NFTs, These Crypto Assets That Turn the Art World Upside Down (But Not Only)

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NFT represents ownership of a business or virtual object

NFT is the digital equivalent of a title deed. As in the case of cryptocurrencies, these digital tokens are based on the blockchain*. It is therefore not tamper-proof, as the history is shared among thousands of users around the world.

But unlike cryptocurrencies, these are “non-fungible” assets. One bitcoin has the same value as another bitcoin: these two tokens can be exchanged indiscriminately. On the contrary, NFT is unique. Like painting or sculpture, it has its own identity. It can be bought or sold freely and its price depends on supply and demand. Also known as “cryptocollectibles” or “cryptogoods,” NFTs make it possible to obtain all kinds of “unique” digital objects, including virtual artwork.

One of the interests of NFTs in the art world is their ability to act as a Certificate of Authenticity, thanks to this unique and tamper-resistant digital identity. There can be no doubt that the work is ‘pseudo’. Recording its entire history in the blockchain allows for infallible traceability.

>> Read: 10 Bitcoin Alternative Cryptocurrencies to Follow in 2021

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NFTs are sold at gold prices

With NFTs, the art market takes a somewhat confusing turn: What is the point of buying a digital work, which is by definition infinitely repeatable? The answer may lie in philosophy. However, highly prized by digital art collectors, these digital assets have fueled the rise of hitherto virtually unknown crypto artists.

My picture, a work of art first 5000 days, a virtual painting by American artist Beeple, fetched $69.3 million at auction at Christie’s in March. The starting price was only $100. The sale of this jpeg propelled Beeple to the third most expensive living artist in the world, during the opening” A new chapter in art history “, According to him.

Other crypto artists have seen the price of their work soar thanks to NFTs. This is for example the case of Krista Kim, founder of the Artistic Art Movement, who digital house It sold for about $500,000. The lucky owner should receive a 3D file of this virtual house using their own NFT. Chris Torres, inventor of an internet meme that depicts a cat flying on a rainbow, has sold it nian cat At the beginning of the year for 300 ether (about 420,000 euros).

In March, Twitter co-founder Jack Dorsey sold the first message he posted on the platform on March 21, 2006. The message, ” Just set up my twitter She reported an incredible amount of $2.9 million.

But this story is perhaps the most unusual. Kevin Rose, journalist at The New York Times, he decided to sell the NFT…from an article he wrote about NFTs. The experience exceeded his imagination: when he was thinking of raising a few hundred dollars for this freely referenced “paper” on the Internet, the bids exploded. NFT was eventually sold for $560,000 to digital art collectors.

>> READ: Jon Hammon Launched His Own Art Project & Cryptocurrency

Create an NFT as a business…in a video game

Art is not the only sector that uses NFTs. The creation of an NFT seems to have only two limits: the imagination necessary to create digital objects and … the presence of buyers. In fact, this concept of title deed is embodied in the blockchain* And on the basis of cryptocurrency opens up many perspectives, especially in video games.

If it is already possible to breed, sell or buy virtual cats (via the game CryptoKitty), the game sandbox It creates a parallel universe where it is possible to have … a very tangible business. This virtual world allows players to purchase one of the 166,464 blocks (or “lands”) that make up it. They can start building a house there or something else. In 2020, the presale of 10% of these virtual lands was completed in just 5 hours, valued at approximately $450,000.

The peculiarity of the game is that internet users can also create virtual objects (or “assets”), which are then registered via NFTs on the Ethereum blockchain. They are free to resell them to other players for Ethers. Of course, these cryptocurrencies can be converted into official currency.

>> Read: Banksy: a sale of about 20 million euros for the hospital

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The world succumbs to the trend of NFT

The euphoria surrounding NFTs has finally spread to the media world. At the end of April, rapper Eminem put up a series of NFTs for sale on the platform elegant gate, corresponding to comic books, baseball cards, and an autographed vinyl record for one of his albums. American star Ellen DeGeneres has auctioned one of her selfies, which shows her in the middle of the show with a drawing of a cat: the piece fetched more than $33,000.

The sports world is also starting to browse this new trend. A few days ago, PSG announced that it was selling its first technical NFTs. about 11 lucky friend, a digital figurine made by artist Ludo. It is available in five different historic football club colours. More than half of the proceeds from the sale will go to charities.

>> Read: How to Buy Bitcoin or Cryptocurrency?

Legal and financial framework remains unclear

NFTs are purchased using cryptocurrencies on specialized exchange platforms. open sea And rare pieces They are famous, for example, for being secondary market specialists. All transactions are instantly stored there on the blockchain. Tokens can also be obtained directly from the issuers, but this type of purchase requires extreme caution. Especially since investing in NFTs is inherently risky: as with the purchase of artwork, it is best not to invest with a single perspective on value added.

In the event that taxpayers register gains, the taxes associated with these tokens remain unclear. So much so that Senator Oise Jérôme Bascher (Les Républicains) questioned the Ministry of Economy and Finance on April 15.

If the Pacte Act of 2019 makes it possible to control digital assets, then NFTs fall outside this framework. Their characteristics may bring them closer to cryptocurrencies, which are taxed as financial products, but this definition seems too simplistic. ” Therefore, the applicable taxes will consist of the absorption of ICO tokens.*. But what about utility tokens*Which used to use the service? asks the senator.

Should they be assimilated for tax purposes into artwork? ” It’s hard to include, because NFTs clearly fall into a different category than business [de l’esprit telles que définies par la loi]. But it is also difficult to exclude them, because the law is evolving and the definition of work remains very subjective Refers to Jerome Basher. If the market continues to rise, the debate will need to be settled quickly.

About the author
Caroline Courvoisier worked for 10 years in the financing and management of major real estate projects before dedicating herself to economic and financial journalism. I pursued an undergraduate course in economics and earned a master’s degree in wealth management, a course I completed with specialized financial training at NYU (real estate finance) and INSEAD (specializing in “Blockchain Revolution in Financial Services”).
LinkedIn Caroline Courvoisier

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Better understanding of the article

Words marked with * or underlined in the article are defined here.

Blockchain is a technology for storing and transmitting information that operates without a central controlling body. It is a shared database that contains the history of all the transactions that have taken place between its users since its inception. It is considered secure because its widespread participation makes it tamper-proof.

Crypto assets:
“Crypto assets” are virtual assets, accessible only from the Internet platform. These include, for example, cryptocurrencies such as Bitcoin. They do not currently have any legal presence in France, although they are used to speculating.

Cryptocurrency is a virtual currency. Currently the most popular is Bitcoin. It is not issued by a central bank and has no cash correspondence. Cryptocurrencies can only be exchanged using the blockchain protocol. There is currently no legal tender.

ICO (Initial Coin Offering):
An ICO (Initial Coin Offering) is a fundraiser that works on the principle of issuing digital assets (tokens) that can only be exchanged for cryptocurrencies.

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