NFTs are making some collectors and artists rich, but success in this high-risk marketplace is more art than science. Alex Lugo, 29, used to drive trucks to support his wife and children, Jonathan, 5, and Layla, 9. Now, he says has saved enough that his children will “have the freedom to choose what they want to do with their lives.”Lila Barth for The New York Times Late on a Friday last spring, Izzy Pollak decided to buy two Bored Ape NFTs — which, as a reminder for the many people thinking, Yeah, but I still don’t know what an NFT is — means he bought unique, digital images (in this case, of apes).
As the owner of a Bored Ape , he now has commercial rights over the digital image to do with as he wishes. Many people choose to display their NFTs as their profile picture on social media accounts.
(And if you’re wondering how ownership of a digital asset can be proven: Every NFT, or non-fungible token, has a distinct serial number, and the transaction history of each NFT is stored on the blockchain, so people can see who the real owner is.)
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 of the apes are wearing gold jackets or animal-print tunics. Others are smoking cigars or smiling widely.
At the time, Mr. Pollak, who works for Genies , a tech start-up in Los Angeles that makes NFTs and avatars, didn’t have a lot of disposable income. “I was living in a four-bedroom townhouse with three other people,” he said. “We all shared a bathroom. It felt like college life.”
He didn’t come from money, either. During the 2008 financial crisis, Mr. Pollak said, 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 spurred by hearing people talk about them on Clubhouse . “I was like, ‘Oh my God, this is insane. I’m about to spend hundreds of dollars on a picture of a monkey,’” he said.
Turns out it was a wise decision. Last fall, several months after he had bought his first NFTs, Mr. Pollak’s apes skyrocketed in value. He sold one that he had bought for approximately 14 Ether (a virtual currency that was worth about $40,000 on the day of the purchase) for around 70 Ether (approximately $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 call it the Chimp Chalet,” he said, laughing. “I always wanted to own a house but never thought I could make it work.”
He now has three Bored Ape NFTs in his portfolio. He hasn’t sold them yet, but he will one day. For the first time in his life he feels financially well-off.
A fortunate handful of people now have their very 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,” said Matt Medved, a founder of Nft Now , a digital media publication about NFTs. Some are using the funds to pay off student loans, buy a home or quit jobs they hated. (Some people, of course, are also buying yachts or throwing lavish parties.)
“NFTs are like manna from heaven,” said Mr. Pollak, who also acknowledges how lucky he is. “I’ve heard horror stories of people spending their rent money on NFTs. It’s heartbreaking to see people risk their money when it doesn’t usually work out.”
Most people who make or buy NFTs never turn a profit. There is no regulation or consumer protection, and trading them is basically 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 are aplenty. Alex Lugo points to the real estate he owns in the Metaverse. Mr. Medved encourages people to think of NFTs like baseball cards. “For generations our society has accepted that rare baseball cards have value,” he said. “There is a rare Mickey Mantle card that probably costs 5 cents to make that sold for $5.2 million last year . And why? It’s not about the physical piece of card stock. It’s the history, the rarity, the scarcity, the cultural relevance.”
“It comes down to fandom,” he added.
Similarly, what many NFT artists […]
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