What are NFTs? Cryptocurrency technology is driving new digital art craze

CTV National News: Cashing in on digital art John Vennavally-Rao explains why people are spending millions of dollars for digital art that doesn't even exist in the real world.

TORONTO — A new craze is sweeping through the art world, but it’s of solely digital work.

Using blockchain technology -- which is what underpins cryptocurrency transactions like Bitcoin -- to authenticate who owns the pieces, digital assets known as “non-fungible tokens,” or NFTs, are selling for millions.

An NFT is a singular, one-of-a-kind digital token that cannot be interchanged with other tokens – which makes them optimal for buying and selling art or other collectibles as they accrue value independently.

NFTs give a digital certificate of ownership to buyers to prove authentication of both the work and the purchase, but does not give buyers the original file or copyright – which is why NFTs have been labeled as a “bragging rights” purchase.

Canadian Trevor Jones, who lives in Scotland, sold more than $3 million worth of digitally-authenticated versions of his painting “Bitcoin Angel” in just seven minutes.

“It’s crazy how fast this space is moving,” Jones told CTV News. “This is the first time in history that an artist could monetize digital pieces.”

A version of the “nyan cat meme,” where a pixelated cat with the body of a Poptart flies over a rainbow, sold for US$590,000 at auction, and a 10-second video clip by digital artist “Beeple” sold for US$6.6 million.

Canadian musician Grimes recently sold US$6 million dollars worth of NFTs as well.

Even the NBA is getting in on the action – with the biggest transaction to date on Feb. 22, when a user paid US$208,000 for a video of a LeBron James slam dunk.

Auction house Christie’s has recently moved into the digital space, offering a new Beeple piece on the block. NFTs have surged in popularity during the COVID-19 pandemic as more and more people purchase items digitally due to lockdowns and stay at home orders.