Last spring on a late Friday, Izzy Pollak decided to buy two Bored Ape NFTs – which, as a reminder to the many people who think yes, but I still don’t know what an NFT is – means he has unique, digital images bought (in this case from monkeys).
As the owner of a Bored Ape, he now has commercial rights over the digital image to do with as he pleases. Many people choose to display their NFTs as their profile picture on social media accounts.
(And if you’re wondering how to prove ownership of a digital asset, every NFT, or non-fungible token, has a clear serial number, and the transaction history of each NFT is stored on the blockchain so people can see who owns the asset. real owner.)
Mr Pollak, 29, who bought three more a few months later, obtained these from a collection of 10,000 NFTs known as the Bored Ape Yacht Club. Some monkeys wear gold jackets or animal print tunics. Others smoke cigars or smile broadly.
At that time, Mr. Pollak, who works for Genies, a tech start-up in Los Angeles that makes NFTs and avatars, doesn’t have a lot of disposable income. “I lived with three other people in a four-bedroom townhouse,” he said. “We all shared a bathroom. It felt like student life.”
He didn’t come from money either. During the 2008 financial crisis, Mr. Pollak that when he was 16, his mother couldn’t pay the mortgage, so he and his family had to rent an apartment.
Mr Pollak’s interest in NFTs was sparked by hearing people talk about them on Clubhouse. “I thought, ‘Oh my God, this is insane. I’m about to spend hundreds of dollars on a picture of a monkey,'” he said.
It turns out to have been a wise decision. Last fall, several months after he bought his first NFTs, Mr. Pollack up in value. He sold one he bought for about 14 Ether (a virtual currency worth about $40,000 on the day of purchase) for about 70 Ether (about $231,000 on the day of sale).
He used the money for a down payment on a three-bedroom house in Los Angeles with a backyard. “We’ll call it the Chimp Chalet,” he said with a laugh. “I’ve always wanted to have a house, but never thought I could make it happen.”
He now has three Bored Ape NFTs in his portfolio. He hasn’t sold them yet, but one day he will. For the first time in his life, he feels financially prosperous.
A fortunate handful of people now have their own rags to riches stories thanks to NFTs. By investing in the right project at the right time, some collectors and digital artists have made “life-changing money,” says Matt Medved, a founder of Nft Now, a digital media publication about NFTs. Some use the money to pay off student loans, buy a house, or quit jobs they hated. (Of course, some people also buy yachts or throw lavish parties.)
“NFTs are like manna from heaven,” said Mr. Pollak, who also acknowledges how lucky he is. “I’ve heard horror stories about people spending their rent on NFTs. It’s heartbreaking to see people risking their money when it usually doesn’t work out.”
Most people who make or buy NFTs never make a profit. There is no regulation or consumer protection, and trading it is basically just as risky as gambling. Investing in cryptocurrency is high risk and involves a lot of technical know-how and luck; few financial professionals would recommend it, and scams abound.
Mr. Medved encourages people to think of NFTs as baseball cards. “For generations, our society has accepted that rare baseball cards have value,” he said. “There’s a rare Mickey Mantle card that probably cost 5 cents to sell for $5.2 million last year. And why? It’s not about the physical piece of cardboard. It’s the history, the rarity, the scarcity, the cultural relevance.”
“It comes down to fandom,” he added.
Likewise, what many NFT artists create or invest in will be worth little or nothing in the long run. But there are a few NFTs that have become very valuable and have earned their owners and creators a huge sum of money in a short period of time.
The Bored Apes that Mr. Pollack bought, for example, could be minted — that is, going to market — for 0.08 Ether ($200 last spring). Now, less than a year later, the cheapest is worth about 73 Ether (about $190,000). (Ether can be converted to cash on major cryptocurrency platforms such as Coinbase and Gemini and then transferred to a bank account.)
Claire Silver, an artist in his early 30s working with artificial intelligence, is another NFT success story. In 2017, she was given three CryptoPunks, a collection of 10,000 unique pixel art characters generated from an algorithm, by someone she met on Slack.
“I was in a chat room about cryptocurrency and I met this guy who was interested in art,” said Ms. Silver, who lives a nomadic lifestyle but most recently lived in Denver. He told her he had 730 CryptoPunks, she said, “and asked if I wanted three. I said, ‘Sure.’”
In 2017, collectors could claim CryptoPunks for free as long as they had an Etherum wallet. Now the cheapest sells for about 68 Ether (almost $175,000).
