Bitcoin surpassed the $50,000 mark in February of this year.
Tesla, the largest maker of electric vehicles (EV) on earth, revealed earlier in the month that it had purchased US$1.5 billion worth of Bitcoin and would accept Bitcoin as a form of payment.
What’s more, the credit-card giant Mastercard also offered customers cards with the option of allowing transactions related to their cryptocurrencies.
If you are already shocked by the news above, here comes something even more “exciting”.
Non-fungible tokens, NFTs, are now one of the most frequently debated topics among investors at this moment in time.
In the US, NBA Top Shot, a Blockchain-based platform on which investors can trade officially licensed NBA video highlights, has already generated $230 million in sales.
The craziest bid was placed on a LeBron James highlight, – for those unaware, an American professional basketball player for the Los Angeles Lakers of the National Basketball Association – which sold for $200,000 – FOUR times the value of one Bitcoin.
Before discussing the magic of these digital or virtual assets, let’s figure out the features of four different types of such asset first.
Imagine drawing a quadrant with an X-axis divided into tangible and intangible, a Y-axis divided into fungible and non-fungible.
On the right side, we could expect something that can be ‘touched’, something physical, and the opposite, the left side.
On the top half all the items in one category have identical value, but on the lower half, each one has its own unique value.
Then we could put some examples into this quadrant.
For the first quadrant, something that is tangible and fungible, fiat money and gold are put here.
We can “touch” these assets and there is no difference between my one dollar bill and your one dollar bill, which means that fiat money is interchangeable.
Move on to the second quadrant to the left, something that we could not really take in our hand but each has identical value – this is Bitcoin, Ethereum and various cryptocurrencies you may have heard of.
Your lone bitcoin has exactly the same value as my lone bitcoin.
Then comes our topic today, something that is non-fungible and intangible on the lower left side, such as Crypto kitties and the NBA highlights we mentioned above.
The last part is something tangible and non-fungible, such as the artwork you might find at a Christie’s and Sotheby’s auction or in The British Museum.
Take your attention back to the non-fungible tokens again.
Why are there people willing to pay so much to buy something digital, which means that you could not touch what that you have bought?
Another major drawback, and even worse – other people could, can, and would probably, DUPLICATE your artwork online anytime!
However, just as the name of this type of asset, non-fungible, suggests, which means that each item is unique, no one can actually possess the same thing as the one you already have in your hand.
This is because of Blockchain’s ability to provide proof of authenticity, and the transaction of each unique NFT would be recorded, so people could track the records on Blockchain to find out who the REAL OWNER of that specific NFT is under a decentralized structure.
From How Pleasure Works: Why we like what we like, the author told a story about how people evaluate the value of an artwork.
When people buy a painting, a sculpture or any other type of artwork, they seek an appraiser to evaluate the value of that asset and, the most important thing – its authenticity.
If later, the buyer found out that they were in possession of a fake, the value of that asset would suddenly vanish.
The true value of the artwork, or anything that human beings pursue, may not be itself, but the perception or consciousness that our society gave to that thing.
So, although normal people or sometimes even the experts, can not distinguish the difference between the real deal and a fake at times, the UNIQUENESS is the reason why someone is willing to spend big bucks on these forms of art.
And the same concept also applies to these non-fungible tokens; thus, in my own opinion, one reason at least for the “insane” behavior described in this article.