(Bloomberg Businessweek) — A few months before nonfungible tokens exploded into the public consciousness, the field was already pretty big, with some 75,000 buyers in 2020, according to a report by market researcher NonFungible and L’Atelier BNP Paribas. But it was also still sleepy.

The term “NFT” is often used as a shorthand for a certain kind of blockchain-linked artwork, but it really refers to the digital certificate of authenticity to which these artworks are attached. The first ones were conceived as early as 2012, as digital coins that represented coupons, subscriptions, or company shares. An NFT can be created for anything, whether a century-old painting or a tweet, attesting to the blockchain’s guarantee that it’s the original, no matter how many free JPEG replicas you can dig up on Google Images. Half of the NFT sales made in 2020, according to the NonFungible report, were related to video games; 8% were connected to metaverses, virtual “worlds” where participants can buy land and virtual goods. Artworks made up only 5% of NFTs’ total market distribution, and most sold for under $100.

In March, though, NFT art began seizing headlines. Christie’s auctioned a collage of images by the creator known as Beeple (real name Mike Winkelmann, a graphic designer in Charleston, S.C.) to a Singapore-based crypto investor who paid $69.3 million worth of Ether, more than 10 times the record value of any other known NFT sale. Images by other artists, such as Pak, Mad Dog Jones, and Micah Johnson, started routinely selling for tens of thousands of dollars on digital marketplaces such as OpenSea and Nifty Gateway. As curiosity spiked, everything from (real) houses to Taco Bell-licensed pictures of Mexican food to LeBron James dunk highlights began to come with an NFT. Charmin released images they of course called NFTPs.

The frenzy has subsided some, with the average price of an NFT sinking since February from $4,000 to about $1,500, according to NonFungible, and the average daily sales volume of NFTs falling from $19.3 million in mid-March to $3.03 million by April. But the people who got in early—those who were lucky, true blockchain believers, or both—have still done supremely well. Collectors who bought hundreds or even thousands of NFTs are now, suddenly, multimillionaires, at least on paper (or rather, on-screen). Still others have begun selling, joining the growing ranks of the crypto rich.

Who are these people? And what are their motivations? The following are some of the biggest and most active collectors.

Online ID: etyoung

Actual ID: Eric Young

Young graduated from business school in 2009 and started out at Bank of America Merrill Lynch, putting in “a few years of torture” before going into fintech. “That helped me better understand the payment landscape, and how money moves around, and how the financial infrastructure works,” he says. He bought his first Bitcoin in 2015, traded “a six-figure amount” in 2017, and then started accumulating “several hundred thousand dollars’ worth at bear market lows in 2018.”

He’s continued to buy. “Bitcoin is a finished product. It’s a savings technology,” he says. “That’s why I dumped most of my wife’s and my net wealth into it—because I had a lot of conviction in it.”

Young, who lives in the Bay Area, first encountered NFTs when he saw a Guernica-inspired animation called Picasso’s Bull by the digital artist Trevor Jones. He remembers hearing about Nifty Gateway and “poking around and thinking, ‘Let me see who would be interesting to buy, let me just experience it.’ ”

Investing in digital-art NFTs, Young says, made intuitive sense. “I understand how this ascribes provenance to a piece on a public ledger, and there’s nothing else I need to understand,” he says. “Whereas when you’re investing in a cryptocurrency, you need to think about governance, who the founders are, and there’s higher risk.”

Young says he’s since invested more than $1 million, on 350 or so NFTs, and has sold only three works he considers “notable.” Two were by Mad Dog Jones, with Young paying $700 for both and later selling them for $240,000. “One of the things, if you’re part of the crypto economy, is that things become … I don’t want to say cheaper,” Young says, “but when you’re pricing things in Bitcoin terms or Ether terms, and not the U.S. dollar, it looks very different.” Indeed, if you have 100 Ether to spend on art, and Ether’s value is skyrocketing, pieces priced in dollars can quickly become bargains.

