"the price of an avatar is equivalent to an apartment on the third or fourth line?" The exploding NFT continues to go out of the circle recently.

This week, NBA star Stephen Curry of the Golden State Warriors bought an ape avatar for 55 etheric places (about $180000, 1.16 million yuan), causing a heated discussion among netizens and posted on Weibo Corp's popular search.

Netizens expressed shock one after another, but more of them did not understand-"people are stupid with a lot of money, 180000 buy a picture."

In fact, NFT is far more popular than imagined, and millions of avatars are not uncommon on the market. But behind the huge wealth effect, it is full of doubts and arguments.

Why is NFT frequently sold at sky-high prices?

An avatar worth millions of dollars

NFT, whose full name is Non-Fungible Token, is a non-homogenized token, which is the only encrypted currency token used to represent digital assets. It has the characteristics of indivisibility, irreplaceability, uniqueness and so on. On the block chain, virtual currency can be divided into two types: homogenization and non-homogenization. Homogenized tokens, namely FT (Fungible Token), can be substituted for each other and can be close to infinite split token. For example, there is essentially no difference between a bitcoin in your hand and a bitcoin in mine. This is homogenization.

The virtual avatar Curry acquired came from Bored Ape Kennel Club (boring ape Yacht Club, or BAYC), one of the most popular collection communities on the NFT market.

The project, which consists of 10000 limited global editions of NFT ape works, is a unique digital collection on the etherfang block chain. These apes have different characteristics in clothing, background, fur, facial expressions and so on, and each of them is unique.

The boring ape Yacht Club project was officially released in May this year, and all 10000 ape works are priced at 0.08ETH Tai Fong. When it went on sale, it was so popular that 10000 "apes" sold out in less than two hours.

According to the latest data from opensea, the sales of the project have exceeded $400m, the number of dealers has reached 5400, and the lowest price is $160000. This means that the price of the product has soared by more than 500 times in just four months.

A reporter from the China Securities News checked the historical trading records and found that the trading of the project was so active that an ape changed hands almost every few minutes. The most expensive ape work costs nearly $400000.

This is just the tip of the iceberg where NFT's profile portrait has been auctioned at a high price. At present, there are scarce encrypted punk (CryptoPunk) images, all of which cost more than a million dollars. On March 11th, a 24-inch 24-pixel encrypted punk profile picture sold for a high price of 4200 ethernet. At current prices, the avatar is worth $16.57 million.

A senior NFT collector told the China Securities News: "the scarcity of (NFT avatar) works makes people have the desire to collect." It is very honorable to use it as an avatar, and friends who understand it will know at a glance that it is worth several Tai Fong. And if you buy it, it may appreciate in value. Some friends bought encrypted punk before they bought it, and they earned a flat in a few days. "

The rapid development of NFT

NFT's first hit was in 2018, when it started with the CryptoKitties game.

After users buy an encrypted cat with Taiyuan, they can gain exclusive ownership and cannot be copied, taken away or destroyed. The game has been all the rage since its launch, gathering more than 1.5 million users in just a few months, with a total transaction value of more than $40 million, and a cat can sell for more than $200,000.

"the important feature of NFT is non-homogenization, so it is naturally suitable for non-standardized goods." Yu Jianning, rotating chairman of the Block chain Special Committee of the China Communications Industry Association, said that at present, the main applications of NFT are concentrated in the digital world's native works of art, collectibles, game props, meta-universe resources and other fields, but in the future NFT can become a bridge between real-world assets and digital world assets, mapping real-world assets on the block chain through NFT.

In 2020, the market size of NFT was only $338 million. By the first quarter of 2021, that figure was $1.5 billion. According to CoinGecko, the current market size of NFT has exceeded $20 billion (about 130 billion yuan).

Andrew Kang, founding partner of blockchain investment firm Mechanism Capital, has written, comparing NFT avatars to luxury goods, art and high-end real estate, and hinting that the future NFT market will exceed $40 billion.

Who created the myth of sudden wealth?

This year, there have been a growing number of high-priced NFT projects that have not been understood: a pair of Musk virtual sneakers sold for $110000, a rainbow cat picture for $560000, and a $91.56 million pixel avatar for sale.

Many investors believe that the NFT world is full of madness, bubbles and hype.

Vincent, a senior researcher at Ouyi OKEx Research Institute, told the China Securities News that there are two main reasons for the frequent occurrence of sky-high NFT: first, the continued popularity of the NFT market continues to attract new players and capital, pushing up the price of NFT. Second, from the players' point of view, the head NFT works have collectable significance and social attributes, and the consensus base is also expanding, such as the recent fire of encrypted punk, which is one of the earliest NFT projects on Ethernet Square, and is regarded as "bitcoin" in NFT. It is not only sought after by on-site users, but also joined by off-site organizations such as Visa Inc.

He also pointed out that the NFT market is still in the early stage, there are a lot of non-standard, opaque operation, the recent continued popularity has also attracted part of the speculative team influx, they seize the user "afraid to miss" psychology, with the help of all kinds of packaging, hype techniques, attract users to enter the market, which will undoubtedly enlarge the market risk.

Ben Nolan, founder of Cryptovoxels, said there could be an encryption "winter" in the coming months, and the NFT boom could burst and then collapse completely. It would be very unwise to enter the NFT market as a way to invest or make money.

Editor: Peng Ye Song