Ethereum blockchain, NFTs and digital art sales taking off
Brad Coetzer could not resist the bored-looking ape dressed in lab whites.
The ape was a piece of digital art sold as a non-fungible token.
“One of my favourite bands is Gorillaz and the ape reminded me a lot of the artwork used by the band,” Mr Coetzer, a customer success manager at Stablehouse in Hamilton, said. “Also, a really detailed ape in a science outfit — tell me that's not cool?”
Mr Coetzer wanted to own a small piece of the internet, and thought that the artwork would look cool on his wall or as his profile picture.
“It's a Bored Ape, but a newer release by NFTPride,” he said. “They're new to the market so they're still quite undervalued. They range between a couple of hundred dollars to a couple thousand but because they're new they still haven't really exploded, which they very well might not.”
He will be happy if it gains in value but he is not banking on it.
Mr Coetzer is just one of many locals getting involved with NFTs, buying and selling digital art, among other things, through online marketplaces such as OpenSea, Rarible or SuperRare. The currency is Ethereum blockchain or Ether, which fluctuates in value. On Tuesday one Ether was worth $4,709.77.
Around the world, some NFT digital art is selling for astronomical sums. In March, Christie’s sold Beeple’s Everydays: The First 5,000 Days for $69.3 million, making it the most expensive sale of NFT art in history.
… is a unique and non-interchangeable unit of data stored on a digital ledger (blockchain).
… is an easily reproducible item such as a photo, video, audio file or other type of digital file.
… uses blockchain technology to establish a verified and public proof of ownership.
… can be copied and shared like any file.
… is typically a one-off product and is provably scarce, and not divisible.
Then last month records were broken again when CryptoPunk #9998 sold for a staggering $532 million. However, that sale has been controversial, with allegations of money laundering coming from some quarters. The art is a simple pixelated head with white hair and green eyes.
NFT digital art can be printed out and framed. Some people turn it into their online avatar. Mr Coetzer’s ape has become a profile picture on a few of his social media handles.
He believes that we have not even begun to tap into the possibilities when it comes to NFTs, speculating that they could become big in the insurance world.
“When it comes to actual decentralised finance, one of the biggest issues is insurance,” he said. “A lot of people don’t want to insure something that people don’t have a huge amount of trust in. It is still a very new concept so people are not very trustworthy of blockchain as a vehicle.”
But he said it should be trustworthy.
He also thinks that there are business opportunities in smart contracts. These are like any other contract, except that there is a tiny computer programme inside a blockchain. It can be programmed to self-execute when a set of predefined conditions are fulfilled. Smart contracts exist on decentralised and distributed blockchain networks.
NFTs are also adding a new dimension to gaming. You can buy a virtual sword, cattle or even take out a loan for a piece of virtual land using Ether as the currency. And as tiny digital penguins, melancholy apes and dragon kittens become more popular in the virtual world, Hollywood is taking note.
“They are looking at making movies based on these NFT art pieces,” Mr Coetzer said. “Hollywood would have to pay royalties to the owner of these NFTs if they use them.”
For those looking to get into the NFT game for the first time, it can be a little daunting. But Mr Coetzer said that the bitcoin, blockchain and crypto communities are very helpful, and there are many YouTube channels and forums out there to learn from.
“It is the kind of exploring that you need to do your research on,” he said. “You have to really look to avenues of what you want to do. You will spend a lot of time and will probably be wasting a lot of money along the way if you don’t do it correctly. Follow a couple of people on Twitter and start understanding a bit more about the industry. It is here to stay. That is for sure.”
Mr Coetzer thought that if local artists can get themselves on the right NFT marketplace platforms there are opportunities for them to sell their work. But he said that selling art can be just as challenging in the virtual world as it is in the real world. There is plenty of competition.
He said that Bermuda is already a leader in cryptocurrency regulation.
“The more open to the market the government is, the more open to the market Bermudians will become and it will essentially be able to improve continuously from there,” he said.