The Guggenheims Of NFTs
Bloomberg Businessweek|April 19, 2021
Perhaps you’ve heard of nonfungible tokens? These collectors already have millions of dollars’ worth
James Tarmy and Olga Kharif

A few months before nonfungible tokens exploded into the public consciousness, the field was already pretty big, with some 75,000 buyers in 2020, according to a report by market researcher NonFungible and L’Atelier BNP Paribas. But it was also still sleepy.

The term “NFT” is often used as a shorthand for a certain kind of blockchain-linked artwork, but it really refers to the digital certificate of authenticity to which these artworks are attached. The first ones were conceived as early as 2012, as digital coins that represented coupons, subscriptions, or company shares. An NFT can be created for anything, whether a century-old painting or a tweet, attesting to the blockchain’s guarantee that it’s the original, no matter how many free JPEG replicas you can dig up on Google Images. Half of the NFT sales made in 2020, according to the NonFungible report, were related to video games; 8% were connected to metaverses, virtual “worlds” where participants can buy land and virtual goods. Artworks made up only 5% of NFTs’ total market distribution, and most sold for under $100.

In March, though, NFT art began seizing headlines. Christie’s auctioned a collage of images by the creator known as Beeple (real name Mike Winkelmann, a graphic designer in Charleston, S.C.) to a Singapore-based crypto investor who paid $69.3 million worth of Ether, more than 10 times the record value of any other known NFT sale. Images by other artists, such as Pak, Mad Dog Jones, and Micah Johnson, started routinely selling for tens of thousands of dollars on digital marketplaces such as OpenSea and Nifty Gateway. As curiosity spiked, everything from (real) houses to Taco Bell-licensed pictures of Mexican food to LeBron James dunk highlights began to come with an NFT. Charmin released images they of course called NFTPs.

The frenzy has subsided some, with the average price of an NFT sinking since February from $4,000 to about $1,500, according to NonFungible, and the average daily sales volume of NFTs falling from $19.3 million in midMarch to $3.03 million by April. But the people who got in early— those who were lucky, true blockchain believers, or both—have still done supremely well. Collectors who bought hundreds or even thousands of NFTs are now, suddenly, multimillionaires, at least on paper (or rather, on-screen). Still others have begun selling, joining the growing ranks of the crypto rich.

Who are these people? And what are their motivations? The following are some of the biggest and most active collectors.

ONLINE ID: etyoung

ACTUAL ID: Eric Young

Young graduated from business school in 2009 and started out at Bank of America Merrill Lynch, putting in “a few years of torture” before going into fintech. “That helped me better understand the payment landscape, and how money moves around, and how the financial infrastructure works,” he says. He bought his first Bitcoin in 2015, traded “a six-figure amount” in 2017, and then started accumulating “several hundred thousand dollars’ worth at bear market lows in 2018.”

He’s continued to buy. “Bitcoin is a finished product. It’s a savings technology,” he says. “That’s why I dumped most of my wife’s and my net wealth into it—because I had a lot of conviction in it.”

Young, who lives in the Bay Area, first encountered NFTs when he saw a Guernica-inspired animation called Picasso’s Bull by the digital artist Trevor Jones. He remembers hearing about Nifty Gateway and “poking around and thinking, ‘Let me see who would be interesting to buy, let me just experience it.’ ”

Investing in digital-art NFTs, Young says, made intuitive sense. “I understand how this ascribes provenance to a piece on a public ledger, and there’s nothing else I need to understand,” he says. “Whereas when you’re investing in a cryptocurrency, you need to think about governance, who the founders are, and there’s higher risk.”

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