Back in March, the art world was shook when an NFT was auctioned off for $69.3 million. Yes, a piece of digital art sold for millions of dollars. Since then, signed tweets have gone for hundreds of thousands, classic gifs have sold for a small fortune, and musicians are selling video clips as NFTs to one lucky buyer.
Sure, this is all interesting (and strange and maybe confusing), but when something makes that kind of splash in one sector, we want to be prepared to see how it ripples out to other areas.
So what exactly is an NFT?
When the Computer Age brought the internet into homes and pockets of people across the globe, we were ushered into the Information Age. Being able to share and send and duplicate and edit and exchange information within seconds became how we lived and worked. And now that the Information Age is taking a final bow to make way for the Experience Age, the next wave in modern art (and potentially nonprofit fundraising, if they stay flexible to innovative opportunities) is using the internet as a platform. Enter the NFT.
Non-fungible tokens are unique digital assets. They are GIFs, JPGs, MP3s, or any other sort of digital file that can be created. But the buyer doesn’t just get the asset – it comes with a digital certificate of authenticity. Since no NFTs are alike, the owner will be the sole holder of that original asset, until they sell it to the next buyer. This is what sets them apart from fungible tokens, like currency (both traditional and crypto) that can be exchanged for one another.
What’s stopping people from right-clicking on that NFT? Well, nothing. But that is not the point. Think of it as the signature. It is the difference between owning an original Monet and a print. Anyone can appreciate Nyan cat and make a copy of the GIF. But only one holds the original – for a whopping $580,000.
How could this impact the nonprofit sector?
These headline-making NFTs are being auctioned off on art websites, but that’s not the only place they are making noise. Recently, an NFT auction raised $200,000 to help music venues stay afloat. Big name artists allowed their likeness to be used, and the original NFTs were successfully sold to help the music community thrive during difficult times.
But why stop there?
Nonprofits have incorporated auctions as part of their fundraising efforts for years. While they may have traditionally been offering items donated from local establishments, this new era of art is likely to bring with it some NFTs up for grabs at charity auctions.
There are questions that will come up as nonprofits navigate this shift:
What value do you place on the NFT before the auction?
What is the fair market value that will be recorded on the receipt of their donation?
Does your nonprofit accept cryptocurrency payments?
As this trend progresses, some standard answers to these questions might start to take shape. Until then, it is a good idea to decide as an organization your tentative answers, especially if you want to be on the cutting edge of NFT auctions.
Mittun works to stay on top of all digital trends – NFTs included. While we won’t stop slinging websites to try our hand at making multi-million dollar digital art, we are going to keep our finger on the pulse of how they will affect the nonprofit sector. Because we want to help you raise more money and do more good.
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