The value of a NFT

I have worked in technology for 30 years, but hadn’t heard of a NFT until the recent sale by Christie’s. The idea of a high-value digital artwork seemed counterintuitive, but the sale of Everydays: The First 5000 Days by Beeple for $69 Million at a Christie’s auction (https://www.christies.com/features/Monumental-collage-by-Beeple-is-first-purely-digital-artwork-NFT-to-come-to-auction-11510-7.aspx) set the high mark for a NFT. 
 
It has me thinking about the value of a NFT and how to appraise a NFT. A lot of questions come to mind. First, what is an NFT? Why would you want artwork on a screen, is it artwork if it is digital, or is it technology gone awry? What about cryptocurrency – how do we translate it to in real life (irl) currency?
 
Appraisals are usually necessary for estate planning, estate distribution and insurance. However, with NFTs the chance of destruction or damage is unlikely and insurance is a moot point. Nonetheless, an appraisal is still an essential part of collection stewardship, ensuring that you are making a sound investment and estate planning.
 
WHAT IS A NFT?
A NFT is a Non-fungible token, which means it is non-reproducible. It uses blockchain technology and introduces the possibility to ensure an artist a legacy by enforcing percentage returns to the artist on primary and secondary sales. For investors, blockchain provides a clear provenance. 
 
WHERE ARE NFTs AND NFT GALLERIES?
For those of us who are new to moving around in the digital realm it is a bit confusing. We have to go back to geometry and think about cartesian planes and coordinate systems. In the virtual world you create an avatar to “visit” places. To move an avatar, you push buttons for “up, down, left, right”, similar to old video game commands. If you want to experience a gallery, I suggest you try the gallery experience of Sotheby’s, located at 52,83 (https://decentraland.org , Voltaire Art District) or https://rarible.com .
 
LEGACY BUILDING 
For artists, NFTs open the door to creating a legacy as part of the NFT creation process. During the NFT creation process, there is an option to add in a percentage return, usually 20%-30%, to the artist on both primary and secondary sales. A percentage return to the artist helps create an income stream to cover ongoing expenses for studio space, equipment and materials, as well as normal living expenses.
 
For investors, helping an artist continue to produce artwork will help build the value of an  investment in art. Furthermore, although cryptocurrencies are commonly used in the NFT world, irl currencies such as USD, CAN, AUS and GBP are excepted also.
 
APPRAISING A NFT 
The same methodologies apply to a NFT as a bronze or vinyl sculpture, an oil painting or pastel drawing. The technology is expected to last 500 years, so I expect NFT appraisals will be in demand for a few centuries.  The translation of crytpocurrency to irl currency is something I still haven’t wrapped my head around, but it looks like https://coinmarketcap.com/converter/ , has it figured out.
 
If you have any questions about fine art appraisal, please contact us at [email protected] .