How did the $ 40 billion market become immutable arguments?

By early 2021, only a handful of crypto enthusiasts knew what an immutable NFT token was.
But by the end of the year, nearly $ 41 billion had been spent on these tokens, according to the latest data, making the art market and digital collections almost equal in value to the global art market.
“This year has seen the non-interchangeable token market explode from less than $ 1 billion in an industry to tens of billions of dollars,” said Mason Nystrom, research analyst at crypto data group Messari, adding that buyers were quick to look for works of art that matched their “identities”.
Interchangeable marks are essentially digital certificates of ownership registered in the blockchain system – that is, they are a fixed limitation that cannot be changed or confused.
These tokens are usually created or created using intelligent contracts – self-created contracts written in blockchain code – and can also be traded on a secondary market for cryptocurrencies.
The obsession with irreplaceable tokens emerged in March, when a collage (a panel of newspaper clippings, advertisements, etc.) by Biebel sold for $ 69.3 million at Christie’s, the first auction house. The artist, whose name is Mike Winkelman, reacted to the news with a post on Twitter where he said: “Oh, my God”.
Although these irreplaceable symbols first appeared in the art world, other figures from sports and music companies – even former United States First Lady Melania Trump – have also embraced the idea of ​​taking advantage of the noise around them to find new ones. ways to interact with fans.
The NBA has created its own market of non-interchangeable tokens for buying, selling and trading premium videos of players called the NBA Top Shot.
Other signs included numbered sets of non-exchangeable arguments that went viral, including Crypto Banks and Board Api Yacht Clubs, which signaled their owners’s club affiliation to be used as avatars on social media accounts.
“Its core value remains in its exclusive nature,” Nystrom said, noting that expensive sets of immutable signs also allow shoppers to access private channels on the Discord chat platform, meet and organize parties.
He added: “The place is like a village club: there is a big barrier to entry – the price paid as capital – and when you pay the price, you will find yourself surrounded by high net worth people and other personalities.”
In the year to December 15, a total of $ 40.9 billion was poured into blockchain contracts for the Ethereum platform commonly used to create immutable token, according to statistics from Chainalysis, an analytics group in the crypto industry. But the total investment would be even higher if the value of non-interchangeable tokens created in other blocks, such as the Solana platform, were taken into account.
In contrast, the global art market was worth $ 50.1 billion last year, according to figures from UBS and Art Basel.
Chainalysis has found that non-exchangeable tokens have attracted a large number of retail investors to the crypto world, with small acquisitions of less than $ 10,000 representing more than 75 percent of the market.
But it is similar to the cryptocurrency market, where it is still dominated by some big players, or “whales”. According to Chainalysis, between the end of February and November, there were 360,000 fixed land holders holding 2.7 million fixed lands. Of these, 9 percent – or 32,400 e-portfolio holders – own 80 percent of the market value.
Stephen Dell, a software engineer who is skeptical of the cryptocurrency industry, said many whales “hold hundreds of millions of dollars in cryptocurrencies” because of the cryptocurrency price boom and “are looking to make more cryptocurrencies.” Others say they enter the market as professional traders. A popular non-exchangeable token investor, known on Twitter as Branky, had an initial investment of $ 600 in 2017 and now has a variable token portfolio worth more than $ 20 million.
Investors told the Financial Times that they are investing in several different projects, “some with higher daily turnover and others with their own charm”. In addition to “rolling” between lucrative projects, Branki said there are specific plots he plans to keep as long-term investments.
To date, most new collectors of non-exchangeable tokens on the secondary market have not recovered any of their purchase costs, according to a Financial Times analysis provided by the blockchain analytics platform Nansen, with early-stage collectors benefiting from the high price. Fixed token prices as happened with cryptocurrencies. Used to trade immovable land.
But this unregulated market also suffers from market frauds, frauds and manipulations, especially because it is difficult, if not impossible, to discover the true identities of buyers and sellers.
Over the 30 days that ended in mid-December, Nansen’s analysis revealed questionable activity worth $ 2 million in the CryptoBank and BoardIP groups, with some non-exchangeable plots sold, for example, at a 95 percent discount. average sales. or because of mistakes made by buyers or sellers, or because of tax evasion or any other fraud that benefits inexperienced users.
The researchers also warned of the potential for market inflation through clothing trading – which occurs when a trader imitates both sides of a transaction (seller and buyer) in order to give an exaggerated impression of demand.
“You can buy and sell non-exchangeable tokens on a public platform and make it look like there are a lot of people interested in buying them when you’re just raising the price,” said Rudiger K. Wing, Germany ‘s chief executive. – based on Wing Fine Art.
“This also happens in the world of traditional art,” he added, but if a manipulator sends a work of art to Sotheby’s and tries to do the laundry business, he or she will have to pay 25 percent of the sale price. auction houses, making such ventures expensive.
“With non-exchangeable tokens, costs are a small part of that,” he said, referring to transaction fees, known as gas charges, required to name or buy non-exchangeable tokens, which can fluctuate on demand.
However, there are many industry supporters who believe that the market is maturing and will eventually offer a number of advantages, such as allowing artists to always increase their shares.
Benedict Evans, an independent technology analyst and former venture capitalist, asks, “What can you do about this software?” “It can happen that the artist gets a share of the sales and also from the secondary sales that will follow,” he said, referring to early innovations in markets such as music rights in particular.
But so-called non-exchangeable land financing occurs in some societies – for example, the use of non-exchangeable land as collateral for a loan, or the division of ownership of a single part of it into smaller parts, which is well known. and fragmentation.
But in the long run, enthusiasts hope that one day these signs will boost e-commerce in any world, virtual world or futuristic digital world filled with avatars. Here, non-interchangeable tokens can determine ownership of any virtual merchandise, be it clothing for digital avatars, or art on the walls of their digital homes. Nike recently announced that it has purchased a virtual shoe company to create virtual sneakers.
In either case, the future of the non-exchangeable token market will also depend on the position that regulators take as this market unfolds.
But there are concerns, even among corporate issuers, that non-exchangeable tokens share features with some digital investment vehicle and thus can be considered securities by lawmakers.
Devika Kornbacher, a partner at Vinson & Elkins, said companies seeking to issue non-exchangeable land often ask, “Will this non-exchangeable land be considered a financial instrument? Would you consider the company’s securities issued? ours? “
Meanwhile, tax agencies such as the Internal Revenue Service have not yet dealt directly with non-exchangeable tokens, but some experts argue that they could be considered “accumulated”, meaning they will be subject to capital gains tax. .
“It’s an existential issue that seems big to the whole industry,” Pratten Vallabanini, partner at White & Case, said of the upcoming law.

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