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Celebrities are getting hooked on NFTs

When in March 2021 the auction house Christie's sold the digital artwork Everydays: The First 5000 Days by Beeple for the equivalent of $ 69.3 million in cryptocurrencies, the concept of NFT (acronym for Non-Fungible Token) was largely unknown to the general public. Less than a year later, these digital certificates of authenticity, which allow you to claim ownership of a specific file – works of art, videos, memes, virtual accessories to show off in video games – are attracting the interest of more and more people, in part likely influenced by the endorsements NFTs have recently received from a growing number of celebrities. Singer Justin Bieber, actresses Gwyneth Paltrow and Reese Witherspoon are just some of the famous people who have announced they have bought NFT, giving huge resonance to a highly speculative industry where scams abound.

Among the most cited cases is that of Paris Hilton, who at the end of January was the protagonist of a much discussed segment of the US talk show The Tonight Show. In the interview, the entrepreneur and heiress had shown the conductor Jimmy Fallon her own “Bored Ape”, that is the digital drawing of an anthropomorphic ape wearing a hat and sunglasses, saying that she had spent over 300 thousand dollars to buy the 'NFT. Fallon had a reproduction of his monkey ready, bought a few months earlier for 216 thousand dollars.

In a very clumsy and awkward exchange, Hilton and Fallon complimented each other on the purchases, sparking widespread mockery online. The conversation seemed to many a disguised promotional message, at least to many NFT critics who find it simply ridiculous that someone could pay such large sums of money for works of dubious artistic value. Moreover, without obtaining the copyrights, given that what is purchased is only the set of digital information that characterizes a specific file within a blockchain, which is a decentralized digital register (and which does not need, therefore , of external authorities, such as banks or governments, to exist) based on complex mathematical calculations that make it immutable.

– Read also: Why NFT art is so cheap

What is undoubted is that, speaking of its investments in television to an audience that averages around one and a half million viewers, Hilton has contributed to bringing NFTs in front of a large audience that has largely not yet understood. exactly what it is.

NFTs, on the other hand, are still a niche even within the larger cryptocurrency market: if the combined value of all NFTs is currently valued at around $ 16 billion, that's just $ 1. % of a sector worth approximately 2 trillion billion.

About half of the total value of the NFT market is given by files that are part of limited edition avatar collections, such as the monkeys of the Bored Ape Yacht Club – in Italian Exclusive Club for Bored Monkeys – or the pixelated zombies of the CryptoPunks collection. There are 10 thousand examples of CryptoPunk and another 10 thousand examples of Bored Ape. In both cases, their creators asked a computer to randomly generate them based on some more or less rare characteristics. Initially buying the NFT of a Bored Ape or a CryptoPunk was quite affordable: the zombies were initially released for free and could be claimed by anyone with a digital wallet on the Ethereum platform, while the monkeys were sold, last April, for less than $ 200 each.

Since then, however, their value has increased tremendously in the secondary market, and in some circles of ultra-rich and blockchain enthusiasts, owning one of these avatars is a huge source of pride, as well as a symbol of status and wealth.

– Read also: For some reason these “bored monkeys” are worth a lot

Among the celebrities who in recent months have bought a Bored Ape there are not only Hilton and Fallon, but also the actress Gwyneth Paltrow, the youtuber Logan Paul, the sportsmen Mark Cuban, Neymar, Stephen Curry and Serena Williams, the musicians Post Malone , Eminem, Marshmello, Timbaland, DJ Khaled and Snoop Dogg. There are also celebrities who collect them, such as DJ Steve Aoki, who owns at least nine Bored Ape, two NFTs from the Mutant Ape collection and a CryptoPunk. Jay-Z, Snoop Dogg and Jason Derulo all bought a CryptoPunk in 2021, while supermodel Heidi Klum bought a blonde-haired one for the equivalent of $ 260,000 in early February.

In addition to investing in existing NFTs, several celebrities are trying their hand at their own collections. This is the case, again, of Paris Hilton, who had sold her first NFT as early as 2020 and invested in a specialized platform, but also of the historic skateboarder Tony Hawk, who has put up for sale five digital collectibles depicting his tricks. most famous in early February, and the musician Grimes, who in March 2021 had released a series of NFTs depicting short music videos she shot.

