[ad_1]
In February 1637, at the height of the speculative frenzy in the Netherlands, we now know as “tulip mania” a single bulb of the prized Viceroy tulip sold for 6,700 guilders, enough to buy a large house in the city. one of the most desirable areas of Amsterdam.
The tulip market collapsed later that month, with prices for the most common bulbs falling 95%. Since then, the mania for tulips has become synonymous with the irrationality of financial bubbles.
So what about the NFT mania?
Last week, Nifty Gateway, a specialist online marketplace for non-fungible tokens, or NFT, hosted an auction featuring a computer-generated illustration by digital artist Mike Winkelmann, known as Beeple, including the JPG collage “Everydays – The First 5,000 Days, ”was sold online by Christie’s earlier this month for a sensational amount of $ 69.3 million.
Work on Nifty Gateway, “Ocean Front,” showed a dilapidated condo development of old trailers, buses and containers coming out of the sea on wooden stilts, and sold for $ 6 million. It could have bought a three bedroom, three bathroom apartment overlooking Central Park in New York City.
“We are in a frenzy of speculation. I don’t know how long these awards will last, ”said Robert Norton, CEO and co-founder of Verisart, a company that certifies artwork on the blockchain. “We are living in a moment of collective hysteria.”
Over the past few months, NFTs have sold for mind-blowing prices almost consistently on specialist sites that accept cryptocurrency payments. In February, an NBA Top Shot music video of a LeBron James dunk sold for $ 208,000, paid for in FLOW tokens. Last week, Jack Dorsey, chief executive of Twitter, sold his first, newly “created” tweet as NFT, for 1,630.6 Ether, the digital currency of the Ethereum blockchain-based platform. This award was equivalent to $ 2.9 million.
Most mind-boggling of all, of course, was the $ 69.3 million donated at the end of Christie’s auction of a two-week batch of the Beeple JPG. A digital mosaic of all the satirical illustrations that the South Carolina-based artist has uploaded every day since 2007, “Everydays” was the first purely digital NFT that Christie’s had sold.
In another first, Christie’s accepted payment to Ethereum, the most common cryptocurrency used to trade digital collectibles. The price of Ethereum has more than doubled since January 1, swelling the virtual wallets of investors, some of whom are splashing their Ether on NFT art.
“Everydays” was bought by Vignesh Sundaresan, a Singapore-based cryptocurrency entrepreneur, also known as MetaKovan, whose payment of 42,329,453 Ether covered both the hammer price of $ 60.2 million and $ 9.1 million in fees, according to Rebecca Riegelhaupt, a spokesperson for Christie’s.
Sundaresan is the founder of Metapurse, a cryptocurrency fund that in January launched a “public art project” called B.20; According to its website, B.20 seeks to redefine “the experience and ownership of art”. At the center of the project is a “bundle” of virtual assets, anchored in a collection of 20 Beetle NFTs purchased for around $ 2.2 million in December.
The ownership of the B.20 collection, but not the assets themselves, has been divided into 10 million tradable virtual tokens. The Beeple images are displayed in virtual museums on cryptovoxels.com, which describes itself as a virtual world powered by the Ethereum blockchain. Visitors to these open access virtual museums can become collection stakeholders by purchasing B.20 tokens from virtual vending machines inside.
One artwork that you won’t see on screen, however, is “Everyday”. Sundaresan and his partner Anand Venkateswaran, alias Twobadour, said in an email that the Christie’s acquisition “was not part of the B.20 collection”. They added that there were no plans to monetize the 5,000-image collage yet.
With the prices of individual NFTs soaring, the B.20 fund is just one of many NFT condominium companies, where affordable tradable tokens pegged to the value of desirable digital assets are spread among a group of buyers. .
“I find the shift to fractionation disturbing,” said Michael Moses, founder of Mei-Moses, an auction database now owned by Sotheby’s. Its main clue shows that over the past 10 years, the overall value of the thousands of works of art resold at auction has not increased.
