Millenials and even Gen Zs – or ‘zoomers’, the first generation to have grown up with access to the online world from a young age (those born between 1997 and 2012) – are starting to invest in digital art stored on the blockchain through the financial vehicle known as non-fungible tokens (NFTs).
It’s the latest craze to hit the cryptocurrency world and though many wrote it off as a passing fad, it appears to be anything but.
Some 12- and 13-year-olds have become overnight millionaires by creating digital art pieces and selling them on online marketplaces such as Rarible, OpenSea and SuperRare.
These millenials and Gen Zs are trading in CryptoKitties, CryptoPunks and Bored Ape NFTs. The digital artworks may have weird and funny-sounding names, but they’ve been selling at ridiculously high prices.
Billions for a computer-generated image
Last October American digital artist Beeple (real name Mike Winkelmann) sold an NFT of a collage, which he created using 5 000 digital images, for $69 million (more than R1 billion).
That didn’t hold the title of ‘most expensive NFT sold to date’ for long – in December, NFT artist Pak (formerly known as Murat Pak; actual identity unknown) sold an artwork known as The Merge for $91.8 million (more than R1.4 billion).
What is even more astounding is that the latter, a single art piece, was fractionalised and distributed among 28 983 different traders who received 312 686 individual pieces of the NFT.
This kind of fractionalisation of artwork is unheard of in the conventional art world and is only possible now due to blockchain technology.
At the age of 12, Nyala Hayes has already become a multi-millionaire by making digital art and selling it online. She’s made over $5.7 million (close to R89 million) in Ethereum from producing NFTs and selling them online.
The idea for her NFTs came from her love of brontosaurus dinosaurs. She thought of combining the long neck of the brontosaurus with images of women. Her NFTs titled ‘Long Neckies’ represent diversity; she says they are meant to make people feel comfortable in their skin and young girls feel powerful within themselves.
Benyamin Ahmed, a 12-year-old from London, has earned nearly £290 000 (R6 million) selling his Weird Whales NFTs. The inspiration came from a popular pixelated whale meme. Ahmed is storing all of his earnings in his Ethereum digital wallet.
What exactly are NFTs?
NFTs are a type of digital asset used to represent common everyday objects like in-game items, music, art and videos. They are bought and sold on online marketplaces using cryptocurrencies.
An NFT is created or ‘minted’ from a digital asset representing both a physical and non-physical item, including art, collectibles, music, videos, sporting highlights, in-game skins, virtual avatars, and GIFs.
Instead of having a physical art piece or painting hanging on their wall, the buyer of an NFT will receive a digital file of the artwork.
An NFT is like a physical collectible item, the only difference is that it is encoded onto a digital blockchain. The owner of an NFT gets sole rights to the digital asset, which makes each NFT unique and rare.
NFTs are gaining momentum and popularity since they’ve become an easy way to trade digital art. In 2021, the NFT market was valued at $41 billion, an incredible achievement considering the concept was launched just four years
How to get into NFTs as an investor
You don’t need to be an artist or a meme creator to get into the NFT digital art scene – all you require is a digital wallet and some cryptocurrency like Ethereum or Solana.
Cryptocurrencies can be purchased from a cryptocurrency trading platform like Binance, Coinbase, Kraken, and Luno. You can buy and sell NFTs on the open NFT markets like OpenSea, Rarible, and SuperRare.
A few other NFT marketplaces accept other cryptocurrencies, but Ethereum and Solana are among the best-known ones.
You must be prepared to pay some hefty ‘gas’ fees, priced in Ether, to trade NFTs on the Ethereum blockchain. Gas fees are the transaction fees you will have to pay for creating your NFT on the Ethereum Blockchain.
How do I find the best NFTs to buy?
With all the hype surrounding them, finding the right NFT to buy can be a little intimidating at first. It is always good advice to do your research before jumping head-first into buying your first NFT.
The online site rarity.tools contains a collection of all the NFTs currently available on all the NFT marketplaces.
The NFTs are sorted by ‘Highest floor price’ and ‘Rarity ranking’. If you know the name of an NFT collection, you can search for it by name, and you will get a list of all NFTs within that collection, along with their price, volume, and rarity ranking.
When you’ve found an NFT on rarity.tools, clicking the NFT will give you details of where you can buy it.
Listen to Ciaran Ryan’s interview with Chris Becker, blockchain lead at Investec:
Yattish Ramhorry is a digital strategist and chief technology officer at tutti.Ai a fintech company based in Joburg.