You may have noticed the price of Bitcoin has gone up since the 2024 U.S. election – well over US$100,000 as we go to press. Oil is up, too, as are gold, real estate and just about every asset class you can get your hands on. The rich get richer.
Yes, even NFTs are back on the upswing. Some of them, anyway; as we go to press, five of the top six Non-Fungible Tokens at CoinGecko have seen their floor price go up the past 30 days:
- CryptoPunks: +0.3%
- Pudgy Penguins: +13.5
- Infinex Patrons: +7.5
- Bored Ape Yacht Club: –14.4
- Autoglyphs: +20.6
- Mad Lads: +11.9
Ah, those poor depraved apes. They’re the laughing stock of the industry, down from 146 ETH in April 2022 (about US$425,000 without inflation) to 14.85 ETH ($48,000) at press time. But they’re not alone; pretty much every NFT that shot up during the pandemic got pumped and dumped. Some are just doing a better job of rebounding than others.
We’ll save the larger debate over asset prices and investing in NFTs for another day. But if you were sharp enough to see how useful these things actually are while everyone else was pointing and laughing, well done. Here’s a closer look at what makes NFTs tick, and why you might be hearing a lot more about them in the crypto news going forward.
What Are Non-Fungible Tokens?
First off, a “token” is any object that represents the owner’s rights over some other object – or to have some action performed for them. In the world of computing, there are session tokens that identify and keep track of internet activity, access tokens that contain security credentials, and so on. “Non-Fungible” means this token cannot be changed in any meaningful way.
Put those two terms together, and you get the name for a class of digital identifiers used to certify ownership over the things their tokens represent. With those Bored Apes, the thing in question is the drawing itself. Andy Warhol had 32 soup cans; we have 10,000 Bored Apes – like No. 8817, a very sad fellow with a propellor beanie and a silver earring.
In theory, being able to prove you owned Ape No. 8817 was enough of a use case to make it a viable store of value. That, plus the rarity of the particular traits No. 8817 had compared to the others, is partly why it sold for the equivalent of US$3.4 million at Sotheby’s back in 2021; the purchaser, Brandon Buchanan, told Hypebeast that he also wanted to build a community and a brand around his ape.
Today, as I write this, the highest offer on OpenSea for Ape No. 8817 is a shade under that $48,000 floor price for the Yacht Club. Don’t worry too much about Buchanan – he flipped that NFT a while back, and it’s changed hands multiple times since. Now you can buy it for less than the average price of a new car in the U.S.
What Good Are NFTs?
Okay, maybe owning one of 10,000 digital apes isn’t the best use case for NFTs. But if we look beyond scarcity and speculation, and beyond the pumping and dumping, NFTs have significantly expanded the powers of digital ownership.
Moving past the digital art world, NFTs can be used to authenticate and verify your purchase of just about anything. Real estate is one of the hottest markets for NFT use, allowing properties to be flipped more quickly with less capital; for something a bit more mundane, the NBA’s All-Star VIP Pass is an NFT that acts as a ticket for all that league’s All-Star Games up to 2027.
As with just about everything in the crypto space, what really matters with NFTs is what you’re using them for. Verifying your ownership of an asset is one thing; what you can actually do with that asset is quite another. Invest accordingly.
