LONDON (Reuters) – In October 2020, Miami-based art collector Pablo Rodriguez-Fraile spent almost $67,000 on a 10-second video artwork that he could have watched for free online. Last week, he sold it for $6.6 million.
The video by digital artist Beeple, whose real name is Mike Winkelmann, was authenticated by blockchain, which serves as a digital signature to certify who owns it and that it is the original work.
It’s a new type of digital asset – known as a non-fungible token (NFT) – that has exploded in popularity during the pandemic as enthusiasts and investors scramble to spend enormous sums of money on items that only exist online.
Blockchain technology allows the items to be publicly authenticated as one-of-a-kind, unlike traditional online objects which can be endlessly reproduced.
“You can go in the Louvre and take a picture of the Mona Lisa and you can have it there, but it doesn’t have any value because it doesn’t have the provenance or the history of the work,” said Rodriguez-Fraile, who said he first bought Beeple’s piece because of his knowledge of the U.S.-based artist’s work.
“The reality here is that this is very, very valuable because of who is behind it.”
“Non-fungible” refers to items that cannot be exchanged on a like-for-like basis, as each one is unique – in contrast to “fungible” assets like dollars, stocks or bars of gold.
Examples of NFTs range from digital artworks and sports cards to pieces of land in virtual environments or exclusive use of a cryptocurrency wallet name, akin to the scramble for domain names in the early days of the internet.