We bought an NFT. Here’s what we learned

We bought an NFT. Here’s what we learned

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For the uninitiated – a group we belonged to until recently – NFTs, or non-fungal characters, refer to pieces of digital content linked to the blockchain, the digital ledger system supporting cryptocurrencies such as bitcoin and ethereum (ETH) . While those cryptocurrencies are flexible, meaning you can exchange one bitcoin (or in the IRL world, one dollar) for another, each NFT is unique. NFTs can take various forms, such as virtual trading cards and other collectibles, tweets, and even physical objects.

Mostly, however, NFTs are used to buy and sell digital artwork. This is not a new phenomenon, but over the past few weeks, NFTs have been selling for seven or even eight figures, reflecting a broader euphoria in the market that is currently building up stocks, sports trading cards and cryptocurrencies. Twitter founder Jack Dorsey, musician Grimes and Super Bowl champion Rob Gronkowski are one of the big names jumping on the bandwagon. Earlier this week, digital artist Mike Winkelmann, better known as Beeple, sold a 5,000-image collection at Christie’s auction house for a staggering $ 69.3 million.

And on the evening of March 4th, we became the latest click-purchase on a piece of digital art – very, very affordable art not to confiscate our business accounts. In the process, we not only joined the growing list of buyers and sellers in this emerging market, but also a much smaller community of co-owners for this particular artwork. A new digital family.

The perfect piece of digital art

After much deliberation, we selected a piece by digital artist Alexander Shelupinin in Moscow called “Little Alien” – a shape-changing, color-changing portrait of a hairless Sphynx cat. It spoke to us because the CNN Business team has a long and colorful history with hairless cats, but that’s a story for another time. We bought it from Known Origin, one of the many NFT markets that are gaining traction quickly, where it was listed by the artist at the time for 0.01 ETH, or $ 15. Thanks to a slight rise in ethereal prices since then, it is now worth a hefty sum of $ 17.
Shelupinin, who sells his art under the name “Alex Shell”, told CNN Business he started making cryptocurrencies about three years ago, after building his own ‘mining tool’ for ethereum, creating new crypto-currency by use computers to solve complex math problems. . But it is a time- and resource-intensive process that uses a lot of electricity and computing power, and when the price of ethereum collapsed in mid-2018, he started looking for other uses for the rig.
He started by creating ‘very funny images’ – very abstract art, a gorilla looking at a banana and even an animated Covid-19 particle – by coding it using the programming language Python. Then he discovered Famous Origin and applied to sell his images there.

“They approved me, so I officially became an artist,” he said.

Little Alien, multicolored edition, an NFT artwork by artist Alex Shell.
Since launching the platform in early 2019, Shelupinin has sold 226 different pieces on it (261 if you count multiple copies of some of them) for a total of about 15 ETH – which is currently worth $ 27,000. He also made money selling and selling NFT artwork on other popular platforms such as OpenSea, such as the one he bought for about $ 56 and resold for over $ 6,200.

Because every blockchain transaction is permanently recorded and public, NFTs provide a way to add value to online items, giving artists like Shelupinin more control over what they produce and how much they can earn from selling them.

“There is a real fit between the technology and problems in those industries,” said Tal Elyashiv, founder and managing partner of SpiCE VC, a venture capital firm that invests in blockchain ventures.

NFTs are also now taking advantage of a ‘cool factor’, which offers the average internet user another way to get into cryptocurrencies. “Crypto is already … kind of old, so here’s something new that is somewhat related that we can participate in,” Elyashiv said. “There are also many known factors in this.”

A complicated process

However, there is at least one major obstacle: the system is still notorious for the lay buyer, as evidenced by our hairless purchase process for cat portraits.

First, we had to transfer ether $ 20 from the digital currency exchange Coinbase to a wallet app called Rainbow, and then connect Rainbow to Well-known Origin. Then we had to send the etherum worth $ 15 that we needed to buy the artwork from Shelupinin.

