Connect with us

Business

Why NFTs are suddenly selling for millions of dollars – The Hustle

Published

 on


Jesse Schwarz could’ve bought a Lamborghini. He could’ve placed a winning bid on Jimi Hendrix’s guitar. He could’ve paid off a mortgage.

But instead, on a recent Monday morning, the 32-year-old entrepreneur logged onto a platform called NBA Top Shot and, with a few friends, spent $208k on a video clip of LeBron James dunking.

Schwarz doesn’t get the broadcast rights to the clip, or even a physical copy of it: He owns a few lines of code that prove he’s the owner of a unique digital asset.

“My family thought I was crazy,” he tells The Hustle. “But I’ve never been the kind of person who invests in traditional things.”

His purchase is one of several bafflingly expensive digital collectibles sold in recent weeks, including: 

These assets, called non-fungible tokens (NFTs), have courted an explosion in interest that we haven’t seen since — well, GameStop.

Zachary Crockett / The Hustle

NFTs have caught the attention of tech investors (Mark Cuban), the high-brow art world (Christie’s auction house), and major corporations (Nike) alike. And everyone from Lindsey Lohan to the rock band Kings of Leon is flooding the market with high-priced virtual creations of their own.

But what exactly is an NFT? What makes them so valuable? And what might the future hold for these digital assets?

Non-fungible tokens (NFTs), defined

Let’s start by breaking down the 2 key words here:

  1. A non-fungible asset is something unique that isn’t readily interchangeable. Think of a rare sports card, an antique car, or a piece of land. This differs from a fungible asset like cash (a $5 bill is always worth $5, no matter who owns it, or what condition it’s in).
  2. A token is a type of virtual currency that lives on a blockchain and represents a specific asset, like a piece of digital artwork.

So, in simple terms, an NFT is a documentation of ownership of a one-of-a-kind digital asset.

Zachary Crockett / The Hustle

An NFT can represent any kind of digital asset: a piece of artwork, an audio file, a video clip, a plot of virtual land.

The NFT isn’t actually the piece of artwork itself; it’s a piece of code on a digital ledger (blockchain) that points to where the artwork lives — usually on a server somewhere else.

Still confused?

Picture a Hot Wheels car.

In the physical world, you go out and buy a Hot Wheels collectible at a store, or an online marketplace like eBay. You pay cash — more for a rare one, less for a common one — and in return, you receive a tangible object made of metal and plastic.

Here’s what that (simplified) process would look like in NFT form:

Zachary Crockett / The Hustle

Why go through all this trouble to create some digital asset when you could just buy a real Hot Wheels car? What’s the value-add here?

Physical collectibles face a few challenges:

  • It can be hard and/or time-consuming to verify authenticity: An original can be faked, forged, or replicated.
  • It can be hard to trace an object’s ownership history: There’s often no public record of a collectible’s lifetime journey.

Historically, the legitimacy of digital assets has been even trickier to validate since the internet is amok with copies of copies of copies.

NFT evangelists say that blockchain technology solves these issues.

By publishing a work on the blockchain, the artist is creating an immutable, verifiable public record of its authenticity.

Take CryptoPunks, one of the first NFTs, created back in 2017.

Only 10k CryptoPunks were minted — each one a simple character with a set of unique traits. For any given punk, you can view a full transaction history of bids, offers, sales, and ownership records. 

We can see that the most coveted punk, #6965, originally sold for $1.1k and switched hands a few times over the years before fetching the princely sum of 800 ETH a few weeks ago (~$1.5m at the time).

Cheers to whoever bought this thing in 2018 for $3k and sold it 2.5 years later for a 511x return. Note: the price reflects how much Ethereum was worth at the time of purchase. (Zachary Crockett / The Hustle)

That someone shelled out $1.5m for a piece of code designating them the owner of a pixelated ape wearing a fedora seems to defy any semblance of rational market behavior.

After all, the image above can easily be captured with a screenshot, downloaded, or recreated by any Redditor with access to Microsoft Paint.

So what makes this thing — or any NFT, for that matter — valuable?

