The nascent market for these items reflects a notable, technologically savvy move by creators of digital content to connect financially with their audience and eliminate middlemen.
Some NFT buyers are collectors and fans who show off what they have bought on social media or screens around their homes. Others are trying to make a quick buck as cryptocurrency prices surge. Many see it as a form of entertainment that mixes gambling, sports card collecting, investing and day trading.
Eye-popping NFT sale prices have attracted some of the same confusion and derision that have long haunted the cryptocurrency world, which has struggled to find a good use for its technology beyond currency trading. And there is uncertainty over the stability of values, since many of the transactions are using cryptocurrencies, which have fluctuated wildly in worth over the last two years.
“A lot of people are cynical about this kind of thing,” said Marc Andreessen, a venture capital investor at Andreessen Horowitz, in a discussion on the social media app Clubhouse this month. But people don’t buy things like sneakers, art or baseball cards for the value of their materials, he and his partner, Ben Horowitz, explained. They buy them for their aesthetics and design.
“A $200 pair of sneakers is, like, $5 in plastic,” Mr. Andreessen said.
“You’re buying a feeling,” Mr. Horowitz added.
The market for NFTs began to pick up last year, with more than 222,000 people participating in $250 million worth of sales, quadrupling the volume in 2019, according to Nonfungible.com, which tracks the market. As day trading has risen alongside the stock market in the pandemic, investors have looked for riskier and more esoteric places to make money, from sneakers and streetwear to wine and art.