Recently, Sotheby’s, which is one of the world’s largest brokers of fine art and collectibles, decided to enter the crypto game by auctioning digital items. The decision is part of a wave of traditional players that are investing in a new – and profitable – facet of the crypto industry, which is the NFT segment.
While many still think about blockchain as synonymous with digital currencies, there are several other applications for this unique technology. In this article, you will find out the perspectives about the impact of Sotheby’s recent decision in the NFT industry. Hopefully, this will bring you a new look to the crypto market, as well as alternatives to the usual action of going to purchase Bitcoin.
Explaining NFTs – Why Are They So Unique and Scarce?
An NFT, acronym for Non-Fungible Token, is a unit of data stored on a blockchain that certifies a specific digital file to be unique. In essence, NFTs are tokens, but unlike other digital assets that are mutually interchangeable (e.g., ETH, LTC, UNI), they are not fungible.
Technically, every NFT is a unique asset in the blockchain. However, while it could be like an art piece painted by Monet or Dali, it can also be like a baseball or basketball card, where there are hundreds of numbered copies of the same piece.
There are several use cases for NFTs, which include digital art, collectibles, gaming items, music, sports, and copyrights. Surprisingly, their prices can easily surpass cryptocurrency prices by a lot.
There are two main standards used to mint NFTs on the Ethereum blockchain, which are the ERC-721 (the most used standard) and the ERC-1155, which is the only token standard that permits the creation of both fungible and non-fungible tokens.
Sotheby’s Decides to Enter the NFT Market – How Did It Happen?
In early March 2021, multi-million-dollar broker Sotheby’s announced that the company would have its first NFT auction, which included a statement from CEO Charles Stewart affirming that NFTs “are here to stay”.
Founded in 1744 in London, Sotheby’s is one of the most traditional broker companies in the world, owning other subsidiaries and partnerships such as the Sotheby’s Institute of Art, Sotheby’s International Realty, and RM Sotheby’s.
After the successful auction of unique digital artwork by the digital artist Beeple, sold at Christie’s for almost $70 million, the traditional auction company decided it was time to enter the NFT market.
The one chosen to have his digital works for sale at the world’s most famous auction business was the artist known by the pseudonym Pak, whose real identity is still unknown.
Hence, all the NFTs within “The Fungible” collection, created by Pak, were auctioned between April 12 and 14, in partnership with Nifty Gateway, an NFT trading platform that belongs to Gemini, a well-known crypto-asset exchange.
Sotheby’s vs NFT Artwork – A Daring Decision for a Successful Outcome
A month after the sale of the NFT “Everyday’s: The First 5000 Days”, created by American digital artist Beeple, which was acquired by a buyer who paid the sum of $ 69.3 million at Christie’s, the rival Sotheby’s bet for the first time on an NFT adventure.
The result of the auction of digital works by artist Pak had an immediate impact on the art scene, generating an amount that reached $ 16.8 million, which was an absolute success for Sotheby’s.
Instead of betting on rarity as the single premise for the event, Sotheby’s launched unlimited quantities of “cubes”, works of art in the form of NFTs created by Pak through the Nifty Gateway platform.
About 23,598 of these rotating cube animations were bought for a total of $ 14 million during the three-day auction event. The artist’s idea was to question the notions of value and rarity, not limiting the number of NFTs sold. According to Sotheby’s itself, about 3,080 collectors bought at least one cube.
Additionally, Pak also sold two exclusive pieces, one of which represents a single pixel, and was purchased for $ 1.36 million by digital collector Eric Young. The other NFT, an exclusive art piece displaying a geometric shape that turns on itself, was sold for 1.44 million.
Plus, the collector who bought more cubes will receive a unique additional NFT artwork, entitled “The Cube”, a bonus that is different from the other cubes displayed in the exposition.
Final Thoughts
Since 2020, the NFTs market has become the world’s most popular crypto market, especially after the increasing adoption of NFTs representing collectible sports cards and digital art pieces.
According to the website NonFungible.com, the NFT industry had an estimated $2 billion worth of digital art in the volume of negotiations only in the first quarter of 2021. Plus, in the past 20 days alone, NFTs have moved over $207 million in sales.
The astonishing numbers of sales are a sign of the NFT industry’s vitality, which generates more than $10 million in daily transactions on digital platforms such as Nifty Gateway and OpenSea marketplaces.