On Wednesday, Young bid for, and won, a $1.4 million artwork by Pak in a sale organized by Sotheby’s on Nifty Gateway; bidding was extended by an hour as Young battled with two other collectors for the work. Young typically displays one of his NFTs on an Infinite Objects frame “which is small—I can have it on my desktop.” A lot of his NFT art also came with physical components, such as prints, sculptures, and plaques, giving his collection a hint of last-millennium charm. “I have a lot of stuff I need to frame,” he says.

Online ID: WhaleShark

Actual ID: Not disclosed

Ask around in the relatively tight world of major NFT collectors and the name WhaleShark inevitably comes up. The British, Hong Kong-based collector began putting at least half his salary into Bitcoin as early as 2012, then in 2015 switched to Ether. As these currencies rose in value, he began looking for ways to spend them.

In 2019 he started buying NFTs, and he now holds about 210,000. A digital repository he started called the $Whale Vault contains one of the largest assemblages of NBA Top Shots “moments,” video clips that are also certified NFTs. Top Shots are licensed by the NBA, making the clips, which can be released in editions of anywhere from 1 to more than 10,000, effectively digital trading cards. WhaleShark estimates that he’s spent about $150,000 on Top Shots and that this collection alone is now worth as much as $53 million, though the only way to know for sure would be to sell it.

“I think the main reason why NFTs started to blow up is that people started to realize it’s just a natural evolution,” he says. “Our life is slowly turning from physical to digital. When you look at the younger generation, they are very accustomed to holding digital collectibles as a store of value.”

WhaleShark says he hasn’t sold anything he’s bought and plans to donate his collection someday. But he still managed to monetize his holdings recently, by creating a blockchain-based currency, $Whale, that’s backed by the NFTs in the Whale Vault. The coins can be used to rent and sometimes purchase NFTs from the vault, as well as to participate in Whale-related decisions. And of course they can be traded like other cryptocurrencies. “Back then they were worth $500,000,” WhaleShark says of the currency’s early value. Today the fully diluted market cap (the coins’ price multiplied by their maximum supply) is roughly $260 million, though the price can fluctuate dramatically. He still holds about 40% of the currency.

WhaleShark sees plenty of room for the NFT field to grow. “If we look at the percentage of the mass-market population that are dealing with NFTs today, you might be looking at 0.01%,” he says. The remainder “provides a significant amount of headroom. We have tons of big names coming into this space: Nike, BBC, Paramount. All these big names are going to drive user adoption.”

Even so, he points out, not all NFTs are made equal. “I do believe that 99.9% of projects out today won’t hold value,” he says. “You had so many independent projects that were leveraging NFTs in a very exploratory manner. What we’re looking to in the future is projects that have that mainstream polish.”

Online IDs: Seedphrase, Danny

Actual ID: Daniel Maegaard

Maegaard was born in New Zealand and lives in Australia. He made his first $1 million on cryptocurrency at age 26, he says, then asked himself, “Do I continue doing my law degree, or do I pursue this full time?” To clear his mind, he booked a one-way trip to Europe, hung around for three months, then returned to Australia in 2017 determined to become a full-time crypto investor.

In late 2018 he discovered NFTs connected to land sales in the blockchain-based game Axie Infinity. From there, he says, “I just fell in love with the community.” The group of tightknit collaborators he found reminded him of when he’d discovered Bitcoin. As he began to collect NFTs, he sold almost as often as he bought, allocating a portion of his crypto portfolio to the pieces “with the plan to basically flip them.” In May 2020 he spent the equivalent of $20,000 on Punk #6487, a “zero trait punk” depicting a pixelated face on a blue-gray background, from an NFT series known as CryptoPunks. He says his peers derided the purchase as “absolutely silly.” In February he sold it for 550 Ether, worth about $1 million at the time.

