Non-Fungible Tokens (NFTs) are units of data stored on a blockchain that certifies a digital asset to be unique and therefore not interchangeable, while offering a unique digital certificate of ownership. Public attention towards NFTs has exploded in 2021, when their market has experienced record sales. For long, little was known about the overall structure and evolution of its market. To shed some light on its dynamics, we collected data concerning 6.1 million trades of 4.7 million NFTs between June 2017 and April 2021 to study the statistical properties of the market and to gauge the predictability of NFT prices. We also studied the properties of the digital items exchanged on the market to find that the emerging norms of NFT valuation thwart the non-fungibility properties of NFTs. In particular, rarer NFTs: (i) sell for higher prices, (ii) are traded less frequently, (iii) guarantee higher returns on investment (ROIs), and (iv) are less risky, i.e., less prone to yield negative returns.

Luca Maria Aiello

Associate Professor at the IT University of Copenhagen, Denmark