If you observe NFTs only through headlines, it's easy to only see the big wins. CryptoPunks, the first NFT collection, was free to mint in 2017, and now are sold for above $150,000. People who spent $250 on a Bored Ape Yacht Club a year ago are now holding onto an NFT that can easily be sold for over $300,000. But as with every speculative market, there are losses in the NFT world. Lots of them.
Exhibit A: Last year crypto entrepreneur Sina Estavi bought Twitter cofounder Jack Dorsey's first tweet as an NFT for $2.9 million. Last Wednesday Estavi put the tweet on a 7 day auction, tweeting that he would donate half of the expected $50 million sale to charity. When the auction ended, the highest bid was $280 (0.09 ether), CoinDesk reported.
The way NFT marketplace OpenSea works, Estavi can choose to either accept or reject the bids. He said he's open to more bids (which feels like it's not how auctions should work) and the top bid is now $4,631 (1.5 ether).
The auction process evidently isn't over and there's still time for last-minute bids to come through and push the price up dramatically -- it's already gone up over 10x from the end-of-auction bid of $280. But to put it likely, it seems unlikely that it'll reach $2.9 million, much less the $50 million Estavi hoped for.
"The deadline I set was over, but if I get a good offer, I might accept it, I might never sell it," Estavi told CoinDesk before re-opening the auction. Estavi was contacted for comment but did not immediately respond.
For the majority of people, who are confounded by the success of nonfungible tokens, Dorsey's tweet sale is perhaps the apex of bewilderment. NFTs are to digital assets what deeds are to a house: It's not the asset itself, it's a receipt that proves ownership. That may make sense for an NFT created by an artist and sold to a punter, but makes far less sense for a tweet. If Dorsey deletes the tweet, or if Twitter pulls it, the NFT would be for an asset that no longer exists.
Those hoping that this presages the end of NFTs may be disappointed, though. Over $2.4 billion-worth of nonfungible tokens were traded on OpenSea last month. OpenSea's volume last April, when Estavi initially bought the NFT, was $96 million.
Many blockchain proponents have argued that the current state of NFTs -- predominantly bought and sold as status symbols among the crypto rich -- is the first phase of the technology. They liken it to the internet of the late '90s: Just as much a proof of concept as a utility. While no one knows what the next phase of the technology is, most are looking towards the metaverse where already millions are being spent on land and items.