Officially, Beeple’s Everydays is the most expensive NFT. This collage of digital art was sold at an auction at Christie’s for $69 million. However, CryptoPunk sold for $532 million in October 2021. It is not easy, as is often the case with NFTs and cryptocurrency.
CryptoPunk is part of a set of 10,000 NFTs, which were among the first in the industry. Most of them are bought for amounts in the range of $350,000 and $500,000. In the case of the most expensive NFT, the person bought it from him- or herself.
NFTs are held in digital wallets, like cryptocurrency, and the number of wallets a person can create is unlimited. The buyer/seller transferred the NFT between two wallets, which we’ll call 1 and 2 for the sake of simplicity. Then, a third wallet purchased the NFT from the second one for $532 million. After that, it transferred it back to the first wallet. This happened right after the sale.
Why was it necessary to go through using three wallets? The buyer used a flash loan to pay for the NFT. He didn’t pay for it using his own funds.
What are flash loans?
They are a complex tool of decentralized finance, like most DeFi tools. The idea is that you need only meet smart contract criteria to qualify for a huge loan in cryptocurrency. Let’s give an analogy. Imagine you are buying a really expensive home using a loan. You need to have another buyer, who’s willing to pay enough for your profit and for covering the loan interest. This is what the entity behind the most expensive NFT transaction did, except he was the buyer and the seller at the same time.
Discord and Twitter, which provide most of the news surrounding NFT and crypto, were quick to start speculating on the motives behind the sale. Ultimately, the communities on the platforms concurred that the sale was a publicity stunt. The owner of the NFT was trying to drive its price up.
Two types of art NFTs
Art NFTs come in two main categories. The first kind is unique. Someone creates a digital art work and then sells it, just like you would a physical asset. The second kind involves NFT collections. Cryptopunks is an example of one. The artist creates thousands, sometimes tens of thousands of NFTs based on the same template, but with different features. For example, the Bored Ape collection is a set of 10,000 apes, but they have different facial expressions and backgrounds and are wearing different clothes.
The value of an NFT goes up if its properties are rare. Rare apes can sell for millions, while the “floor” price is ‘just’ $190,000.
CryptoPunks sold for so much because it is considered the original NFT collection. It was created almost 5 years ago, when the infatuation with Bitcoin and crypto in general was just beginning.