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NFT Crash Course, How Did All This Happen?!
Seen this artwork on the news? We did too! This was when digital artist Beeple sold for over $69 million at NFT auction!! We’re not understating when we say NFTs exploded in early 2021. Just to put things into perspective, the number of active wallets (ie demand) spiked 1.5x in the first quarter of 2021, compared to the same period from the year prior – reaching 150,000. Prior to that though, the market had been slowly (but surely) gaining momentum since 2014. The average price of NFTs are increasing too – meaning that in addition to increased NFT transactions, the value of each piece is going up too (good news for the creatives!).
In addition to the demand itself going up, the prices of NFTs have also been on the rise. Much like the kind of art which you can hold in your hands, which can be resold for multiples higher further down the line, the price of NFTs is also influenced by demand. As works by “traditional” artists like Picasso and Monet can sell for the value of all the houses in a village combined these days, so can works by NFT artists like Beeple. To illustrate, from the fourth quarter of 2020 to the first quarter of 2021, the average price of an NFT (according to NonFungible.com) increased from $1,231 to $6,585 once resold. A key difference though is that with NFTs, creators don’t necessarily have to wait for their fame-status to be realized after they die. Thanks to the power of social media, they have the power to build influencer status whilst they’re still around.
And let’s not forget that there is only one true piece of each NFT. So, the more popular a creator becomes (and the more their fans want a piece of their work), the more valuable each piece of work becomes. Effectively, that’s what is driving the price of the NFT market nowadays.
Now, we’re sure that skeptics out there might be wondering: is all this a hype? Or are NFTs here to stay? Though we’d say that the demand is now “normalizing,” there’s still a huge market for it – which is why we’re here covering it for you!