High figures have already been paid for cryptographic works, although the rise of the NFT file format raises questions about its regulation and its environmental impact.
The NFT file format is all the rage, not only in the technology sector, but also in the art world. Already high figures have been paid for one of these digital works (69 million dollars), while in Spain the first works were sold in November, one of them for 20,000 euros.
NFT, short for non-fungible token, is a cryptographic technology based on blockchain technology represents something unique, not replaceable, in a way that guarantees its authenticity, as well as who is its owner. They are normally bought in exchange for cryptocurrencies such as Ether, but unlike these they are not mutually interchangeable, that is, they are not fungible.
The purchase of a digital work would thus be equivalent to the purchase of a physical work of art, since acquiring a file in NFT is similar to obtaining the original version (and not one of the copies) of a work of art such as we know it.
According to the Online Art Trade Report 2021 prepared by Hiscox, the works of art in NFT have had sales to date for a total value of 3.025 million euros and, currently, 14 percent of the online art platforms already they offer NFT and an additional 38% plan to do so shortly.
Types of NFT
The rapid adoption of NFTs has been due to several factors, including the ease with which they can be traded and the freedom it offers to artists, since it allows them to sell their work directly, without intermediaries. Besides art, practically anything can be sold as NFT, and investors in these types of assets have become more and more diversified. One of its most common uses is collecting in all its forms.
In July, British engineer Tim Berners-Lee sold the source code of the protocol for the World Wide Webroyalty-free and free, for $ 5.4 million.
Viral internet memes and videos have been another favorite category for NFT collectors. The video ‘Charlie bit my finger’ was paid $ 760,999, while the meme ‘Disaster Girl’ It sold for $ 500,000.
Meme ‘Disaster Girl’. Foto: YouTube
One of the milestones that has contributed the most to the popularity of the NFT format took place in March 2021, in which it remains the highest amount paid for one of these crypto works: 69 million dollars. This figure was paid at an auction organized by Christie’s for the work. ‘Everydays: the first 5000 days’by digital artist Beeple, nickname Mike Winkelmann. East collage In JPG format it is actually made up of 5000 images, each one of them created daily for 13 and a half years by the artist.
Christie’s is proud to offer “Everydays – The First 5000 Days” by @beeple as the first purely digital work of art ever offered by a major auction house. Bidding will be open from Feb 25-Mar 11.
Learn more here https://t.co/srx95HCE0o | NFT issued in partnership w/ @makersplaceco pic.twitter.com/zymq2DSjy7
— Christie’s (@ChristiesInc) February 16, 2021
Doubts about regulation and environmental impact
As with cryptocurrencies, which function without a central bank to control and sustain them, NFTs make their way in a context with little regulation. However, some first steps are already being taken to legally define the world of Blockchain and NFTs.
In the Spanish State there are already laws that, although they have not yet been implemented, provide that companies that manage crypto assets must report this to the authorities, although at the moment this is oriented more to cryptocurrencies than to NFTs.
A recurring doubt is whether taxes are paid on the sale of these files, and the members of this market are unanimous: taxes are paid, which vary according to the laws of each country. In the case of Spain, if a NFT is sold in current currency, VAT must be paid, which varies from 10% if it is sold by the author himself to 21% if it is a resale by an entrepreneur. Likewise, if it is sold between individuals, it is necessary to add the property transfer tax, and if there is capital gain, tax it through personal income tax if it is a natural person or Corporation tax if it is a company.
Another aspect that is beginning to be studied is the environmental impact involved in NFT transactions through cryptocurrencies. Some of the measures to deal with it come from the artists themselves. This is the case of Beeple, author of the cryptographic work for which the highest amount has been paid, who has assured that he is taking measures to be carbon neutral, since it costs around $ 5,000 to offset the polluting emissions of one of his NFT collections.
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