Given that buying NFTs can be quite complex for those who are not already comfortable with the world of cryptocurrencies, there are services that deal with investing in this kind of assets on behalf of wealthy clients, taking on the burden of dealing with Ethereum, digital wallets and other technical matters. The most famous of these “concierges” is called MoonPay, and was also mentioned by Hilton and Fallon during their conversation on the stage of the Tonight Show: among his clients there are certainly Snoop Dogg, Diplo, actor Kevin Hart, and Paltrow, who thanked the company on Twitter when he bought his own Bored Ape.

MoonPay CEO Ivan Soto-Wright says the company's growth is “100% organic” and that celebrities are genuinely excited about “the NFT's promise to transform the way digital rights, property intellectual and fan relations ». A spokesperson for the company also said that all of the famous customers initiated transactions on their own and weren't paid to talk about the service. The only ad paid by MoonPay, so far, would be a quote from a recent Post Malone music video.

It is unclear whether all these celebrities' enthusiasm for the world of NFTs and cryptocurrencies is actually genuine. For example, at least in the case of the Bored Ape bought by Justin Bieber, it appears that the cryptocurrencies needed to buy it were given to him by Gianpiero D'Alessandro, a business partner of Bieber, as part of a complex plan to advertise NFTs launched by the company. D'Alessandro himself.

Several observers have also pointed out that there is some promiscuity between the stars who are entering the cryptocurrency and NFT sector and the financial world behind it: the Creative Artists Agency (CAA), an influential talent agency that represents between the others Jimmy Fallon, Gwyneth Paltrow and Heidi Klum, is among the investors of OpenSea, the main platform to buy NFT, and has recently signed an agreement to represent the NFT artist 0xb1.

It is not only this ambiguity, however, that raises doubts. The debate on the issue, in fact, is very polarized: if on the one hand there are those who see in the blockchain and its various applications – including NFTs – the future of the Internet (or at least an easy way to get rich), from other very many raise criticisms of both an environmental nature – the blockchain requires enormous amounts of energy to function – both social and political.

One of the most common criticisms is that NFTs function as speculative investments. Significant amounts are also spent on buying these digital certificates, betting on the fact that their value will grow in the future and they can be sold for an even higher amount. The more people know about NFTs and think it makes sense to invest in them, the more likely their value is to go up. To earn from their investment, it is therefore advisable that an increasing number of people believe in the value of NFTs and spend their money on it, convinced that they can then resell that NFT at an even greater value. This is why there are those who fear that it is a large speculative bubble ready to explode, or a pyramid scheme, that is, a fraudulent economic system in which the enrichment of the top management is based on the recruitment of other people.

In this context, the fact that celebrities with millions of followers compare the credibility and popularity of their name to NFTs contributes to giving these works a value that would not otherwise be taken for granted, legitimizing the idea that investing in them is a good idea.

The risks of allowing celebrities and influencers to advertise highly speculative assets, and whose value is therefore very volatile, is already being talked about in relation to cryptocurrencies, which are still necessary to buy NFT.

The promotion of cryptocurrencies has already created problems with the law for some famous people: in early January, influencer Kim Kardashian, boxer Floyd Mayweather and former NBA star Paul Pierce were being sued for getting rich wrong with a the so-called “pump and dump” scheme, using one's personal reputation to convince investors to buy an almost unknown cryptocurrency, EthereumMax, at artificially inflated prices. Kardashian said the Instagram post in which he talked about EthereumMax with the caption #ad, commonly used to refer to third-party sponsored posts, “does not constitute financial advice.” But Charles Randell, who heads the Financial Conduct Authority, a major body that regulates the UK stock exchange, said Kardashian's post “may have been financial promotion with the largest audience in history.”

Thus, the multiplication of advertisements in the cryptocurrency sector has recently led the governments of the United Kingdom, Spain and Singapore to announce measures to regulate these advertisements to protect less experienced investors, who are urged not to miss the opportunity to get rich. but who may not have the necessary knowledge to independently calculate their own risks. For the winner of the Nobel Prize in Economics Paul Krugman, there are increasing signs that “the risks of investing in cryptocurrencies are falling disproportionately on people who do not know what they are getting into and who are poorly positioned to manage the consequences. “.

Among them, especially in the United States, there are many people marginalized by the traditional financial system who hope to take their revenge by becoming millionaires thanks to cryptocurrencies and NFTs.

More and more celebrities are urging them not to miss the new “gold rush”: during the Super Bowl, the very popular American sporting event, along with trailers of new films coming out this year and advertisements from more traditional companies Ads have aired from several online services for buying and selling digital currencies that have hired celebrities such as basketball player LeBron James and comedian Larry David.