She held onto hers until 2020 when she heard rumblings that they were selling for a lot of money. She sold one in July 2021 for about $60,000 and has two more. (Many sell for six figures. One sold for nearly $600,000 last month.)
Ms. Silver also makes her own NFTs. She, like all NFT artists, makes money from the original sale and may receive 10 percent of each secondary sale. One of her pieces sold for 15 Ether ($63,000 at the time).
She has saved so much that she finally feels financially secure, at least for now. “This amount is very important to me because I come out of poverty. We had to accept church donations for growing food,” she said. “The other day I walked into Walmart and thought, ‘I can buy the cheese, I can buy the good coffee.’ I had never experienced that freedom before.”
She recently returned from a trip to Britain, where Sotheby’s was auctioning her work, and is planning a trip to Japan.
This month she even gives her mother a house, which she paid for in cash. “I’ve got this big red bow, and I’m going to put it on the front door, like in those commercials,” she said. “I’ve wanted to do something like this for my mother since I was a little kid.”
A guide to cryptocurrencies
Map 1 of 7
A word list. Cryptocurrencies have gone from being a curiosity to a viable investment, making them nearly impossible to ignore. If you’re struggling with the terminology, let us help you:
Bitcoins. A Bitcoin is a digital token that can be sent electronically from one user to another, anywhere in the world. Bitcoin is also the name of the payment network on which this form of digital currency is stored and moved.
blockchain. A blockchain is a jointly maintained database that reliably stores digital information. The original blockchain was the database where all Bitcoin transactions were stored, but non-currency based companies and governments are also trying to use blockchain technology to store their data.
Coinbase. Coinbase, the first major cryptocurrency company to list its shares on a US exchange, is a platform that allows people and businesses to buy and sell various digital currencies, including Bitcoin, at transaction fees.
Crypto Financing. The development of cryptocurrencies has spawned a parallel universe of alternative financial services known as Decentralized Finance or DeFi, allowing crypto firms to move into the traditional banking realm, including lending and borrowing.
Just two years ago, Alex Lugo, 29, who lives in Lindenhurst, NY, drove trucks to support his wife and two children, ages 9 and 5. “I was making $25 an hour,” he said. “That’s nothing in New York.” He decided to enroll in a cryptocurrency trading program and it changed the life of his family.
While some collectors buy select NFTs and hold them for years, he throws a lot at them in the short term. “I ended up buying them and flipping some for 10K, some for 30K, some for 5K, 2K,” he said.
He has also benefited from investments in newer types of NFTs. “I own real estate in the Metaverse next to Adidas headquarters,” he said. “It’s like owning real estate in the Hamptons because what will Adidas do if they want to expand? They’re going to buy me out and pay me millions of dollars, so I’ll move.”
(“This sounds speculative rather than something that can be easily proven,” Mr Medved said in an email.)
Mr Lugo made enough money from these individual sales that he quit his job as a truck driver in January 2021. Now he says he has been able to put away a significant amount of savings for his children, who “will have the freedom to choose what they want to do with their lives.”
He and his family currently live in a two-bedroom apartment, but he is looking for a four-bedroom house in Lindenhurst.
NFTs have helped others dig themselves out of financial holes and make a fresh start.
Gossamer Farris, 32, is now a full-time recording artist in Brooklyn. But it took NFTs to get her comfortable there.
After college, she had a 9 to 5 job at a student loan center. “I did as much as I could after work,” she said. “I made illustrations and sculptures and textiles, and I also made items like little stickers for people to buy in my online store.”
She quit that job in 2019 to become a tattoo artist, but even that was a struggle, especially in the early months of the pandemic. “I struggled to make ends meet,” she says. “Unfortunately, I had a lot of debt, such as credit card debt and health-related debt, because I am transgender and had surgery.”
In the winter of 2021, seeing that NFTs were driving people crazy, she decided to try creating her own collections, with work focusing on her Filipino and black heritage, and collaborating with other artists on their NFTs.
She has since paid off her debt and now earns enough money through NFTs to pursue her passions exclusively. “I don’t have the stress I need to make money as an artist,” she said. “I can pay the rent and not have to worry about making ends meet.”
While some people get rich from NFTs, Mr. Medved urges people to remember that many other NFT projects lose value over time. “You should never invest more money than you are willing to lose,” he said. “The NFT space, like the crypto space, is very volatile and the markets are moving up and down very quickly.”
“I think a lot of NFTs will go to zero in the long run,” he said. “Your success depends on your ability to pick the best projects, and it’s not easy.”