At age 15, Mark Cuban realized he could take advantage of the philatelic market. Prices varied so much and there were such inefficiencies that he figured out how to buy 15-cent stamps to sell for $25 an hour later and save for college.
The famous billionaire investor – he owns the NBA team Dallas Mavericks – saw even then how collecting simply assigned different value to a physical good, but now believes in the revolution of NFTs (Non-Fungible Tokens), which are the digital version of stamps, art or any other tangible or intangible product to which a series of users end up conferring a value. These assets are gaining ground, and they are part of that new culture in which blockchain and cryptocurrencies are also absolutely integrated. Gold is valuable because we all believe it is
Cuban was reflecting at the beginning of 2021 on this revolution of new stores of value. Many speak of bitcoin as one of those stores of value that replace or can replace what gold has always represented, but for Cuban in reality everything is part of the same idea.
As he explained then, that gold has become the store of value par excellence is part of “a narrative. There are plenty of precious metals that meet the same requirements, but gold has more buyers. When the number of buyers increases, the price goes up, and vice versa. There is nothing unique or special about gold except for the fact that enough people believe in that story and buy gold.”
It is the same reflection that other economists and analysts have made in the past. Yuval Noah Harari talked about it in his bestseller ‘Sapiens: from animals to gods’ and explained how the value of gold and silver “is purely cultural” and had become that store of value for perfectly meeting the requirement that it had “universal trust”. We assign value to gold because many other people (the majority of our world’s population) do. From what you touch and see to what you don’t touch (but you can see)
NFTs (Non-Fungible Tokens) are digital assets that are basically an extension of that same idea. Before we conferred value on tangible goods that we could touch and see (gold, stamps, works of art), and now we do it more and more to intangible goods that we mostly see, but probably cannot touch.
Cryptocurrencies are an approximation to that principle, but NFTs go a little further and apply that concept of store of value to those more collecting-oriented objects.
A digital Pokémon card is a good example of this new collectible stamp format, and the concept is the same as the one that years ago became famous with that surprising fever of crypto kittens (Cryptokitties) that in fact are still active and quoted at prices that for many are absurd. Why did a digital avatar of a cat cost $115,000? Easy: enough people believed that its price was indeed that. There is no more. What are NFTs and what features do they have?
Contrary to what happens with cryptocurrencies, NFTs cannot be interchanged with each other, since no two NFTs are the same: your card from a crypto kitten is unique, as is that digital work of art or any other intangible good that falls within this definition.
As they explained on Coindesk, there is a clear analogy between an NFT and a ticket to a music festival: in that ticket there is information about the buyer of the ticket, the date of the event and its location. Those inputs, like NFTs, are personal and unique.
Most of these “tokens” (which can be coins, stamps, works of art, or crypto, for example) are based on the standards of the Ethereum network and its blockchain.
That has made it easy to operate with them when buying and selling them, and that services such as MetaMask or MyEtherWallet (wallets that allow you to interact with Ethereum) are references in this type of transactions. In addition, NFTs have several characteristics:
- Strangely unique: these assets have many analogies with works of art, of which there may be copies (it is even easier to make copies of digital works), but here the owner can certify that he is the sole and real owner of the original work, although this can be easily shared on the internet (and does). It is a curious situation and a turn to the value we attach to physical and digital works of art.
- Non-interoperable: You cannot use a Cryptokitties avatar/card in other similar games such as CryptoPunk.
- Indivisible: Unlike cryptocurrencies, NFTs cannot be divided into smaller parts, and have full value as an entity or full token, without more. You can’t have 1/1000 of a crypto kitten.
- Indestructible: The data of an NFT is stored on the blockchain through a smart contract, which makes it unmentionable, deleted or replicated.
- Absolute property: unlike music or film, if you buy one of these goods your property is absolutely yours. You don’t buy a license to watch the movie or listen to the song, but that intangible good is entirely yours.
- Verifiable: The blockchain makes it possible to verify something that is rather more complex to prove or certify with topics such as art collecting or stamps, for example: the blockchain maintains a history of who has bought or sold an NFT and who is its current (absolute) owner, including the original creator from whom that digital asset was purchased in the first place.
NFTs as the future of business
We return to Cuban, absolute believer in this type of digital assets. In his opinion, NFTs are the future of business. “This generation knows that a digital contract and the digital asset it represents or a crypto asset is a better investment than the traditional asset you can see, touch or feel.”
Every single day for the last 13 years, the digital artist Beeple has created a unique artwork from start to finish as part of his monumental ongoing series, EVERYDAYS.
This month, we will of…#beeple #digitalart #digitalartist #artist #art #thefirst5000days #nft @beeple_crap pic.twitter.com/4VjcZp4rWq— Christie’s (@ChristiesInc) February 16, 2021
That certainly begins to make sense with this renewed boom that is being seen with cryptocurrencies and of which bitcoin and Ether are protagonists. Crypto cats have even been followed by memes such as Nyan Cat, but also NFTs are also beginning to have support even in very traditional segments, as demonstrated by the new auction organized by the auction house Christie’s.
This house will auction a digital artwork called ‘Everydays: The First 5000 Days’ created by a celebrated artist named Mike Winkelmann, who is much better known by his alias, Beeple.
Beeple’s work begins to be auctioned today, and although the starting price is $100, the value will eventually reach several million dollars.
The work is a collage of just over 5,000 images created (one per day) by this artist in the last 13 years. The auction, by the way, must be paid in ETH, and christie’s indicates both the address of the wallet and that of the smart contract that validates and certifies that the work – an image of 21,069 x 21,069 pixels ) is unique.
Beeple, who has earned millions with his works, has now become the maximum exponent of that theoretical revolution that art and collecting could live with NFTs. And, as Cuban said, “art is art. It has always been available in almost unlimited forms.”