What are NFTs and why more of them are appearing in the automotive world
No doubt by now you have heard the term NFT. And if you’re anything like me, you still might be trying to get your head around them. Here's what you need to know.What is an NFT?
NFT stands for "non-fungible token" and at the most basic level, an NFT is a digital asset that links ownership to a unique physical or digital item, such as works of art, real estate, music or videos. Once upon a time, you’d collect coins, baseball cards, or Tazos, now NFTs can be considered more like the modern-day collectible.
But what do NFTs have to do with the car industry?
Whether it’s a massive surprise or not, the worlds of NFTs and cars are colliding. People are starting to pay big money for a car that isn’t even real, which is wild! Especially in a time where the prices of real cars are on the rise.
Earlier this year, American auction house Barrett-Jackson, auctioned the world’s very first collector car NFTs at the 2021 Las Vegas Auction. A pioneer in the collector car industry, Barrett-Jackson auctioned four NFTs, the first of the series of VIN 001 back in June and featured a select group of vehicles that had previously sold for charity.
The four vehicles included the 2021 Ford Mustang Mach 1 VIN 001, the 2021 Ram 1500 TRX Launch Edition VIN 001, the 2021 Ford Bronco 2-Door VIN 001, and the 2022 GMC Hummer EV Edition 1 VIN 001.
At the time, the company said they were excited to bring the NFT platform to the collector car world, but much like any collectable, it comes with a hefty price tag. The Ford Mustang Mach 1 sold for US$30,000, while the other 3 NFTs went from between US$5000 to US$22,000.
Closer to home, Blockstars Technology created a world first in September 2021 with digital NFT Ford Falcon GTHO Phase III 'Yellow Glo' Artwork and once again prices got wild, for over $50,000 exceeding the original showroom price from when the original car was released in 1971. The real version of the car was also sold at the same auction, finding a new owner for $1,300,000.
And most recently in November 2021, Alpine launched the GTA Concept, a virtual car design that offered five different liveries exclusively as collectible NFTs. Starting as the personal project of designer Arseny Kostromin, who previously worked for Renault, The GTA Concept is based on the A110 sports car.
Alpine worked with Nfast, an NFT hypercar designer, and Animoca Brands, which runs Revv Racing, a blockchain-based racing game for this concept, meaning the five owners of the GTA Concept models will be able to virtually drive their machines exclusively in the Revv Racing game.
Are there any benefits to owning an NFT?
While you might be scratching your head as to why these NFTs are going for such big bucks, it’s likely these auctions will become increasingly more popular in the years to come and this collectable trend is unlikely to stop anytime soon.
Keeping in mind that in 2020 the average cost of a new car in Australia was $40,128, there are some benefits of owning NFTs, compared to owning a physical car.
Most places will give you a certificate of authenticity, and in the case of the Blockstars Technology auction, the highest bidder also received a 3D model of the car, shopping benefits with the auction house and a framed picture of the digital NFT. Plus owning a digital car collection means you don't have to pay for car rego, maintenance or building a large garage to house all of the vehicles.
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