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An ‘NFT’ digital image just sold for US$69 million — but what is it?

Click to play video: 'What are non-fungible tokens or NFTs?'
What are non-fungible tokens or NFTs?
WATCH: We know about bitcoin and the record amounts of money paid for baseball, football and hockey cards, but there's a new entry into the collectibles market - "non-fungible tokens." – Mar 10, 2021

Some people will pay a lot of money to own a piece of digital art from graphic designer Beeple. Others will simply download it off the internet for free.

A digital image by the cutting-edge artist has sold for a whopping US$69.4 million at auction, in a record-setting sale for a piece of art that does not exist in the physical world.

Christie’s auction house sold the art piece on Thursday after a two-week online auction involving more than 180 bids. The final auction price tag is the third-highest ever for a living artist, and the most anyone has ever paid for a non-fungible token, or NFT. This was the first time that Christie’s has ever offered a digital-only piece of art with an NFT to guarantee its authenticity.

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The artwork is essentially a JPG image file called Everydays: The First 5000 Days. It’s a collage of digital images that Beeple created once a day for — you guessed it — 5,000 days.

‘The First 5000 Days,’ a digital collage by Beeple, is shown. Christie's auction house/Beeple

The artist, whose real name is Mike Winkelmann, has been posting the individual images online since 2007, but the fully-assembled collage now certifiably belongs to one deep-pocketed buyer.

Beeple explained in a video for Christie’s that he assembles his artwork from digital models on his computer. Many of his pieces use models of world leaders, while many others involve Buzz Lightyear from Toy Story.

All of them are available on his Twitter account, where you can grab them and make them the background on your phone, if you so choose.

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But as of Thursday, there’s only one person in the world with a certified digital certificate saying they own the collage.

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Of course, the sale doesn’t mean Beeple’s collage will soon be hanging over the mantle at the buyer’s home. The artwork exists entirely in cyberspace, and there’s nothing to stop you from finding it through social media, a Google image search or a Canadian news website.

The as-yet anonymous buyer essentially paid for the right to say they own the image, as part of a fast-growing online obsession with non-fungible tokens.

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What is an NFT?

NFTs are basically non-physical things that you can own through the internet, thanks to a cryptocurrency-related technology called blockchain. A publicly accessible digital ledger keeps track of who owns which NFTs online, and they cannot be forged or manipulated because many people have copies of the ledger to prevent tampering. You don’t necessarily control the copyright or usage of the NFT that you buy, but you do own the global bragging rights to it.

NFTs can be digital images, songs, GIFs, videos or even tweets. Twitter founder Jack Dorsey, for example, is auctioning off his first tweet for more than $2.5 million, with all proceeds slated to go to charity.

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Whoever buys the tweet will get an autographed digital certificate and their ownership of the tweet will be “minted” in the blockchain, according to the seller Valuables.

NFTs might sound like a strange thing to spend your money on, especially when anyone can save a piece of media onto their phone or computer, but speculators have been driving the price of NFTs up to astronomical amounts in recent months, amid a boom in online interest.

“Owning any digital content can be a financial investment, hold sentimental value and create a relationship between collector and creator,” Valuables explains on its site. “Like an autograph on a baseball card, the NFT itself is the creator’s autograph on the content, making it scarce, unique and valuable.”

Much of the NFT market revolves around Ethereum, a Bitcoin-like form of cryptocurrency. Many NFTs are bought and sold with Ethereum, and Christie’s was even willing to accept it as payment for the Beeple collage.

Can I buy an NFT?

The NFT market has exploded recently with the rise in cryptocurrency values, which has minted online millionaires with money to spend. At the same time, a generation of digital artists is rising up to meet the demand.

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Music artist Grimes, for example, recently sold a collection of her digital art for approximately $6 million.

Other artists have started selling songs as NFTs, even though you can listen to them at your leisure on various streaming services. The Kings of Leon, for instance, have raked in nearly $2 million through NFT song sales.

Beeple’s art has also sold for high prices in the past, including a piece depicting a big, naked version of former U.S. president Donald Trump. The one-term president is depicted face-down with graffiti scrawled all over his body, including the word “LOSER” displayed prominently on his shoulder. A Twitter-like bird stands on top of him, and it’s tweeting a clown emoji.

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A collector sold that piece of art, called CROSSROADS, for US$6 million in February. The collector originally paid Beeple $67,000 for it.

Click to play video: 'Selfie art project'
Selfie art project

The NFT market has been growing since 2017, when Vancouver-based Dapper Labs started selling certified images of cats called CryptoKitties.

Dapper Labs has since expanded into sports with NBA Top Shot, which allows users to buy pro basketball highlights. Some highlights can be bought at auction for a few dollars, while others can verge into five or six figures.

The top available clip for the Toronto Raptors shows Pascal Siakam blocking LeBron James on a play during a game from Nov. 10, 2019. That clip is particularly rare, with only two available at US$49,990. You can also own a Fred VanVleet dunk for as little as US$9.

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The future of NFTs remains uncertain, especially given the volatility of the various cryptocurrencies that fuel the market around it. It could continue to explode based on rampant speculation, or it could cool off when people see the prices involved.

Todd Levin, a New York-based art adviser, told the New York Times that he has “mixed emotions” after seeing the record-setting Beeple sale at Christie’s.

“On the one hand, it’s super exciting to witness a historical inflection point,” he said. “On the other hand, the amount of money involved could skew and damage a nascent emerging market.”

Beeple hailed the sale in a statement released through Christie’s.

“Artists have been using hardware and software to create artwork and distribute it on the internet for the last 20+ years but there was never a real way to truly own and collect it,” he said in the statement. “With NFTs that has now changed. I believe we are witnessing the beginning of the next chapter in art history: digital art.”

He offered a simpler reaction via two four-letter words on Twitter.

“Holy f—,” he wrote.

With files from The Associated Press

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