The Ultra-Rich Are Buying NFT's For $11,754,000.

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Contributor, Benzinga
February 15, 2022

Pak’s “The Merge” sold for $91.8 million. Beeple’s The First 5000 Days for $69 million. And CryptoPunk #7523 brought in a staggering $11.8 million.

With sales volume for NFT’s experiencing more than 131 times growth and the market surpassing $40 billion in 2021, investors can’t seem to get enough. Even big brands like Walmart, McDonald’s, and Nike are all launching their own NFTs. 

And consider, while the ultra-rich could’ve invested their millions in stocks, real estate, or Lamborghinis… some are buying NFTs instead. Read on to discover what an NFT is, and why they’re so popular.

What Exactly is an NFT? 

NFT stands for “non-fungible token,” and the technology allows digital content to be registered on the blockchain. NFT creates a way for users to register and validate digital art, songs, and real estate. And it’s caught the world by storm. 

On March 6th the CEO of Twitter, Jack Dorsey, listed his first tweet as an NFT for sale. The NFT simply contained the text “just setting up my twttr,” the username “Jack”, the time stamp Mar 21, 2006. By all accounts, it looks just like a normal tweet. Yet in just 3 days, it was sold for roughly $2.9 million. 

Technically, anyone could’ve taken a screenshot of the tweet and “owned” it on their computer. However, this NFT was recorded on the blockchain - a public ledger that everyone can verify. This means each NFT is verified and unique. There can’t be another NFT with the same exact data as this one. 

But What Makes NFT Art Valuable? 

What makes a collectible like baseball cards worth a lot of money? A normal physical baseball card is probably worth a few dollars, but a 1952 Topps Mickey Mantle card sold for $5,200,000. The last time a copy of this card went on display, it arrived by armored car. But what makes them different? Because there are only a few copies available, and it’s in demand by collectors 

Similarly, when you create an NFT, you are registering it on the blockchain and making it the “only” copy available. NBA video trading cards such as Derrick Rose's layup are valued at $1,000,000. Lebron James dunk is $535,000. And Steph Curry's 3-pointer is $63,000. The limited supply creates scarcity, and when combined with demand, makes collectibles valuable. NFT’s are creating collectibles from digital assets.

Scarcity and Hype Surrounding NFT’s is Fueling Speculation 

Paris Hilton sold her NFT for $1.1 million, Eminem bought NFTs for a total of $462,000. And Lindsey Lohan sold her NFT artwork for $85,000. And it’s not just celebrities. 

Bored Ape #8817 sold for $3.4 million. Draft king billionaire Shalom Meckenzie bought CryptoPunk #7523 for $11.7 million. And an anonymous user named “oxy7eb2 … 3f6b” paid $600,000 for a picture of a pop tart cat with a trailing rainbow shooting out from its behind. With NFTs extending into spaces such as real estate and automobiles, the space could get a lot bigger, but not without risks. 

An Alternate Asset Celebrities Love

According to The Economic Times, contemporary art auctions reached a record high thanks to NFTs. That could be because lately, some ultra-wealthy individuals are getting into art. The Rothschilds sold one for $197 million. Oprah Winfrey grossed $62 million with this asset, and Jeff Bezos sold Amazon stocks and purchased $70 million of them. 

Contemporary artworks have appreciated 23.2% on average when inflation is at least 3%. It has outpaced the S&P 500 by 164% from 1995 to 2021. Thanks to new legislation, investors can now invest in this overlooked alternate asset alongside celebrity art collectors such as Leonardo DiCaprio, Jay Z, and Brad Pitt with Masterworks. There are more than 320,000 members on the Masterworks art investment platform; signup here.