The reason why NFT artwork is worth millions isn't just for a speculative market so another chump will buy it from you at a higher price, but it also has another value. Like all artwork it is used for tax avoidance. The high price of NFTs allows a wealthy elite to squirrel away millions to accrue value without being taxed. They are more handy than a real piece of artwork or some expensive property in London because a digital image isn't vulnerable to physical damage or maintenance costs. It's obvious why this shit is exploding.
an interesting video that touches on the tax laws on physical artworks changing so they jump to the next thing....
https://www.youtube.com/watch?v=VtxQL55Y8cM
Has anyone flipped an NFT yet? Pretty sure they've got worse resale value than a new car.
The only people making money off of them are the people creating them, and the cost to "mint" them is so low that basically anyone with some Ethereum can put some out there to see if anyone bites.
It's the long con—if you buy an NFT, get it appraised at some crazy high value, then donate it to a museum or something that counts as a donation and it's a tax writeoff. I buy an NFT for $20, I get it appraised at $20 million and then I donate it, and now I'm paying $20 million less in taxes on my other income. This is how art works, I'm positive it'll be how NFTs work as well, except this is even easier since there's nothing physical at all.
I see this a lot on the internet but it's only partially true, like it only happens for the 0.1% of collectors who can afford to slosh $80m in wet paintings into freeports every season. The vast majority of collectors just want to sell their work for more then they paid for it 20 years ago. Return expectations are still wildly inflated, but the whole market actually isn't just a laundering scheme, and most "investors" in conventional art break even at best.
Source: I'm the brilliant but sexy art history major in every airport novel you've read
Oh for sure, only the 0.01% or higher who can afford this do this. You're right that most investors are doing this because they hope to sell for more than they buy, and will have to pay capital gains tax.
I think it's the same with a lot of the art idea, yeah some of it is because of money trafficking and tax evasion, but also its a really inflated market with a bunch of rich people and galleries ready to spend whatever they want and a pretty hard exclusive club to actually get demand in.
The high price of NFTs allows a wealthy elite to squirrel away millions to accrue value without being taxed
They can use loopholes like buy/sell in cheaper places by moving artwork around for sale and 1031 exchanges where they reinvest gains into more assets in the same tax year.
This is correct, after you hold an NFT for a year then you can deduct the fair market value if you donate it. I hate NFTs.
You also forgot "money laundering".
When I do it, I get in trouble.
When rich people do it, they call it "collecting fine art".
i get what you're saying, but that isn't what use value means. it's still exchange value.
Been a while since I explored NFTs, are they centrally managed or do they go in your digital wallet? Like with bitcoin before, has anyone lost their NFT to a forgotten password or harddrive crash yet?
There was an idiot posting a meltdown on Twitter like a week ago about how he gave someone his password and they stole 3 of his NFTs.
He then started talking about how he was gonna keep using the jpegs anyway, not realizing he was showing how worthless NFTs actually are lol
