Matt McDermott realized most people have little to no experience with “non-fungible tokens” — better known as NFTs — an emerging technology for buying and selling art and digital information.
But the head of a Baltimore advertising agency believes NFTs and other elements of cryptocurrency have a future in marketing and branding. So he and colleagues sold an NFT of Harvey Agency artwork for around $800 and donated proceeds to the National Aquarium.
The thinking was, “Let’s do something good to make a positive impact and test the waters where we haven’t played as much,” said McDermott, Harvey’s president and CEO. “We’re just skimming the surface of what NFTs — and the blockchain economy — can do for brands.”
The Harvey Agency is among Baltimore-area businesses experimenting with a technology they believe eventually will go mainstream, spreading from entertainment and art to small business, health care and beyond.
NFTs are “cryptoassets in which each token is unique — as opposed to ‘fungible’ assets, such as dollar bills or bitcoin, which are all worth exactly the same,” according to cryptocurrency platform Coinbase.
The tokens verify ownership, or a share of ownership, and certify the authenticity of physical or digital assets — artwork, recordings, images, Twitter posts, comic books — and can be bought, sold or traded along with the asset they represent. Tokens — which are individual and encrypted digital assets — are secured by blockchains, such as Ethereum, a secure and decentralized database.
NFTs are billed as accessible to average investors. But it’s the eye-popping transactions in the thousands or even millions of dollars that have made headlines over the past year.
The artist known as Beeple sold a short animated video last February for $6.6 million, followed in March by a $69 million bid online at Christie’s for his collage of 5,000 digital images. Crypto Art, a website that tracks digital art sales, says more than 2.8 million digital art pieces have been sold to date for a total of more than $2 billion.
Not everyone is convinced NFTs are legitimate across the board, given the unregulated, Wild West nature of the market right now. Some even consider them a scam, while others advise investors to do their research before buying one. Values can fluctuate greatly and be determined by creators or users based on factors such as rarity and application in the digital or physical world.
“Only invest what you can afford to lose, and be aware that you may lose some or all of your investment,” the Better Business Bureau says in an online report, warning that investors in cryptocurrency or blockchain technology platforms should use caution and be aware of significant risk.
Because of the volume of money changing hands, NFT transactions are vulnerable to scams, online platform CoinDesk warned in a January report. Consumers should look out for pop-up links to fake websites, phishing scams that seek access to digital wallets where cryptocurrency is stored, fake accounts that sell counterfeit artwork, and groups that artificially drive up demand, then cash out, among other types of fraud, said CoinDesk, which specializes in the emerging cryptocurrency economy.
Online NFT marketplace OpenSea, which offers a free NFT minting tool, has acknowledged the extent of such problems.
“Over 80% of the items created with this tool were plagiarized works, fake collections, and spam,” OpenSea tweeted in January, saying it was working to deter bad actors.
Alexis Johnson, a Johns Hopkins University graduate who founded cryptocurrency advisory and marketing firm Light Node Media in 2018, said NFTs are not scams, but that scammers exist.
“When it comes to scams in almost any industry in the early stages, there are people who try to take advantage of the hype cycle,” said Johnson, an investor herself. “NFTs are here to stay. Cryptocurrency is here to stay. NFTs are revolutionary, really, a new way to store culture.”
Though the technology is in its infancy, some experts believe it will gain widespread use.
“It’s something that’s going to revolutionize a lot of things outside of what people are seeing now,” said Scott Melamed, president of ProMD, an operator of Baltimore-area anti-aging clinics that invested in NFTs as a unique offering for clients. “We see countless applications, in health care and small business and the way we interact.”
For the Harvey Agency’s campaign celebrating the firm and its clients, the firm released a series of limited-edition NFTs. Each of four individual tokens featured pop artwork created by the agency’s art director, a mashup of holiday memes with nods to “Jaws” and “Shark Week.” They hoped to introduce the technology to clients, who could buy original artwork and contribute to a cause, with proceeds going to the aquarium’s Baltimore’s conservation mission.
The agency’s top-selling NFT, “Hark Fishing,” a design featuring a candy cane fishing hook bobbing in the ocean, sold for a cryptocurrency value equal to about $700 to $850, depending on daily fluctuations in the value of the Ethereum network. It also gave the buyer additional content: a membership to the aquarium and swag from area clients such as Flying Dog Brewery, Michele’s Granola and Goetze’s Candy Co.