Why NFTs are booming

It may seem like NFTs came out of nowhere, but they’re an innovation that has been in the works for several years:

  • 2017: NFTs first garnered widespread public attention with CryptoKitties, a game in which users breed and trade digital cats.
  • 2018: A mini hype cycle led to VC-led investments, and platforms were created to buy, sell, and mint NFTs (like SuperRare, OpenSea, Rarible, and Nifty Gateway).
  • 2019: Big brands like Formula 1 and Nike entered the space.
  • 2020: The market for NFTs tripled in size, to $250m+.

But in the first few months of 2021, we’ve seen an NFT explosion.

In February alone, the 10 most popular NFT collectibles saw a 400% average MoM rise, totaling nearly $400m in sales volume.

Zachary Crockett / The Hustle

This can largely be attributed to one platform: Dapper Labs’ NBA Top Shot, which launched in October of 2020 with the basketball league’s backing.

On Top Shot, users can purchase digital packs that contain NFTs called “moments” — short video clips of NBA highlights, like a memorable dunk or steal. Like physical trading cards, some moments are common (1k+ copies) and some are extremely rare (1 of 1).

Caty Tedman, the head of partnerships and marketing for Dapper Labs, tells The Hustle that the platform now has 511k registered users and $301m+ in sales only 5 months into operation.

Experts The Hustle spoke with say the rapid rise of NFTs like Top Shot is a perfect storm of a few larger trends:

  1. COVID-19 has made us more plugged into virtual spaces: More people working from home = more time interacting in virtual spaces = more openness to the value of virtual goods and services.
  2. A boom in cryptocurrency (and a larger acceptance of the ethos of decentralization) has generated interest in other digital assets.
  3. Major institutions (like Christie’s auction house) have lent NFTs credibility and prestige by jumping aboard.
  4. Non-fungible goods often thrive during times of economic turmoil: Rare coins, for instance, saw price spikes during the Great Depression, the stock market collapse of 1987, and the 2008 recession.

“People are realizing, ‘Wow, I can do all these things — meetings, happy hours, whatever — virtually,’” says Hrish Lotlikar, CEO of an AR-based metaverse called SuperWorld. “That gives way to, ‘Wow, I can buy assets virtually too. I don’t need physical money.’”

On SuperWorld, you can buy NFTs in the form of virtual real estate. East 66th St. in NYC could be yours for just 500 ETH, or ~$822k! (via SuperWorld)

SuperWorld is part of another burgeoning space in the NFT world: virtual real estate

On the platform, Earth is split up into 64B parcels of land — each an NFT with a set of unique coordinates — which can be bought by users and monetized with virtual ads.

Similar worlds, like Decentraland, have seen massive growth in recent years. At launch in 2017, parcels would go for $100 a pop; today, they can fetch up to $80k. Last month, an anonymous buyer shelled out $1.5m for a 9-block virtual estate on the gaming platform Axie Infinity

“Buying land today in virtual worlds feels a lot like buying land in Manhattan back in 1750,” writes Janine Yorio, head of real estate at the online investment platform Republic. “It is also insulated from the COVID-induced volatility of the real-world real estate industry.”

But the question of “value” remains.

Objectively, a video clip of LeBron James dunking isn’t worth $208k. A cartoon cat isn’t worth $100k+. A selfie of Lindsey Lohan isn’t worth $59k.

Of course, the same can be said of any physical collectible.

An original 1960s Hot Wheels car is made up of a few pennies’ worth of metal and plastic, but it might sell for upwards of $50k on the market. A painting — some wood and pigmented oil — can fetch millions.

Zachary Crockett / The Hustle

Like most things in the world, the value of an NFT comes from extrinsic, not intrinsic, factors, including:

  1. Authenticity: Physical collectibles have all kinds of authentication mechanisms, and none are particularly efficient (even acclaimed art appraisers have been duped by forgeries). By contrast, the originality of an NFT is cemented on the blockchain. 
  2. Scarcity: Many NFTs are one-of-a-kind or limited. For instance, only 10k CryptoPunks were released. Of those, only 24 are “apes.” And among the apes, just 1 dons a fedora.
  3. Transferability: It can be resold to nearly anyone around the world, meaning it has a broader pool of potential buyers.
  4. Immutability: The code and metadata of the NFT can’t be changed, lending it permanence.
  5. Utility: Some NFTs can serve functional purposes, generate revenue, or be exchanged for physical assets.

