Editor’s note: This article was first published in April 2022, and the events it describes, including the March 2021 sale of the NFT, were current then. Elon Musk’s interest in Twitter was only a bid at the time; he completed the purchase in October 2022 and the platform was later renamed X.
Sometimes things are worth what they’re worth, even if, at a given moment, speculative madness makes someone willing to pay more. There have been attempts to compare the NFT market with the conventional art market, but once again it has become clear that the two markets are different.
Jack Dorsey’s first tweet was sold last year as an NFT (non-fungible token) for more than $2.9 million, just as many other NFTs sell for outlandish sums in the hope that their value will rise over time, as in the art market.
The tweet, in NFT form, was bought by the crypto entrepreneur Sina Estavi for 1,630.58 ether, the equivalent of $2.9 million at the time.
A few days ago, Estavi announced on Twitter that he was selling the NFT on the NFT trading platform OpenSea. He hoped to sell it for $50 million and donate 50% of the proceeds to charity.
When he thought it up, the idea must have sounded pretty good in his head: buy something as valuable as a tweet that says “just setting up my twttr” and sell it at a profit of more than $22 million (because that’s what the tweet is worth).
To Estavi’s surprise, the highest bid for the tweet was $9,968, so the charities will have to wait a while longer for their eagerly awaited donation. Estavi told the BBC this Thursday that he will not sell the tweet unless he receives a high offer. He didn’t specify the amount, but he did let slip that the donation he hoped to make was around $25 million.
Possibly as a joke, or possibly in hope, Estavi retweeted a tweet suggesting that Elon Musk might buy the NFT, now that Musk has shown interest in buying the company Twitter.
The problem with the NFT market
Using blockchain technology, NFTs are cryptographic tokens for digital media that are opening up a new market for artists, sports organisations, musicians and celebrities. In fact, the media claim this new market offers a new way for lesser-known artists to make money from their work.
To that end, every so often we are shown works selling for outlandish sums, encouraging other artists and even buyers to take part in buying and selling within this “lucrative” market. But the data show something very different: apart from the highest-profile sales, 99% of artists find it exactly as hard to sell their work at decent prices as they do in the real world.
Then there are the most exclusive NFTs: the high-profile ones aimed at wealthier buyers who are willing to pay large sums for them. In this case, unlike the conventional art market, it is clear that the works have no real reason to keep rising in value (as conventional high-end art does).
The high- and mid-value NFT market is still a highly speculative market, a highly illiquid one and, judging by recent events, one highly prone to losing value, if there ever was any value beyond the speculative madness.
All that said, the lack of high bids for high-profile NFTs suggests this market has quite a few limits, even though trading in non-fungible tokens moved more than $17 billion last year, according to the data company Nonfungible.com.
See also: Warren Buffett talks about Bitcoin for the first time
Featured image: Steve Jurvetson from Menlo Park, USA, CC BY 2.0, via Wikimedia Commons.
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