The technology behind NFTs opens up new possibilities for art and pop culture collectors, offering unprecedented access to “truly rare pieces the average person will never have a chance to participate in,” said Adam Fortier, a lifelong comic book fan and president of NFT company InTrove.
The Toronto-based startup, which takes art and collectibles from the physical world into the digital world, teamed up in December with Hunt Valley-based pop art collector Steve Geppi. Geppi Family Enterprises is the world’s largest distributor of comic books, graphic novels and pop culture merchandise through its 40-year-old Diamond Comic Distributors.
The newly formed Geppi Treasury offers art and collectibles from the last century for fractional ownership as NFTs.
Fortier describes NFTs as the representation of ownership, in the way that a deed defines the physical ownership of a house. In the new venture, NFTs will offer verified ownership of physical pieces stored by Geppi. InTrove, meanwhile, handles the minting of NFTs and scanning and photographing of art and collectibles.
Geppi said he envisions a broad market and sees NFTs as a natural progression of art and technology.
The business has started by offering fractional ownership of a 1937 movie poster illustration for “Snow White and the Seven Dwarfs,” created by Gustaf Tenggren, the stylist for the 1936 Walt Disney Co. animated film. The poster, considered one of the most desirable images because it depicts all of the movie’s major characters, is stored and insured at Geppi’s Diamond International Galleries in Timonium.
Starting in December, buyers were offered a chance at fractional ownership for a value equal to about $100, with the poster’s value heading to about $12 million. But the poster NFTs were pulled from the market after a big drop in the value of Ethereum, Fortier said. Plans are to re-offer the poster again, this time based on U.S. currency.
Fortier believes that in general, some NFT investors may expect values will increase, while others simply want a high-tech way to collect or own something meaningful for themselves or to share with others through a virtual museum or experience.
“Why would somebody pay a large sum of money for a comic book?” Fortier said. “It has an emotional connection. … It doesn’t increase a penny in value if you never sell it.”
Some say applications for NFTs go well beyond art and collectibles.
Melamed, the ProMD president, said he felt strongly about patients of his company’s clinics being “ready for the technology revolution that NFTs and the blockchain are bringing.” So he devised a plan for an end-of year giveaway to replace the traditional holiday email blast.
The clinics minted 149 tokens and offered them for free on a first-come, first-served basis. All were claimed. They included complimentary access to an instructional seminar explaining the basics of blockchain and the metaverse, a virtual space where people work, socialize, play and shop.
The ProMD NFTs feature images of the business’ canine mascot, a Shar-Pei named Winston, with the tagline, “Wrinkles look good on Winston. Botox looks good on you.”
“It could become part of history or just an education they received,” Melamed said. ” … We’ve always been on the forefront of technology in helping [clients] to look and feel younger. What’s really the fountain of youth is being up to date in the world.”
Melamed envisions NFTs being used to protect and verify patient records, to track the safety and source of medications, to certify the authenticity of patents, and a host of as-yet-unheard-of ideas.
InTrove’s Fortier compares today’s NFT market to the earliest days of the internet.
“We saw a big rush early last year, with everyone getting into the space,” he said. “It was a bit of the Wild West.”
“This year and next,” he predicted, “you’ll see people trying to approach it in a more responsible manner and more unique ways to represent the technology.”
At the Harvey Agency, the NFT experiment ended with just two of the four minted tokens sold, and just one for full value. The proceeds, all of which were donated, came to about $1,000, based on current Ethereum exchange rates.
The “holiday stunt” went as well as could be expected, McDermott said, considering, “it was such an unusual thing for us to do, and a lot of our audiences don’t deal in or know what cryptocurrency is. … We’ve demonstrated the opportunity NFTs have to benefit brands and create unique experiences.”
McDermott said he expects the technology to grow as a promotional element for products and as a new product line for some brands.
He said Harvey’s remaining tokens are still on the market but not openly advertised.
“Anything they make isn’t going to be significant, but they’re still available,” he said. “They’re cool to have. It’s nice to say, ‘I own this piece of the internet.'”