Many NFT collectors see a future for the tokens in increased “real world” integration.

With Top Shot, for instance, we may see NBA players offering court-side seats and meet-and-greets in exchange for certain moments.

Inside of the virtual world Decentraland, Decentral Games is building a virtual casino where people can play poker tournaments. Buying (and wearing) certain NFT clothing items — say a digital $1k jacket — will get you a seat at certain high-roller tables. 

But ultimately, an NFT is only worth what someone else will pay for it.

And that makes the future a bit uncertain

In the wake of several high-profile NFT sales from well-established artists, a glut of lesser-known artworks have flooded the market.

Some critics have raised doubts that NFTs are just a fad driven by hype, similar to 2017’s initial coin offering (ICO) bubble. Others have stated that the massive influx of buyers and sellers will eventually taper off, and only truly rare, desirable NFTs will retain value.

Schwarz with his LeBron James NBA Top Shot moment (Jesse Schwarz for The Hustle)

Schwarz — the Trends member who dropped $208k on the LeBron James video — remains optimistic.

“A lot of people tell me, ‘I can watch the same clip on YouTube for free,’” he says. “Anyone can watch it. But there’s only one original verified by the blockchain, and that scarcity is what makes it valuable in the long-term.”

His NFT is one of only 49 moments from Top Shot’s co-called “Cosmic” set, and it’s the only LeBron James clip in the series.

“It set a record for the most expensive sports NFT, but in my opinion it was the best value buy on the whole market,” he adds.

“It’s my Mona Lisa.”

Let’s block ads! (Why?)



Source link

Continue Reading

Business

CANADA STOCKS – TSX falls 0.14% to 19,201.28

Published

 on

* The Toronto Stock Exchange’s TSX falls 0.14 percent to 19,201.28

* Leading the index were Stantec Inc <STN.TO​>, up 3.4%, Imperial Oil Ltd​, up 3.3%, and Corus Entertainment Inc​, higher by 2.9%.

* Lagging shares were Aphria Inc​​, down 14.2%, Village Farms International Inc​, down 9.9%, and Aurora Cannabis Inc​, lower by 9.4%.

* On the TSX 91 issues rose and 134 fell as a 0.7-to-1 ratio favored decliners. There were 24 new highs and no new lows, with total volume of 228.0 million shares.

* The most heavily traded shares by volume were Toronto-dominion Bank, Royal Bank Of Canada and Suncor Energy Inc.

* The TSX’s energy group fell 0.32 points, or 0.3%, while the financials sector climbed 2.46 points, or 0.7%.

* West Texas Intermediate crude futures rose 0.52%, or $0.31, to $59.63 a barrel. Brent crude  rose 0.4%, or $0.25, to $63.2 [O/R]

* The TSX is up 10.1% for the year.

Continue Reading

Business

Air Canada signs C$5.9 billion government aid package, agrees to buy Airbus, Boeing jets

Published

 on

By David Ljunggren and Allison Lampert

OTTAWA/MONTREAL (Reuters) -Air Canada, struggling with a collapse in traffic due to the COVID-19 pandemic, reached a deal on Monday on a long-awaited aid package with the federal government that would allow it to access up to C$5.9 billion ($4.69 billion) in funds.

The agreement – the largest individual coronavirus-related loan that Ottawa has arranged with a company – was announced after the airline industry criticized Prime Minister Justin Trudeau’s Liberal government for dawdling. The United States and France acted much more quickly to help major carriers.

Canada‘s largest carrier, which last year cut over half its workforce, or 20,000 jobs, and other airlines have been negotiating with the government for months on a coronavirus aid package.

In February, Air Canada reported a net loss for 2020 of C$4.65 billion, compared with a 2019 profit of C$1.48 billion.

As part of the deal, Air Canada agreed to ban share buybacks and dividends, cap annual compensation for senior executives at C$1 million a year and preserve jobs at the current level, which is 14,859.

It will also proceed with planned purchases of 33 Airbus SE 220 airliners and 40 Boeing Co 737 MAX airliners.

