The unexpected stocking stuffer this Christmas might be a non-fungible token (NFT).
People who are both new and experienced in the nascent world of NFTs say they’re planning on distributing the digital gifts to friends and family – who might not really know what to do with the presents.
Abraham Aradillas says he hadn’t heard of an NFT until about six months ago, after they exploded onto the popular culture mainstream and were parodied by Saturday Night Live.
But now the 23-year-old truck driver from Dallas says he’ll be buying Platy Punks – a popular NFT with the image of a platypus – for all his friends for Christmas, and he thinks they’ll be excited and confused.
“When I told my friends I bought an NFT, they laughed at me. They’re like, ‘You bought a picture of a platypus’. So I think they’ll have the same reaction,” Mr Aradillas says.
As the prices of Bitcoin and other cryptocurrencies skyrocketed over the past year, NFTs have been lifted up in the mania. They’ve piqued the interest of people who started trading and managing their own portfolios during the Covid-19 pandemic, as well as those who finally got a handle on cryptocurrencies.
An NFT is a type of cryptocurrency asset that uses blockchain to record the ownership status of digital objects. Although anyone can view the item, only the buyer of an NFT has the certified status of being its owner.
Unlike currencies, in which every token is of equal value and can be swapped for any other, NFTs have unique qualities that stop them from being interchangeable or fungible.
The NFT market is booming in the wake of Covid-19 as investors seek alternate and more profitable avenues to channel excess liquidity. Mike Winkelmann, the digital artist who goes by the name Beeple, made headlines in March when he sold an NFT for $69 million.
Besides art, people are also spending millions of dollars on NFT collectibles that include sports trading cards, digital houses, augmented reality trainers, music and video games. For instance, an NFT of Twitter chief executive Jack Dorsey’s first tweet sold for about $3m.
NFT sales volume surged more than eightfold to $10.7 billion in the third quarter of this year, up 704 per cent over the previous three-month period to the end of June, according to data from market tracker DappRadar.
Sales volumes recorded on OpenSea, the largest NFT trading platform, hit $3.4bn in August, according to DappRadar. In January, the monthly volume recorded on the platform was more than $8m.
Some gift givers say they hope their friends and relatives will learn about NFTs or that the token will be a good investment: sort of like a lottery scratch-off, the gift could pay off big time. In other cases, the gifts are more akin to collectables, souveneirs or art.
Wallet and keys
For recipients, the gift can feel like a chore. If they are new to cryptocurrency, they have to learn terms such as “wallet” and “keys” – not to mention what NFT stands for.
Educating family about NFTs is part of Jessica Walker’s motivation for giving the tokens as gifts this year for Christmas.
“To understand the new technology, you have to be introduced to it on a personal level,” says Ms Walker, 28, who creates educational content for price-tracking website CoinMarketCap.
Her budget is about one Ethereum, or $4,100. Ms Walker’s father and 25-year-old brother are football fans, so she’s eyeing some of the products on Tom Brady’s NFT platform Autograph. For her mother, an avid news follower, she’s looking at an NFT from a line created by the Associated Press.
She thinks her mother, who has her own Coinbase account, will appreciate the gift. Her brother, however, is a different story.
“My brother will look at me slightly disappointed that I have not bought him food,” Ms Walker says.
Paula Sanguino, 36, a dental hygienist from Raleigh, North Carolina, says her first reaction to being given an NFT was excitement – along with a bunch of questions. She received the web address paulas.eth from a friend. It’s a domain name – like .com or .net – but also functions as an NFT as well as a way to send and receive cryptocurrencies.
“‘Thank you! Is this a domain? What do I do with this? Can I sell it later?’” Ms Sanguino recalls saying. “I was very confused by it when he shared it with me.”
She says it took her a few weeks to wrap her head around the concept of why something like this would be worth as much money as it was.
Montreal resident Nicolas Hebert is using gifts of NFTs as something of a memorial to a friend who recently died.
Mr Hebert, a 30-year-old commercial manager, and two other friends are giving their friend’s niece and nephew, both under age 12, NFTs in honour of him.
“We know this is something he would have done this year,” Mr Hebert says.
The kids will get an OnChain Monkey, which initially cost Mr Hebert about $40 when he helped mint it but is now worth around $2,000 to $2,500, he says.
They will also be getting an NFT called 2 Ballerz, which cost $200 each to mint. There’s no current marketplace for Ballerz.
Rather than buy NFTs to give, some families are creating them. Palo Alto-based angel investor Chris Eberle helped his 13-year-old son, who wants to be an animator, design one that will go out to family.
The recipients will learn of their NFTs in an old-school way, through a picture in a card.
“There’s more of a payoff when you open a card with a cool picture,” says Mr Eberle, 47, who just started his own investment company, Defiant Capital, after serving as director of content and marketing globalisation at Netflix.
Gift givers might want to feel out their recipients first to see if the present would be welcome.
Jules, a 16-year-old from Maryland, says he would be disappointed if he got an NFT as a gift, particularly because of the energy used to create cryptocurrencies.
“I wouldn’t know what to do with it, to be honest,” says Jules, whose mother asked not to use his last name.
“What do you do with it? I think I would just hold onto it. I think that would be the least harmful thing I would do. It really holds no value to me.”