It seems like everyone is talking about NFTs right now. The latest investment craze, which combines concepts from cryptocurrency and art collecting, has taken Hollywood by storm. Many celebrities are either buying NFTs, endorsing them, or making their own to sell on the open market.
But are NFTs actually a good investment for ordinary people? Let’s take a closer look.
What Are NTFs?
NFTs are difficult to describe, especially if you’re not familiar with cryptocurrency. The name is short for “Non-Fungible Token,” which doesn’t exactly clear anything up.
The “non-fungible” part means that it is unique. In economics, something that is fungible can be replaced or exchanged with an identical item. One dollar bill is like pretty much any other dollar. One share of GameStop stock is the same as another share. But one NFT is not the same as any other NFT. They are unique strings of information, not unlike a Bitcoin. However, it is tied to a digital asset such as artwork or music.
When you buy an NFT, you aren’t necessarily buying the exclusive rights to the image, song, video, or other piece of digital media. Depending on the terms of the sale, the original copyright holder may retain their rights to the work and make copies of it. We’re not talking Martin Shkreli buying the only copy of the Wu-Tang Clan album Once Upon a Time in Shaolin and then refusing to release it, either. People can view, download, and share the media that’s attached to an NFT.
In essence, the media part of the NFT is a receipt for the corresponding chunk of the blockchain. You know those “collectors” plates and coins and figurines that come with a certificate of authenticity? Buying an NFT is kind of like buying the certificate—but without the physical item it’s attached to.
In theory, NFTs will appreciate in value over time. Whether that’s true has yet to be seen. Digital artist Beeple (real name: Mike Winklemann) created an NFT collage that sold for $69 million at Christie’s a year ago. One of his works originally sold for $66,666.66 and was resold for $6.6 million. Is Beeple an outlier or a fluke?
NFTS: Good or Bad?
That’s an even tougher question to answer. From an environmental standpoint, they’re certainly not great. NFTs use blockchain technology, which takes a tremendous amount of energy to perform transactions. According to Forbes, it takes 1,173 kilowatt-hours of electricity to complete a Bitcoin transaction. That amount of juice could “power a typical American home for six weeks.”
Cryptocurrency is “mined” by linked computers performing increasingly complex math problems. As crypto and NFTs continue to become more and more popular, those math problems will keep getting harder to solve. That will require even more power to complete them. In theory, that should serve as a way to regulate value and protect against inflation.
Are NFTs a good investment, though? It might be too early to say. There are two main camps right now: people who think NFTs are the future and people who think they are “future Beanie Babies.” (For our younger readers, Beanie Babies were hot collectibles for a minute in the 90s; now, they’re essentially worthless.)
NFTs have no inherent worth. Their value is based on whatever the market will bear. While that’s not so different from collecting art the traditional way, even if the market crashed, you’d still own a Picasso. If the NFT market implodes, there are going to be quite a few people with pictures of anthropomorphic monkeys on their phones. I know which one I’d rather spend millions of dollars to buy, but some celebrities disagree.
Celebrity NFT Enthusiasts
When Paris Hilton joined Jimmy Fallon on his late-night show to talk about NFTs, it felt like a watershed moment. If NFTs are going to go mainstream, future economic historians will likely claim that interview as the turning point.
An increasing number of celebrities are jumping on the bandwagon, and it doesn’t seem like the trend is slowing down. Some of them are creating their own digital artwork, while others are publicly purchasing NFTs for big bucks. A few are making an earnest public argument for NFTs as the future of how we make and share art.
Artists have argued that NFTs allow them to have more control over their work—and get paid better, too. Brands are getting into NFTs now, too, with Nike, Gucci, and Adidas getting in on the action. Will we see a future where cereal boxes come with non-fungible tokens inside instead of prizes? Or are NFTs a fad—or even worse, a grift?
That’s what some critics have said about these celebrities, all of whom have either endorsed NFTs or created their own to sell.
Lindsay Lohan was one of the first celebrities to cash in on NFTs. In March 2021, she released a single called “Lullaby” as an NFT. Later, she’d sell an image of herself as an anthropomorphic wolf. She told Forbes:
“It’s only a matter of time till everyone in Hollywood and beyond gets involved. Maybe we will see the tokenization of movies, and of how artists are paid for their films, music and art. I see a future where crypto, NFTs and blockchain will be the norm, rather than the exception.”
That would prove to be a shockingly accurate prediction.
Jimmy Fallon and Paris Hilton
Here’s Paris Hilton telling Jimmy Fallon about her new project: NFTs. Hilton has long insisted that she’s much smarter than the public gives her credit for, and the intense awkwardness of this interview notwithstanding, she clearly knows what she’s talking about.
It’s worth noting that as Hilton and Fallon show off their Apes—which are from the trendy Bored Ape Yacht Club—the interview serves as an advertisement for their own investment. If more people get into NFTs, then they can sell their Apes for a profit.
Speaking of the Bored Ape Yacht Club, Justin Bieber just made headlines by buying on for 300% more than its market value. He paid $1.29 million for the digital image, which he then shared on his Instagram. He bought a second one a week later. Apparently, he just really likes them.
Captain Marvel star Brie Larson recently came under fire for tweeting about an NFT she purchased. Larson is using an NFT from the Flower Girls collection, 10,000 digital artworks created by Varvara Alay. They’re a “pretty” alternative to the Bored Apes of the world, but they serve the same purpose.
Larson changed her profile picture to the Flower Girl and gushed about how much she loved it. Her fans were less impressed, calling out the actress for her involvement in what many of them view to be an ethnically questionable, ecologically disastrous hustle.
Musician, artist, and mother of X Æ A-Xii with former partner Elon Musk Grimes is no stranger to the crypto space. She created a series of multimedia NFTs that sold for $6 million last February. Investors in her collection haven’t seen growth; in fact, one of the pieces sold for 84% less than the buyer originally paid, calling into question whether there’s a reliable resale market for NFTs.
Late last year, Reese Witherspoon started posting about NFTs and cryptocurrency on her social media accounts. Witherspoon tweeted, “In the (near) future, every person will have a parallel digital identity. Avatars, crypto wallets, digital goods will be the norm. Are you planning for this?”
She also tweeted her support for “creators who have pioneered the NFT space” and encouraged “more women to be part of the conversation.” Witherspoon’s Twitter avatar is currently a Flower Girl, just like Brie Larson.
He might be 90 years old, but William Shatner is still exploring new frontiers in celebrity endorsements. After getting a trip to space, courtesy of Jeff Bezos’ Blue Origin rocket, Shatner cashed out on his Star Trek cred with a series of 125,000 digital trading cards based on his life and career. The trading cards sold out in less than ten minutes.
John Cena seems to have a good thing going with his acting career these days, not to mention his fanbase from the WWE. Unfortunately, those fans weren’t willing to shell out $1000 for an exclusive package of Cena swag that included an NFT. Of the 500 packages, only 37 of them sold.
“I talk a lot about failure — this idea failed,” said Cena. “Myself and the folks in the WWE thought $1,000 was a fair price point. We were wrong. We were absolutely wrong.”
Having essentially retired from acting, Gwyneth Paltrow became a trendsetter in the celebrity lifestyle space. Now, it seems that she’s testing the NFT waters. In January of this year, Paltrow revealed that she had “joined” the Bored Ape Yacht Club. She also endorsed Moon Pay, a cryptocurrency exchange. Paltrow’s current Twitter avatar is a Flower Girl. Although there are currently no GOOP branded NFTs, it feels almost inevitable that Paltrow would give it a shot.