Chris Murray, managing director, equity research at ATB Capital Markets, said the deal took into account the “specific needs of Air Canada in the short and medium term without being overly onerous.”

He added: “It gives them some flexibility in drawing down additional liquidity as needed.”

Transport Minister Omar Alghabra said the government was still in negotiations with other airlines about possible aid.

Canada, the world’s second-largest nation by area, depends heavily on civil aviation to keep remote communities connected.

Opposition politicians fretted that further delays in announcing aid could result in permanent damage to the country.

Air Canada said it would resume services on nearly all of the routes it had suspended because of COVID-19.

‘SIGNIFICANT LAYER OF INSURANCE’

The deal removes a potential political challenge for the Liberals, who insiders say are set to trigger an election later this year.

The government has agreed to buy C$500 million worth of shares in the airline, at C$23.1793 each, or a 14.2% discount to Monday’s close, a roughly 6% stake.

“Maintaining a competitive airline sector and good jobs is crucially important,” Finance Minister Chrystia Freeland told reporters, adding the equity stake would allow taxpayers to benefit when the airline’s fortunes recovered.

The Canadian government previously approved similar loans for four other companies worth up to C$1.billion, including up to C$375 million to low-cost airline Sunwing Vacations Inc. The government has paid out C$73.47 billion under its wage subsidy program and C$46.11 billion in loans to hard-hit small businesses.

Michael Rousseau, Air Canada‘s president and chief executive officer, said the liquidity “provides a significant layer of insurance for Air Canada.”

Jerry Dias, head of the Unifor private-sector union, described the announcement as “a good deal for everybody.”

Unifor represents more than 16,000 members working in the air transportation sector.

But the Canadian Union of Public Employees, which represents roughly 10,000 Air Canada flight attendants, said the package protected the jobs of current workers rather than the 7,500 members of its union who had been let go by the carrier.

($1=1.2567 Canadian dollars)

(Reporting by David Ljunggren in Ottawa and Allison Lampert in Montreal; Additional reporting by Julie Gordon in Ottawa and Munsif Vengattil in Bengaluru; Editing by Dan Grebler and Peter Cooney)

Continue Reading

Business

U.K. advises limiting AstraZeneca in under-30s amid clot worry

Published

 on

LONDON —
British authorities recommended Wednesday that the AstraZeneca COVID-19 vaccine not be given to adults under 30 where possible because of strengthening evidence that the shot may be linked to rare blood clots.

The recommendation came as regulators both in the United Kingdom and the European Union emphasized that the benefits of receiving the vaccine continue to outweigh the risks for most people — even though the European Medicines Agency said it had found a “possible link” between the shot and the rare clots. British authorities recommended that people under 30 be offered alternatives to AstraZeneca. But the EMA advised no such age restrictions, leaving it up to its member-countries to decide whether to limit its use.

Several countries have already imposed limits on who can receive the vaccine, and any restrictions are closely watched since the vaccine, which is cheaper and easier to store than many others, is critical to global immunization campaigns and is a pillar of the UN-backed program known as COVAX that aims to get vaccines to some of the world’s poorest countries.

“This is a course correction, there’s no question about that,” Jonathan Van-Tam, England’s deputy chief medical officer, said during a press briefing. “But it is, in a sense, in medicine quite normal for physicians to alter their preferences for how patients are treated over time.”

Van-Tam said the effect on Britain’s vaccination timetable — one of the speediest in the world — should be “zero or negligible,” assuming the National Health Service receives expected deliveries of other vaccines, including those produced by Pfizer and Moderna.

EU and U.K. regulators held simultaneous press conferences Wednesday afternoon to announce the results of investigations into reports of blood clots that sparked concern about the rollout of the AstraZeneca vaccine.

The EU agency described the clots as “very rare” side effects. Dr Sabine Straus, chair of EMA’s Safety Committee, said the best data is coming from Germany where there is one report of the rare clots for every 100,000 doses given, although she noted far fewer reports in the U.K. Still, that’s less than the clot risk that healthy women face from birth control pills, noted another expert, Dr. Peter Arlett.