As his portfolio has increased, he’s become more inclined to buy and hold. Maegaard now has hundreds of NFTs, whose value he places at about $13 million, representing two-thirds of his net worth. He’s bought a few real-world objects with the proceeds from his crypto sales, including a BMW, a Rolex, two residential properties, and a seven-unit commercial building. But since that last outlay, he says, “my biggest purchases have all been digital.”

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After graduating from Columbia, Bell spent six months in investment banking. “I quickly realized I despised the work,” he says. From there he had a few other jobs, including as a trader for a wealth management company founded by vegan Buddhists. In 2017, still working in traditional finance, he bought his first Ether.

Last year he began to buy digital-art NFTs, working with Pablo Rodriguez-Fraile to build up a shared collection. He was later to the party than many cryptocurrency traders, but he made up for lost time. “I really aggressively started to collect,” he says. Bell estimates he’s now spent about $400,000, on almost 2,000 NFTs.

“There is a gallery component to what I do,” Bell says. “My collection belongs in a museum.” There’s no NFT Guggenheim (yet), so he and Rodriguez-Fraile decided to build one, establishing the Museum of Crypto Art in the virtual-reality world Somnium Space before their partnership ended. (There will also be a website, for the less adventurous.) “The idea for a museum came from an experience I had in central Brazil, when I went to Inhotim,” he says, referring to the sculpture park built by the mining magnate Bernardo Paz. “That sense of stepping into the world of wonder and art is the vision I wanted to bring into the metaverse.”

One of his favorite NFTs is the work One True Path, by the artist known as Rhyolight. “This piece is incredibly special to me,” Bell says, “because Rhyolight was the first artist who we did the solo exhibition with at the museum. When I saw this piece … I’ve never seen anything like it.” Since then Bell has installed 23 permanent exhibitions.

Bell also makes art himself. “It’s a project I began in 2015, where I would use water marbling, a Japanese technique,” he says. “I water and dye dollar bills and give them to friends and people I’ve met along my life path.”

Online ID: Pablo

Actual ID: Pablo Rodriguez-Fraile

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Rodriguez-Fraile began purchasing NFTs in 2017, but it was only last year that he started to buy art-​related ones. His and Bell’s burgeoning collection rapidly gained notice. “Little by little, we were the ones breaking every record,” he says. “I remember we purchased a piece by Pak for $7,000, and it made some big news in the space.” The work, Red, consists of a simple red square, a minimalist counterpoint to the more-graphic NFTs in circulation.

Since Rodriguez-Fraile began collecting, “the landscape has really changed,” he says. “You were able to grab a few pieces for a few hundred dollars. There were a lot less artists, and a lot fewer works going around.” He made headlines again in February when a short Beeple video, an animation depicting Donald Trump naked and passed out on a trash-strewn lawn, sold for $6.6 million. He’d purchased it four months prior for about $67,000.

After parting ways with Bell, Rodriguez-Fraile went on to found the Lot 555 Collection, which he believes is “the deepest, most important collection in the world by far.” Nearly all of the pieces it contains belong solely to him.

He guesses that his personal collection numbers as many as 2,000 NFTs, some of which are displayed on his Nifty Gateway profile. The core of his holdings consists of 300 to 400 pieces featuring “the top of the top creators.” He has about 20 works by Beeple and what he calls “the deepest Pak collection,” numbering around 70 pieces.

The biggest change in the NFT space occurred, Rodriguez-Fraile says, “when creators realized that this wasn’t only about the artist and selling, but that there was another side, with the collectors who do the buying.” Artists who can “foster good relationships and put their careers together in a professional and thoughtful manner were able to attract, let’s say, a bit more serious collectors.”

Take Pak. “We’ve had thousands and thousands of texts over the last year,” Rodriguez-Fraile says. “I’ve talked to them more than my wife.” That kind of engagement, he says, helps to ensure that “they have an incredible collector base. Every major collector is behind Pak, and I think Pak is going to be one of the most important creators in this generation.”

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