“How do you rate what is split?” Value is something incorporated over time, not added in an instant, ”Moses said in an interview. Cutting expensive digital items into exchangeable tokens has made the market “loaded with volatility,” he added. “Basically, it’s the game. You have no idea of the real value of the work. “
According to a blog post published on January 19 by Twobadour, 50% of the 10 million tokens in the B.20 fund were kept by Sundaresan, and 2% of them belong to Beeple himself. Another 25 percent were issued in a public offering in January, priced at $ 0.36 each. The first 16 percent of the public offering was “instantly” bought by robots, Twobadour said, referring to the high-speed automated trading mechanisms used by speculators.
Tokens were trading at $ 6.33 on Tuesday. On March 10, the day before Beeple’s “Everydays” sale at Christie’s, they had peaked at $ 28.43, according to coinmarketcap.com. The B.20 website says that “there is endless benefit to art.” But the fund’s token holders, like those who speculated on tulip bulbs, are finding that the value of these investments can go down as well as up.
According to economist Peter M. Garber, author of Famous First Bubbles: the Fundamentals of Early Manias, the Dutch tulip market – or rather futures for their invisible and buried bulbs – has become “just a market. of play ”in 1637, in particular for the less expensive bulbs, exchanged by weight in taverns, whose order prices were multiplied by 20 in the space of a month.
“People were coming in with no wealth and no credit,” Garber said. “The agreements got out of balance. It was unbearable.
In an article published last week, Beeple told The New Yorker that he cashed in crypto gains from his Christie’s sale for $ 53 million the old fashioned way. The day after the record-breaking auction, he said in an interview on Coindesk TV, an online medium for blockchain and cryptocurrency news: “I think it’s a bubble,” adding: “ If it’s not a bubble now, I believe it. will probably be a bubble at some point, because there are so many people rushing into this space. (Winkelmann did not respond to requests for comment for this article.)
A token based on a New York Times column of Kevin Roose’s NFTs sold at an online auction last week for 350 Ether, or over $ 500,000. All proceeds from the auction will be donated to the Neediest Cases Fund, a charity affiliated with The Times.
Damien Hirst, who The New Yorker says sent a congratulatory message to Winkelmann after the Christie’s auction, is among the artists joining the rush. On Tuesday, Hirst said in a press release that he would offer a collection of 10,000 NFTs, called “The Currency Project,” with each token tied to an associated original work on paper.
The single artist project involving the 10,000 NFT strike may seem out of step with the growing outcry over the energy used by Ethereum’s proof-of-work algorithm, which requires a large number of computer servers.
In December, London-based digital artist and computer scientist Memo Akten calculated that minting and selling the average NFT produced around 211 kilograms of carbon dioxide. Based on these calculations, Hirst’s latest project would consume energy equivalent to the electricity consumption of an average American household over 412 years. (Hirst and Palm, a crypto startup partnering with him on the project, said in a press release that their implementation would be “up to 99% more energy efficient” than previous sales of NFT based on Ethereum.)
Environmental concerns could possibly be a factor that could dampen enthusiasm for NFTs. Another could be a drop in the value of Bitcoin and Ethereum, to which NFT prices are pegged.
In early 2018, the nascent crypto art market was strangled when the prices of virtual currencies collapsed. But in recent months, Bitcoin’s value has been bolstered by investments from electric car company Tesla, hedge funds and other influential players, giving investors hope that cryptocurrencies could lose their reputation for volatility. .
Kenneth S. Rogoff, professor of public policy and economics at Harvard and author of the 2016 book “The Curse of Cash,” said the investment of “big hitters” such as Tesla may have reinforced the idea that the cryptocurrency like Bitcoin would escape the government. regulation.
“The major problem with cryptocurrencies is that people are able to do large-scale transactions that cannot be easily traced by the government. It helps facilitate tax evasion, money laundering, crime and terrorism, and governments cannot quietly allow this, ”Rogoff said in an interview. “But central banks and regulators move slowly. Bitcoin and other cryptocurrencies can have a long term. “
It’s also worth pointing out that feverish speculation about assets that have no physical existence has flourished during epidemics, when people spend a lot of time indoors. The tulip mania coincided with an outbreak of bubonic plague in the Netherlands that killed a fifth of Amsterdam’s population between 1635 and 1636.
As the character of a weaver who mortgaged his house and sold his loom to buy promissory notes for light bulbs put it in “The Rise and Decline of Flora,” an anonymous Dutch satire on tulip mania, published in 1637, “It was madness. “
Will people feel the same about digital tokens?
[ad_2]
Source link