Twitter founder Jack Dorsey’s first tweet has been put up for sale, fetching bids up to $100,000. Is that reasonable, for a five-word tweet – a tweet which anybody can read anyway? But then consider this: a 10-second video, which anybody can watch online, has sold for $6.6 million. Digital assets are an emerging investment avenue, called non-fungible tokens (NFTs).

Many online marketplaces facilitate buying and selling of NGTs. Even Christie’s has joined in. Dorsey’s line from March 2006, “just setting up my twttr”, is the first tweet ever in history and has an unbeatable vintage value. [On sale here: https://twitter.com/jack/status/1367990471759306752] The only part missing was a way to monetize it. The NFT provides the solution: it is a unique digital signature which certifies the sale, and the buyer can in future sell this artefact using that signature.

In other words, there are two factors that are expected to promote such ‘investments’ in online stuff like photos, videos and tweets. The first factor is economic: the age-old, fundamental principle that has sustained the market in antiques, artworks, autographs and sports cards – which is, if there is limited or no further supply of an item, its price is then solely decided by demand. There are only a few Picasso paintings, and someone wishing to park a substantial amount and yet be assured of good returns can buy one of them (even if most are available for viewing in galleries and online). The second factor is technological: using cryptography just like Bitcoin technology, the digital signature provides provenance, a way to authenticate the investor’s holding.

The flip side is that, like Bitcoin again, NFTs can gain value based on hype and the bubble can bust one day when the hype dies down. An optimist may see little risk there, since the world is becoming more and more digital, there is also the possibility of fraud since the market is nascent and not exactly regulated yet.

For information on other NFT sales and market analysis:
https://www.reuters.com/article/us-retail-trading-nfts-insight-idUSKCN2AT1HG?utm_source=pocket-newtab-intl-en

NFT explained:
https://www.theverge.com/22310188/nft-explainer-what-is-blockchain-crypto-art-faq

https://www.npr.org/2021/03/05/974089381/whats-an-nft-and-why-are-people-paying-millions-to-buy-them

On risks:

https://seths.blog/2021/03/nfts-are-a-dangerous-trap/