The emerging market for these items reflects a remarkable, tech-savvy move by digital content developers to financially connect with their audiences and eliminate middlemen.
Some NFT buyers are collectors and fans showing off what they bought on social media or on screens in their homes. Others are trying to make money quickly as cryptocurrency prices go up. Many see it as a form of entertainment that combines gambling, sports card collecting, investing and day trading.
The staggering NFT sales prices have created some of the same confusion and ridicule that has long plagued the cryptocurrency world, which has struggled to make good use of its technology beyond forex trading. And there is uncertainty about the stability of values, as many transactions use cryptocurrencies, the value of which has fluctuated significantly over the past two years.
“A lot of people are cynical about things like this,” said Marc Andreessen, venture capital investor at Andreessen Horowitz, in a discussion on the social media app Clubhouse earlier this month. But people don’t buy things like sneakers, art, or baseball cards for the value of their materials, explained he and partner Ben Horowitz. You buy them for their aesthetics and their design.
“A pair of sneakers worth $ 200 is about $ 5 in plastic,” Andreessen said.
“You’re buying a feeling,” added Mr. Horowitz.
The market for NFTs began to pick up last year. According to Nonfungible.com, which tracks the market, more than 222,000 people quadrupled in sales worth $ 250 million in 2019. With day trading rising alongside the stock market during the pandemic, investors have been looking for riskier and more esoteric places to make money Sneakers and streetwear to wine and art.