Gambling with crypto art: $ 57,000 for a virtual Panini image

Thursday March 11th 2021

Gambling with crypto art
$ 57,000 for a Panini virtual image

By John Stanley Hunter

Panini albums, music and internet memes are currently being paid for in horrific sums – even though they only exist on the blockchain. There is a gold rush atmosphere on marketplaces with so-called non-fungible tokens. But the new crypto hype is not a niche phenomenon.

The artist Fynn Kliemann is currently experimenting with the blockchain. "It's all the Wild West right now," he tells OMR. "You have to strap on a Colt and start walking." For a few days he has been auctioning 100 music jingles as so-called non-fungible tokens (NFTs). Because one thing is certain: if you can invest in something, it is currently experiencing a boom. This applies to stocks and real estate as well as cryptocurrencies. And now the digital art market is getting caught.

Artist Banksy's burned artwork has been banned and then digitally brought back to life.

(Photo: imago images / Cover-Images)

A few days ago, a real work by the artist Banksy was burned – and revived as a digital copy. Other items for sale include Panini virtual albums, music, and Internet memes. So far it has been more of a niche topic for die-hard crypto fans, but the NFT hype has been emerging for a few weeks. Well-known investor Mark Cuban, the NBA basketball league and singer Grimes, who just sold a digital work of art for six million dollars, jumped on the trend.

"Music and NFTs will be a big topic", the German artist Kliemann is convinced. "The question is still how." He tries it via the NFT platform Rarible, where individual interested parties can purchase the rights to his new music with the crypto currency Ether and, if necessary, also sell it on. Kliemann then always receives ten percent, even when it is resold.

Trading cards, digital art and computer games

With the NFTs, something should be achieved that has not previously existed on the Internet: a real shortage of digital content. With an NFT, the makers transform virtual goods into unique and forgery-proof collector's items via the Ethereum blockchain. This gives them a value that arbitrarily reproduced content cannot have. You can also see who has the rights to the respective content. And blockchain technology prevents this information from being falsified. Any use of this content is then controlled by the owner.

Some in the crypto industry are already reminded of the ICO hype of 2017: Anyone can start a project, ascribe a value to it and hope that enough potential investors from FOMO ("Fear of missing out") bite into it. A flourishing market has already developed in three categories: collectibles, digital art and computer games.

One of the currently hotly debated examples is the fantasy football platform Sorare, which recently raised 40 million euros from prominent startup investors. Football stars like André Schürrle and Gerard Piqué have also joined the French company. The platform works like a Panini album that made it into the digital world. There is only a limited number of cards for the individual players, which increases their value enormously in some cases.

The market does not have to laboriously build up a community

The most expensive card to date, one from the Paris-St.-Germain player Mbappé, changed hands at the end of 2020 for $ 57,000. Since the cards are authenticated via the blockchain, they cannot be forged, mere screenshots have no value. The users have their own wallet through which they hold the cards. In order to be able to trade, they need a crypto wallet through which they can access the ether currency.

In the past few years, physical trading cards have seen a hype, especially with baseball and Pokemon. This is now going digital. Social media star Gary Vaynerchuk is also involved with Sorare, he can't believe his luck with the NFT trend. "This shit is getting really interesting right now," he tweeted recently. "Technology always finds a way."

Millions of people are already following him and other collectible enthusiasts, the market doesn't have to laboriously build a community – it already exists. And they are looking forward to the digitization of their hobby. According to nonfungible.com, $ 371 million has already flowed into the NFT market.

The computer game industry is also trying to get this community excited. In the blockchain-based game Axie Infinity, players can breed, raise, fight and trade digital creatures. These creatures are NFTs, the more experience they gain, the more valuable they become. A player could earn around $ 200 a week, writes Coindesk. In the Philippines, that helped people during the corona crisis; it became their main job. Recently someone in the game bought a piece of land for $ 1.5 million.

There is a gold rush atmosphere in NFT marketplaces

But NFTs go beyond the niche, and with great financial success. An artist known in the crypto industry named Beep recently sold a work of art owned by the Winklevoss brothers for $ 6.6 million on the NFT marketplace, Nifty Gateway. Beep is currently auctioning another NFT-based work through the renowned London auction house Christie's. The current highest bid is $ 3.5 million.

The best known are the so-called CryptoPunks, which have been around since 2017. There are 10,000 small pixelated works of art, some of which are sold for several hundred thousand dollars each, a handful even for a little over a million dollars. Overall, they now have a trading volume of almost $ 100 million.

For every expensive work of art, there are also thousands on the usual NFT marketplaces such as Nifty Gateway, SuperRare, Foundation and Zora who cannot find buyers. As with any other money-making hype, there are plenty of free riders. There is a gold rush atmosphere in the NFT industry, as shown by Fynn Kliemann's experiment to earn additional money in this way.

He is actually exactly the target group: It should help artists to reliably earn money with their content. It is an attempt to teach the Internet what it cannot yet, as every user has so far been able to copy all images, memes, sound snippets and videos and make them their own.

This text first appeared on Finance Forward.