Gold, silver, fine art and expensive wine have long been the hottest ways to store value: physical assets that investors could hold onto with the expectation their worth would only increase. Over the past two years, non-fungible tokens (NFTs) have upended all that. Like gold, wine and art, their value is entirely conceptual; unlike those things, so is their existence. NFTs aren’t physical things: they are lines of code. So many people aren’t sure what to make of the future of NFTs, and whether the billions of dollars that have flooded into them will turn into real value or be a total waste. The National Post decided to explore the future for itself. That’s why we’re launching our own collection of NFTs, the first ever by a major Canadian news organization.
For those who aren’t yet familiar with them, NFTs are sort of a deed to a unique digital asset — digital artwork, for example — where the ownership is verified by the blockchain, the same technology used by cryptocurrencies like bitcoin. Buying an NFT means you essentially own the rights to a digital drawing, video or audio clip, even if there are other copies of it online.
They’ve already taken the digital art market by storm with eye-popping valuations such as digital artist Beeple’s NFT collage called Everydays: The First 5000 Days selling for US$69 million (in cryptocurrency) in March 2021. Meanwhile, avatars of apathetic-looking simians that are popular on social media, courtesy of the Bored Ape Yacht Club NFT collection, can sell for millions of dollars each, and have generated over US$1 billion in total sales since launching in April 2021.
NFTs have disrupted the sports memorabilia market, while companies like Visa and Coca-Cola have rushed in to buy or launch their own NFTs. Now the National Post is giving it a try, and we are officially launching our own series of NFTs that readers can bid on and buy.
This is how we did it.
The project started with Postmedia executive editor Kevin Libin and National Post editor-in-chief Rob Roberts looking to launch an NFT to go with The Capitalist Manifesto series that has been running in the Post. They asked Postmedia multimedia producer Brice Hall to develop an idea.
The Capitalist Manifesto
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“The most successful NFT collections do more than just sell seemingly overvalued JPEGs,” Hall said, to explain how he developed the concept. “They build a community around what’s best described as a user-generated story, where your NFT is your ticket to participate.”
In keeping with the theme of The Capitalist Manifesto, his idea was to create an Invisible Hand Society. “The collection personifies Adam Smith’s timeless image of the free market, casting each NFT as a real-life champion of capitalism and transforming them into deities,” Hall said.
After Hall developed the idea, and the digital creations, it was up to me, as a reporter who covers crypto for the Post, to figure out how to get them onto the digital marketplace. That involved poring over how-to blogs and wading through a world of YouTube tutorials. I also benefited from some advice from Ether Capital, a cryptocurrency portfolio company, which walked me through the tax implications of NFT gains (yes, the Canada Revenue Agency considers any income from crypto assets to be fully taxable).
But before we could collect any money, we needed to spend some on minting NFTs. These are called “gas fees” and they cover the computing power necessary to process and validate transactions on the blockchain that are needed to transact NFTs (as in, they pay for the gas for your NFT to travel on the blockchain). So, I needed to convert some Canadian cash to Ethereum. It costs just under $4 in transaction fees. And I would need a digital “wallet” — sort of a bank account, minus the bank — to hold it in.
To buy crypto, I went with the US-based crypto-trading giant Coinbase, which is one of the most popular platforms in North America. Setting up an account involved some identity-proving rigmarole and form-filling that wasn’t much different from getting a driver’s license renewed. I hit a few snags over providing the right kind of paperwork to prove my identity, largely because of an expired driver’s license (a reminder of the things that took a backseat during the pandemic), although it was all resolved within a single morning using different identification. (And yes, I’ve since renewed my license.)
Once I cleared the document-authenticating stage, I was in. It was easier than expected to turn my Canadian dollars into Ethereum and within a few minutes, I had Ethereum in my Coinbase account. Coinbase takes a commission for every trade — usually a few percentage points — and that combined with a general downturn in the market meant that the initial $100 Canadian I put towards the Ethereum was quickly chewed up, standing at US$50.04 the last time I checked. It will likely require reloading at some point to cover gas fees once these assets go to auction and when transactions take place.
I needed a wallet that could hold the Ethereum I would spend to cover transaction costs and to hold the proceeds once these NFTs were sold. I had heard positive reviews of MetaMask, which is a wallet that conveniently plugs in directly to a Chrome web browser. It even provides a secret recovery phrase in case the unthinkable happened and I lost access to my account. Shifting my Ethereum from the purchase at Coinbase to my MetaMask wallet was as easy as copying and pasting my wallet’s blockchain address into Coinbase, which transferred the funds in little time.
With a wallet full of funds and a quick means to get more, it was now just a matter of setting up an account on OpenSea, which is the main trading platform for NFTs. In January, OpenSea broke its all-time record by generating US$5 billion in NFT sales for the month. It was all remarkably simple: in only a few moments, I had the account set up and connected to my MetaMask. Uploading the original NFT files took another few minutes. Once the assets are put up for auction, they are recorded on the blockchain.
And as of today, the auction is officially open. You’ll need some cryptocurrency to do it. And you’ll want to hurry: the auction lasts for a limited time only. You can bid at https://invisiblehands.nationalpost.com.
We hit one frustrating snag at the last minute. We wanted to use a particular cryptocurrency — Ethereum — for bids in the auction, but when we went to open the bidding, we discovered we were only able to list the sale in Wrapped Ethereum (which is worth exactly the same as Ethereum). OpenSea explains that Wrapped Ethereum is a “currency that allows users to make pre-authorized bids that can be fulfilled at a later date without any further action from the bidder,” and seems to be the platform’s preferred currency. OpenSea lets you convert one to the other with just the push of a button. So, while it led to some frustrating hours trying to figure out why we couldn’t use Ethereum, it turned out not to be a huge deal.
But all in all, the process was surprisingly simple. It’s something anyone can do, with a bit of research, not much more than a hundred dollars, and patience. The NFT market is already starting to flood with players, and with virtually anyone able to participate, this is probably as close to a free market as it gets, which is something the capitalists at the Invisible Hand Society would no doubt applaud.