If you would like a bold and colourful handcrafted piece of art depicting an ape to hang up on your wall, you could by the Darwin Monkey by Patrice Murciano for around £79.
If however, you wanted a digital drawing of a bored ape by Bored Ape Yacht Club (BAYC) generated by an algorithm you could end up spending anywhere between £1,000 and £2.8 million.
To outsiders, the NFT craze seems completely absurd and out of control, but is there a method to the madness? Is it, contrary to what critics say, more than a craze and here to stay? To find out the answers to those questions and more, read on to find out everything you need to know about NFTs.
What are NFTs?
The acronym stands for ‘Non-Fungible Tokens’. In layman’s terms, NFT is the term used to describe an asset with no set value like cash or commodities. In even more basic terms, NFTs are digital pieces of art that sell online for eye watering amounts of money.
Many of the most high-profile NFT art collections such as the BAYT Bored Ape collection have been created by an algorithm. There are pieces created by professional artists also, as well as a large amount produced by amateur creators.
If you fancy getting in on the act and creating an NFT of your own, have a read of this excellent guide – covering how to make an NFT.
Who buys NFTs?
If you take a deep dive into the statistics you’ll find that the biggest demographic for NFTs are millennial men from Asia with an annual income of $25,000 to $250,000 who already have a keen interest in cryptocurrency?
Why Asia? Why men? Why millennials? Well the answer to the question lies in the final part of the last paragraph – cryptocurrency. This demographic are the most likely to get involved with NFTs because of their close links with crypto.
Something which becomes more obvious when you consider the number one reason that people give for not getting involved in NFTs – not understanding them.
(Want to better understand NFTs yourself? Watch this video.)
Why buy NFTs?
What drives these people to spend so much on NFTs? Well it can all be boiled down to three key points:
- Exclusivity: The type of people buying NFTs tend to have a lot of disposable income, more than the average person and as a result of this, like to use their money to buy things that would usually be out of the reach of normal people.
- Trading: Those who aren’t buying NFTs for an ego boost are usually buying them to make a quick buck. Like crypto, NFTs offer a huge amount of riches to investors who get in and get out at the right time.
- Fandom: NFTs have provided another way for celebrities and organisations to monetise themselves. Football clubs can sell unique ‘moments’ to their fans and celebrities can sell NFTs featuring themselves, their tweets or some exclusive content. Diehard fans lap this sort of stuff up.
Who decides NFT trends?
At this point there aren’t many NFT creators out there so the existing creators are the ones who set the tone and decide the trends. What could be termed ‘strange art’ in the form of apes and other quirky creations has been dominating the market recently.
In the coming months and years experts are predicting that we will see a lot more variety and range in the NFT market. Big brands are expected to get involved so don’t be surprised to see outright advertising masquerading as NFT art.
We can also expect to see an increase in the number of celebrities getting involved in NFTs after the success that creators such as Paris Hilton and Snoop Dogg have had.
Gaming NFTs have also been highly tipped to take off in the coming months, with some AAA titles expected to get in on the action, selling exclusive art of their iconic characters.
These are only predictions at the moment though. In a market where drawings of bored apes by an algorithm suddenly became worth millions of dollars, it would be a fool’s errand to try and correctly predict the next big trend.
(Unpredictable trends like this have characterised NFTs thus far.)
In Conclusion
If you are thinking of getting involved in NFTs the question you need to be aware of all of the facts. For every person making hundreds of thousands from selling a basic piece of art there are dozens, if not hundreds who are losing money on their investments.
When it comes to investing your money, ask yourself whether your cash might be better spent elsewhere…