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But to receive the NFT immediately, we would cost ‘gas’ to the tune of 100 Gwei – a small unit of ethereum – which would be equal to about $ 52. Because we are cheap and not in a hurry, we chose to pay only 5 Gwei, but consequently we waited more than a week and spent another $ 10. Nevertheless, we still do not officially own the ‘Little Alien’.

“The crypto world has made a big mistake, an evolutionary mistake … the whole user interface in this regard is very difficult and it is built into the existence of crypto,” Elyashiv said. “I think we’ll wait a while before we see a simpler and more transparent user interface.”

But he believes the buying experience will improve over time. NFT platforms like Known Origin and OpenSea increasingly look like traditional online shopping, with artwork in a grid and a “Buy Now” or “Enter Bid” button next to it.

And others say that the huge popularity of NFTs, despite their complexity, is a testament to their endurance.

This piece by digital artist Beeple sold for more than $ 69 million.
“To me, it’s a sign of how powerful the technology is. It’s like it’s so bad, but despite how bad it is, you have the biggest influencers and celebrities and brands,” ‘pet3rpan said. a crypto-investor and artist who did not want to give his full name and says that he usually goes by his username and does not disclose his real name.

“Yes, it’s a barrier, I do not think anyone agrees with that,” he said. Pet3rpan also said that he had previously worked as a graphic designer and that he sold 15 of his own NFT pieces for about 2 ETH at Known Origin. “But one reason why NFTs initially really blew up is that most designers … are very technical themselves.”

A community of owners

Pet3rpan is also one of 15 other owners of the ‘Little Alien’ artwork we purchased, a scenario that is possible because it is a virtual piece rather than a physical one. Known origins, like all blockchain-based platforms, include all the owners of each piece. , along with information on when they bought it and how much they paid.

Pet3rpan initially did not remember buying the hairless cat portrait, saying he casually picks up NFT art when something strikes him.

“To me, it’s always been like we appreciate someone’s work,” he said. Sometimes he will buy an NFT in the expectation that the value will rise and he can sell it at a higher price. “But I don’t really buy too much for investment. In most cases, most of the art I own is because I want to appreciate someone’s work and say ‘hey, great stuff, I’m a fan’ and that buy. ”

We tried to reach some other owners of the hairless cat but did not get any answers from them. More than half of them bought the piece more than a year ago, and the most recent purchase was two days ago.

Are NFTs here to stay?

As the NFT trend gets steamy, it also attracts curious new buyers – like us – and traditional artists who would otherwise stay away. At the same time, some artists are concerned about the impact on the environment, as the exploitation and trading of cryptocurrencies uses large amounts of electricity.
You can buy the first tweet. Current bid: $ 2.5 million

But there is also a more basic question for the digital arts community: will NFTs end up being a staggering fad? Elyashiv and others in the industry claim that they are here to stay.

“This is a very, very relevant technology for a lot of industries, it will make a very big difference,” Elyashiv said. “I think it’s very real and I think it holds a lot of power.”

For Shelupinin, who has a day job as a technical consultant, digital art is primarily a funny part of my life with no commitments and no time pressure. But he believes the NFT market will continue to expand as long as cryptocurrencies – particularly the ethernet network NFTs – continue to grow. The NFT market doubled to more than $ 250 million in 2020, according to a report last month by blockchain website Non Fungible and BNP Paribas subsidiary L’Atelier.
Since compiling his first artwork on Known Origins in January 2019, the number of etherum accounts has increased by 160% and the price of the cryptocurrency has increased by 1 355%.

“[That] an expansion of the amount of money in the ethereum ecosystem needs to be ‘parked’ somewhere and NFT is the perfect place for that, ‘he said. He is also encouraged that developers of ethereum continue to improve the cryptocurrency to make it more user-friendly.

“In such conditions, it is just technically impossible to shrink the NFT market, it can only increase,” Shelupinin added.

Whether the hairless cat becomes a collectible that appreciates value over time or merely a memento of a strange and forgotten internet trend remains to be seen. For now, we love it.

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