The agency said most of the cases reported have occurred in women under 60 within two weeks of vaccination — but based on the currently available evidence, it was not able to identify specific risk factors. Experts reviewed several dozen cases that came mainly from Europe and the U.K., where around 25 million people have received the AstraZeneca vaccine.

“The reported cases of unusual blood clotting following vaccination with the AstraZeneca vaccine should be listed as possible side effects of the vaccine,” said Emer Cooke, the agency’s executive director. “The risk of mortality from COVID is much greater than the risk of mortality from these side effects.”

Arlett said there is no information suggesting an increased risk from the other major COVID-19 vaccines.

The EMA’s investigation focused on unusual types of blood clots that are occurring along with low blood platelets. One rare clot type appears in multiple blood vessels and the other in veins that drain blood from the brain.

While the benefits of the vaccine still outweigh the risks, that assessment is “more finely balanced” among younger people who are less likely to become seriously ill with COVID-19, the U.K’s Van-Tam said.

“We are not advising a stop to any vaccination for any individual in any age group,” said Wei Shen Lim, who chairs Britain’s Joint Committee on Vaccination and Immunization. “We are advising a preference for one vaccine over another vaccine for a particular age group, really out of the utmost caution rather than because we have any serious safety concerns.”

In March, more than a dozen countries, mostly in Europe, suspended their use of AstraZeneca over the blood clot issue. Most restarted — some with age restrictions — after the EMA said countries should continue using the potentially life-saving vaccine.

Britain, which relies heavily on AstraZeneca, however, continued to use it.

The suspensions were seen as particularly damaging for AstraZeneca because they came after repeated missteps in how the company reported data on the vaccine’s effectiveness and concerns over how well its shot worked in older people. That has led to frequently changing advice in some countries on who can take the vaccine, raising worries that AstraZeneca’s credibility could be permanently damaged, spurring more vaccine hesitancy and prolonging the pandemic.

Dr. Peter English, who formerly chaired the British Medical Association’s Public Health Medicine Committee, said the back-and-forth over the AstraZeneca vaccine globally could have serious consequences.

“We can’t afford not to use this vaccine if we are going to end the pandemic,” he said.

In some countries, authorities have already noted hesitance toward the AstraZeneca shot.

“People come and they are reluctant to take the AstraZeneca vaccine, they ask us if we also use anything else,” said Florentina Nastase, a doctor and co-ordinator at a vaccination centre in Bucharest, Romania. “There were cases in which people (scheduled for the AstraZeneca) didn’t show up, there were cases when people came to the centre and saw that we use only AstraZeneca and refused (to be inoculated).”

Meanwhile, the governor of Italy’s northern Veneto region had said earlier Wednesday that any decision to change the guidance on AstraZeneca would cause major disruptions to immunizations — at a time when Europe is already struggling to ramp them up — and could create more confusion about the shot.

“If they do like Germany, and allow Astra Zeneca only to people over 65, that would be absurd. Before it was only for people under 55. Put yourself in the place of citizens, it is hard to understand anything,” Luca Zaia told reporters.

The latest suspension of AstraZeneca came in Spain’s Castilla y Leon region, where health chief Veronica Casado said Wednesday that “the principle of prudence” drove her to put a temporary hold on the vaccine that she still backed as being both effective and necessary.

French health authorities had said they, too, were awaiting EMA’s conclusions, as were some officials in Asia.

On Wednesday, South Korea said it would temporarily suspend the use of AstraZeneca’s vaccine in people 60 and younger. In that age group, the country is only currently vaccinating health workers and people in long-term care settings.

The Korea Disease Control and Prevention Agency said it would also pause a vaccine rollout to school nurses and teachers that was to begin on Thursday, while awaiting the outcome of the EMA’s review.

But some experts urged perspective. Prof Anthony Harnden, the deputy chair of Britain’s vaccination committee, said that the program has saved at least 6,000 lives in the first three months and will help pave the way back to normal life.

“What is clear it that for the vast majority of people the benefits of the Oxford AZ vaccine far outweigh any extremely small risk,” he said. “And the Oxford AZ vaccine will continue to save many from suffering the devastating effects that can result from a COVID infection.”

Source: – CTV News

Source link

Continue Reading

Trending