NFT Boom as OpenSea Marketplace is Valued at Almost £10bn

NFTs boomed in 2021, as shown by the news of OpenSea’s recent immense valuation. But are they here to stay or a passing fad? And what does 2022 hold in store for non-fungible tokens?

2021 was the year of the NFT. That’s not anecdotal. Last month, Collins Dictionary made ‘NFT’ the word of the year, after calculating that use of the term rose by 11,000% within that timeframe.

And now – as if anymore such proof was needed – the rise in NFTs is being fully realised financially after OpenSea, one of the most popular and well-known NFT marketplaces, has been valued at £9.8bn ($13.3bn). The extraordinary valuation, which firmly cements OpenSea as one of the new kids on the block(chain) for wealthy investors, came after the company secured a further $300m in funding.

Last month, Collins Dictionary made ‘NFT’ the word of the year for 2021

It’s easy to forget all of this has come just four years after the company was founded. And it’s made its co-founders – Devin Finzer and Alex Atallah – very wealthy indeed, with Forbes estimating their 18.5% stake in the company makes them each worth around $2.2 billion.

Their success is of course down to the meteoric ascent of NFTs, or non-fungible tokens, which are unique digital certificates that are registered in a blockchain and record ownership of artwork or a collectible.

This NFT from artist Beeple sold for a record £51m last year.

This was observed right throughout last year, from Grimes’ total sale of almost $6m for a collection of digital artworks and short video pieces, to Eminem’s recent purchase of a Bored Ape NFT that resembles him for just shy of £350,000 ($450,000). This particular piece was acquired from the Bored Ape Yacht Club – a collection of 10,000 Bored Ape NFTs, which two days ago was revealed to have surpassed $1billion in total sales alone.

DJ Khaled, Diplo and Martin Garrix are among other celebs to have jumped on the rather ironically-named Bored Ape bandwagon recently too.

In total, the overall value of trade for NFTs was thought to be $40.9bn last year

Even older generations like Ozzy Osbourne (soz Oz, age is just a number), have started to partake in the craze. Last week the Prince of Darkness announced he will be launching 9,666 NFTs as a series of ‘CryptoBatz’ – a digital ode to his infamous moment in 1982 where he bit the head off a bat onstage.

In total, the overall value of trade for NFTs was thought to be $40.9bn last year, according to Chainalysis. And that alone was deemed an underestimation as it only took into account the NFTs using the Ethereum blockchain.

Courtesy of Bored Ape Yacht Club

So why should we care? Is this a fad you should simply allow to pass you by, without the need to understand it? After all, as our very own Simon Brew recently put it, ‘to a subset of connoisseurs NFT is more likely to stand for National Film Theatre’.

In short, no. The key players may of course fluctuate; OpenSea, now celebrating its impressive valuation in such a short time, may become what MySpace became in the world of social media companies. (Though that’s unlikely for a while).

Whether we like it or not, though, NFTs are the art world’s major response to the digital age

Whether we like it or not, though, NFTs are the art world’s major response to the digital age. Before them, the world of Bill Gates seemed entirely at odds with the world of Rembrandt, which remained rooted in physical auction sales dictated by the main auction houses.

As the sharing of information and images online grew, a question arose for the art world: if I can screenshot a work of art and send it with ease, what does that mean of its ownership? What value does that bring to the art? NFTs have now provided the answer. (Although, admittedly Rembrandt is unlikely to bring out an NFT anytime soon so it’s more Bored Apes for now).

Anyone can save an image of Bored Ape #79 (as has been done for this online piece), but it’s Eminem who truly owns it – the Real Slim Shady who really has the ‘original’.

Arguably more interesting for NFTs and marketplaces like OpenSea in 2022 will be the virtual bridge they seek to cross, to acquire an even greater market. 2021 may ultimately prove to be something of a honeymoon period.

2021 may ultimately prove to be something of a honeymoon period

Such an example of the potential problems they face in fact occurred at the very end of last year. On 30^th December Todd Kramer, of New York’s Ross+Kramer Gallery, woke up to find a phishing scam had taken 15 NFTs, including four Bored Apes, from his Ethereum wallet with a combined valuation of $2.2million. Ouch.

Then OpenSea had a problem, in having to balance a show of customer protection in a world that likes to pride itself heavily on its decentralised nature. In the end, some five hours or so after the theft, the company swooped in by ‘freezing’ some of the NFTs that had been stolen. This provoked the ire of many NFT purists, who claimed such a move rendered the NFTs unsellable.

OpenSea Co-Founder Devin Finzer.

Should it simply be tough luck for anyone who loses their NFTs or becomes duped by ever-increasing phishing scams? These are the problematic questions OpenSea will have to ask itself as it grows up and lines it coffers.

Such considerations were clearly on the mind of Finzer, who upon making the announcement of extra funding earlier this week, said the money will bolster its current staff of roughly 90 employees, with a particular focus on customer support and trust and safety teams.

For OpenSea and its consumers a more traditional word may be needed for 2022: trust

All of this is to help achieve ‘OpenSea’s vision’, Finzer outlined, ‘to become the core destination for these new open digital economies to thrive, building the world’s friendliest and most trusted NFT marketplace with the best selection.’

NFT was the word of 2021. For OpenSea and its consumers, along with other such marketplaces, a more traditional word may be needed for 2022: trust.