There is a reason behind spending so much money on JPEGs, no matter how weird it may appear. Have a look at the picture below. What can persuade you that a picture is worth $9 million? You’re staring at an NFT, which was among the first-ever made. It’s from the CryptoPunks series, a collection of 10,000 NFTs issued in 2017, during a period when many people were still learning about bitcoin.
You’ve probably already rolling your eyes, either at the $9 million amount or at the concept of NFTs in general. Since March, when NFTs first became popular, the reaction hasn’t altered much. The general public criticizes them as wasteful and damaging to the environment. The larger the sale, the more serious the crime.
Here’s a simple fact that helps explain why NFTs cost the same as a CEO’s salary: Approximately 100,000 people are reported to have become millionaires as a result of Bitcoin. It’s no wonder that NFTs grow in popularity in March. That’s when bitcoin surpassed $60,000, a 500% increase in just six months.
If you see news or a tweet about someone spending a ridiculous amount of money on an NFT, it’s natural to be confused about how ridiculous that purchase is. It’s easy to overlook that highly expensive items are almost exclusively purchased by very wealthy people, who spend a lot of money on status symbols.
NFTs are divisive. A small number of people trust the underlying technology, while the vast majority believe it is a scam. Then there’s the perplexing inaccessibility. Even simple purchases and sales can be risky. If you transfer money to the wrong virtual wallet by mistake, it will be lost forever. And then there is the cost. Let’s say you’re keen to put your toes into the nonfungible sea, and you’re willing to risk $1,000. During a public auction, you should expect to spend somewhere around $120 and $400 on a new NFT. That is until you consider the transaction fees. The majority of NFTs are based on the inefficient Ethereum blockchain.