‘Bored Ape’ NFT collection just sold for a killing in Sotheby's auction

A set of 101 NFTs has sold at Sotheby’s for $24.4 million, as spotted by The Verge. The collection is made up of randomly generated ape characters with a unique arrangement of sailor hats, eyes patches, and other accessories.

The NFTs themselves are just digital images, cryptographically signed with unique keys to imbue them with scarcity that’s supposed to give them value. The ape sale comes from Yuga Labs, the creator of Bored Ape Yacht Club. As the name implies, owners of the ape NFTs are supposed to become members of a “digital yacht club” of sorts, which entitles them to benefits like exclusive merchandise and an online graffiti board. Basically, it’s a status symbol, just like an IRL yacht club. Being part of something others cannot have is part of the value.

Questionable dealings — But still, many are still befuddled by the rise of NFTs. At least with physical artwork it’s truly one-of-a-kind, whereas a digital piece of art can be infinitely replicated. All you’re really buying is the right to say you have a copy that’s been “signed” by the creators. They can also be programmed, as with the apes, to grant the owner other benefits.

The traditional art world has always been shady, involving money laundering schemes, stolen property, and self-dealing. Vast sums of money exchange hands without public scrutiny due to lax oversight. And critics of NFTs think the craze is no different.

The major NFT sale from artist Beeple for $69 million may point to self-dealing, as the artist himself was involved in a complex deal that appeared to artificially inflate the value of the digital .JPEG image. Once it sold at a record price, word trickled out that the buyer was selling fractional ownership in the NFT through a cryptocurrency (i.e. buy 10 percent of the currency and you own 10 percent of the NFT). The high initial sale value created demand that raised the price of the currency, potentially earning the buyer a profit on their purchase. Beeple himself (real name Michael Winkelmann) owned some of the cryptocurrency.

Auction houses like Sotheby’s have an obvious incentive to support the NFT craze, as the digital artworks can be pumped out in rapid succession and the auction house takes a cut of proceeds.

Small artists — Proponents of NFTs hope that they could enable small artists to earn more money from their digital work. The rise of creator platforms like OnlyFans and Patreon have shown people are willing to support their favorite creators to feel a greater connection to them and to gain access to exclusive content. And the NBA has a platform where people can trade clips of major moments in the sport’s history, like trading real cards. But mega sales like the crypto apes appear to be more speculative in nature, with the buyers expecting there’ll be a high resale value as the market continues to grow. Just last month, an NFT image of a rock sold for $1.3 million. A lot of the artwork that has been selling isn’t really art at all. Buyers surely know this and have other incentives for the purchases.

A lot of major companies have responded to the NFT boom. Visa recently spent roughly $150,000 on a collection of CryptoPunk collectibles, saying its move was intended to signal its support for new-age artists. Disney and eBay are among the other companies to get involved. Maybe NFTs are a real thing here to stay, or maybe they’re another tulip bubble.