Digital art has been around since the pixelated days of early computer graphics, but everything changed in 2021 with one seismic sale: Christie’s auction house sold Beeple’s “Everydays” JPEG NFT for $69 million.

The domain quickly expanded and picked up pace. Ventures like the ‘CryptoKitties’ NFT game let anyone buy, breed, and sell unique, blockchain-verified digital cats. Digi-cats were sold for the price of a car!

Investors sat up and took notice. As more and more money poured in, digital art began to be touted as a different form of asset class.

However, big players (read: Bill Gates, Warren Buffet) respond with caution. But why would they turn down a growing market, with a plethora of opportunities?

A Speculative Market:

NFT Investors buy digital art not for its long-term cultural value but to ride short-term price swings. When the market is bullish, everyone expects prices to keep climbing, so demand (and prices) shoot up. But that frenzy can turn ugly in a heartbeat: a sudden crash wipes out fortunes when hype fizzles and buyers vanish. High rewards, yes—but equally high risks, since there’s often no real “fundamental” value behind these pixelated assets.

Greater Fool Theory

Why spend millions on a cartoon ape NFT? Because you believe you can sell it to someone else at a higher price—the greater fool. This theory fuels wild bidding: each buyer gambles that a richer, more optimistic collector will swoop in next. It’s a chain of hope, not intrinsic worth.

Tax Evasion

Like the fine art world, NFTs offers tactics that blur the line between savvy planning and outright evasion, drawing scrutiny from regulators trying to catch up with this digital Wild West:

Anonymous blockchain wallets let buyers conceal identities, making it hard for authorities to track profits.
Some trade across borders to exploit lower tax rates or hide gains in decentralized exchanges.
Others claim “losses” on worthless tokens to offset real-world income.

For all its faults, the NFT market has also tackled some age-old issues in the traditional art world:

Provenance Re-Imagined

Before NFTs, digital art felt free—anyone could screenshot a masterpiece in seconds. There was no reliable way to prove who owned the “original,” so most creators either gave their work away or sold physical prints. NFTs changed that by adding a unique blockchain record to each file, permanently linking one token (and therefore one owner) to one artwork. That on-chain ledger becomes a digital deed of ownership—clear, immutable, and instant.

A More Democratic Art Market?

For Artists: Traditional galleries and auction houses often gatekeep who succeeds. With NFTs, any artist can mint a token and list it on global marketplaces—no broker required. Collectors can browse thousands of new works daily and buy directly with a credit card or crypto wallet. Even better, smart contracts embedded in NFTs automatically pay creators a percentage of every resale, ensuring artists share in their own success long after the first sale.

For Buyers: NFT platforms run 24/7, accept tiny minimum bids, and let you purchase fractions of high-value pieces. You don’t need a Wall Street–sized budget or an invite-only auction login to start collecting.

Fun Fact: Jack Dorsey’s first tweet sold as an NFT for $2.9 million in March 2021—but when relisted in 2022, its highest bid plummeted to just $280