The bumper Beeple sale, plus the arrival of ever more creators, means a mania that has been largely confined to crypto and techie circles could move mainstream. The global NFT market grew from a few tens of millions of dollars in annual sales a few years ago to over $300m in the past month alone, according to Andreessen Horowitz, a venture-capital firm. NFTS mesh with the massive network effects of social media and meme culture, notes Sam Hart of the Interchain Foundation, a Swiss backer of blockchain infrastructure. There has been little time to educate buyers, he says.
The pitfalls are being called out by a few crypto experts. One worry is that broad crypto-enthusiasm may be what is really behind soaring NFT values. It has not gone unnoticed that the buyer of Beeple's "Everydays" is Metakovan, a professional crypto investor. Christie's got its $69.3m in Ether, a cryptocurrency.
Some compare the NFT craze to the boom in initial coin offerings, a form of crowdfunding in which firms issue digital "coins" in return for a payment, in 2017-18, which turned to bust soon after. The soaring prices of many NFTS, reliant on ephemeral buzziness in places like Clubhouse, a hot new audio app, could quickly collapse. Celebrities including Lindsay Lohan jumping on a trend that was meant to be about helping penniless artists is, some reckon, another ominous sign. The upfront costs of "minting" NFTS are low, meanwhile, meaning potentially unlimited supply. (For now NFTS' huge carbon footprint, owing to energy-intensive blockchain transactions, is not transparently recorded.)
A final uncertainty around NFTS' value is that they can in practice be separated from the digital good to which they are tied, undermining their worth. A creator can change the image even after sale. One crypto artist recently "pulled the rug" on some NFTS to highlight the flaw. A series of colourful digital portraits suddenly metamorphosed into pictures of antique carpets. But the art market has always been prone to dodgy dealing. Picking NFTS looks akin to sorting real Rembrandts from those daubed by mere followers.