popular is artwork. The word fungible means that the digital data cannot be replaced or duplicated, it is essentially one of a kind. Similar to real world artwork or collectable sports cards where you can buy, sell, or exchange these items and now this is replicated on the internet thanks to innovative blockchain technology and smart contracts. The NFT certifies ownership over a particular digital good. By far the most expensive NFT to have traded to date is a piece of artwork by Mike Winkelmann who is professionally known as Beeple. He embarked on a project of posting artwork online everyday, new creatives day after day, for 13.5 years. Each of the pieces of artwork that were uploaded everyday were compiled into one piece which was called EVERYDAYS. The unique artworks were digital creatives from the first 5000 days of the project. This digital piece sold at a Christies auction for USD$69,346,250 on March 12th 2021. Not a bad outcome for Beeple after listing the piece for $110 on the 25th of February 2021. Check out Christies site to view a few short videos, one of the live auction where you see that with 1m 21s to go in the auction, it was at USD25,250,000 and feverish bidding in the final minute of the auction took it to almost USD$70M! Given that self managed super funds can invest in collectables such as art, bitcoin superannuation profits could potentially be allocated into these new digital artwork NFTs. But USD$70M might seem a bit of a stretch for most Australians.

NFTs are gaining use as avatars on social media platforms with CryptoPunks becoming extremely popular. With the popularity comes hype and what might seem crazy prices that are being paid for the CryptoPunks. The current lowest price punk available for purchase is USD$242,002 with the highest ever price paid was for CryptoPunk#7523 for USD$11.8M in June 2021. WOW!

CryptoPunks

Twitter founder Jack Dorsey sold his first ever tweet as an NFT earlier this year, donating all proceeds to charity. His tweet below from March 22, 2006 sold for USD$2.9M

Now we are seeing ether rocks, yes, digital rocks created on the Ethereum blockchain, the one in the video below selling for USD$1.3M. There have only been 100 Ether Rocks created and can be bought and sold via decentralised smart contracts. Joe Kernen from CNBC squawk box seems flabbergasted about the situation, his thoughts likely shared by most people. It would be an interesting conversation explaining to your spouse that you have purchased a digital ether rock collectable in your self-managed superannuation fund. We know as long as the global money supply increases under the guise of “quantitative easing” or “economic stimulus”, then Bitcoin has no price ceiling. I guess that rings true for this new NFT craze of CryptoPunks, EtherRocks and other digital art!

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