But in 2021, NFTs broke out of their niche to become one of the hottest tech trends (and buzzwords) of the year. On November 24, Collins Dictionary named NFT its “Word of the Year”.
At its simplest, an NFT is a type of unique digital certificate, registered on a blockchain (digital ledger), that can be used to record ownership of any asset, whether digital or physical. The reason why NFTs are so hot is that they allow, for the first time ever, provable ownership over digital goods.
While they are currently used mainly for representing digital collectibles such as CryptoKitties, NBA Top Shot and Sorare, NFTs can in theory be tagged to any asset that needs to be differentiated from another in order to prove its scarcity, and by extension its value. NFTs can represent everything from plots of land – whether virtual or real – to artworks and tickets. The possibilities are quite literally endless.
For now, though, NFTs are for the most part used to certify ownership of digital art and collectibles. They first caught the world’s attention in March, when the auction house Christie’s sold an NFT-backed artwork by Mike Winkelmann — the digital artist known as Beeple — for an eye-watering $69 million.
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Since that record-shattering sale, Christie’s has sold more than 100 NFT-backed artworks. In December, the 255-year old auction house said it sold NFTs worth $150 million in 2021, according to a Bloomberg report. It said the new format helped it record $7.1 billion in total NFT sales this year, its highest in five years.
The auction house was also behind four of the five most expensive NFTs sold in 2021.
Here they are:
1. Everydays: The First 5,000 Days
Sold for: $69 million
Winklemann’s collage of daily images dating back to 2007 remains the most expensive NFT ever sold. Auctioned on March 11, it was bought by a Singapore-based cryptocurrency investor of Indian origin, who paid for it with the cryptocurrency Ether (ETH). In doing so, he made ‘Everydays’ the third most expensive artwork by a living artist.
2. Human One
Sold for: $28.9 million
Winklemann is also the artist behind the second most expensive NFT ever sold – again, by Christie’s. In November, the auction house sold Human One, a hybrid physical and digital artwork, for almost $29 million. Described as a “kinetic video sculpture”, Human One comprises four video screens on polished aluminium metal, a mahogany wood frame, and dual media servers.
3. CryptoPunk #7523
Sold for: $11.75 million
The third, fourth and fifth most expensive NFT artworks sold this year were all from a single collection called CryptoPunks. These are uniquely generated pixel art characters on Ethereum’s blockchain, created by a pair of developers in Canada in June 2017. A total of 10,000 CryptoPunks were created or algorithmically generated with code. At first they were free for anyone to acquire with an Ether wallet, but in 2021 have become part of a thriving resale market.
CryptoPunk #7523, the most expensive of these, was sold at a Sotheby’s auction in June for $11.75 million. The reason it fetched such a high price is that it belongs to the highly sought-after alien variety of CryptoPunks and features teal-colored skin, a surgical cap, and a mask. There are only nine alien CryptoPunks available out of a total of 10,000 CryptoPunks, making them a rare collector’s item. The buyer said after winning the auction: “I thought it was symbolic of COVID and the popularisation of NFTs.” Is there anything more 2021 than that?
4. CryptoPunk #3100
Sold for: $7.67 million
Maskless and hatless, CryptoPunk #3100 bagged a multi-million-dollar price tag thanks to its blue and white headband. It was auctioned by Christie’s for $7.67 million on March 11 – the same day that Beeple’s collage sold for $69 million.
5. CryptoPunk #7804
Sold for: $7.57 million
Another CryptoPunk that was sold on March 11 makes it into the top 5 NFTs of the year. Featuring an alien smoking a pipe in a cap and sunglasses, CryptoPunk #7804 was snapped up for 4,200 ETH, or a shade over $7.5 million. According to CryptoSlam, an NFT data aggregation site, CryptoPunk #7804 was first bought in January 2018 for just 12 ETH.