In October of 2020, a 10-second piece of video art - of what appears to be a giant Donald Trump collapsed on the ground and covered in slogans amid an otherwise idyllic setting - was purchased by Miami-based art collector Pablo Rodriguez-Fraile for $67,000.
Last week, he sold it for $6.6 million.
The video by digital artist Beeple, whose real name is Mike Winkelmann, was authenticated by blockchain, which serves as a digital signature to certify who owns it and that it is the original work.
It’s a new type of digital asset - known as a non-fungible token, or NFT - that has exploded in popularity as enthusiasts and investors scramble to spend enormous sums of money on items that only exist online.
Rodriguez-Fraile explained what he thinks set this piece of digital content apart and made it worth its hefty price tag: “You can go into the Louvre and take a picture of the Mona Lisa and you can have it there, but it doesn't have any value because you don't have the provenance or the history or the work. Again, the reality here is that this is very, very valuable because of who is behind [it]. It's a full career of a multi-generational, like a generational career in this space of being the best of the best."
Examples of NFTs range from digital artworks and sports cards to pieces of land in virtual environments.
The start of the rush for NFTs has been linked with the launch of the NBA’s Top Shot website, which allows users to buy and trade NFTs in the form of video highlights of games.
Five months after its launch, the platform says it has over 100,000 buyers and nearly $250 million in sales. The majority of sales take place in the site’s peer-to-peer marketplace, with the NBA getting a royalty on every transaction.
Nate Hart is Nashville-based NFT investor who says he bought a LeBron James Cosmic NFT on NBA Top Shot for $40,000 in January, then sold it for $125,000 in February.
"The hype is extremely high right now. I've used the analogy a couple of times that early NFT guys are, in a way, have kind of been presented with the same opportunity as maybe people who found Bitcoin early.”
Investors caution, however, that while big money is flowing into NFTs, the market could represent a price bubble.
Like many new niche investment areas, there is the risk of major losses if the hype dies down, while there could be prime opportunities for fraudsters in a market where many participants operate under pseudonyms.
Still, auction house Christie’s has just launched its first-ever sale of digital art – a collage of 5,000 pictures, also by Beeple – which exists solely as an NFT.
Noah Davis is a contemporary art expert at Christie’s.
“We were at $1 million dollars in 10 minutes with a starting bid at $100. And that just truly is, we've never seen anything even remotely close to that kind of activity."
Bids for the work have hit $3 million, with the sale due to close on March 11.