A reader asks: where can I sell my $60 million Homer Simpson NFT?
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A reader asks: Where can I sell my $60 million Homer Simpson NFT?
Archer replies: “NFTs,” or non-fungible tokens, are probably best known today for re-introducing the word “fungible” into common usage. But at the time they made their debut, they were seen as a great storehouse of value. Even Melania Trump was in the market, according to The Guardian. Hard to beat that for an endorsement.
But now, the value for 95% of those tokens is estimated at “zero ether,” according to a dappGambl report based on data from NFT Scan and CoinMarketCap. That’s zero in dollars and euro, too. Also bitcoin. To be precise, the study’s authors looked at 73,257 NFT collections and concluded that 69,795 had no value. To this the only reasonable response is, what? The other 3,462 are worth something? That seems kind of hard to believe. But here, as elsewhere in the art world, provenance is no doubt important.
By way of background: an NFT is a type of a crypto asset that is used to certify the ownership and authenticity of a digital file including an image, video or text that lives on the blockchain. It is intended to be, as the name suggests, sui generis, non-replicable.
An article on Coinbase.com in January of this year offered a short list of what it said were “the most expensive ETFs ever sold.” This included Merge by digital artist, Pak, which went for $91.8 million in December 2021 (though to be fair that was through an auction of “digital coins” which distributed ownership across 28,983 “collectors,” according to the article). The work is an image of a group of three spheres.
More traditionally, The First 5000 Days was purchased by a single collector, Singapore’s Vignesh Sundaresan, for $69.3 million in March 2021. The work of Mike “Beeple” Winkelman, it’s a collage of more than 5,000 pieces assembled daily since 2007. When purchased it was the fourth most expensive piece by a living artist ever sold by Christie’s, again according to Coinbase.
As of this writing, it appears that neither work has been resold. As a result, mark-to-market pricing is not available, so who knows?
And what of the Bored Ape Yacht Club NFT you might ask? If I understand this correctly, this is actually a collection of NFTs resident on the Ethereum blockchain. The short-form, Wikipedia account of its existence goes something like this: an April 2021 launch date, an ascent in value to $4 billion in 2022, driven in part by purchases by the now defunct digital currency trading platform, FTX, and by a drove of celebrities including Justin Bieber, Snoop Dogg, and Gwyneth Paltrow, and then a precipitous decline.
By July 2023, says Wikipedia, the “floor price” of Bored Ape NFTs had fallen 88%. It should be noted that “floor price” is a term of art and may or may not represent an actual sales value. Coindesk defines it as “the minimum price a seller wants for an NFT in any given collection,” and goes on to point out that “the metric can be manipulated to make a collection seem more popular than it is.” You don’t say.
In traditional finance terms it is the “ask” side of the equation, often ex a “bid.” But even these aspirational prices have taken a hit. This drastic downward market shift of such crypto assets “underscores the need for careful due diligence before making any purchases, especially one of high value,” the report added. That, at least, is unimpeachable advice.
But that’s not the real horror. The dappGambl report also examined the environmental cost of minting all these NFTs. Looking at 195,699 NFT collections with no apparent owners or market share it found that the energy required to mint them was comparable to 27,789,258 kWh, resulting in an emission of approximately 16,243 metric tons of CO2. This was equivalent to the yearly emissions of 2,048 homes, 3,531 cars, or the carbon footprint of 4,061 passengers flying from London to Wellington, New Zealand, it said.
Ouch. So non-fungible tokens seem fun (and they can be), but from both a monetary and a global warming perspective most have been something of a disaster. Perhaps recognizing this, Crypto.com is at pains to add that, “all examples listed in this article are for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, or other advice.” The same goes for this column: it’s not investment advice; it’s more in the vein of waggish commentary.
Woof.