The Year in Review

This sale epitomizes the weirdness of 2021

by Rick Carey with reporting by John Wiley
30 December 2021 6 min read
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In June Barrett-Jackson sold an NFT of a Ford Bronco for $22,000. What, exactly, is an NFT and why would someone pay for it? Read. Photo by Barrett-Jackson

In 2021, everything about the classic car market seemed to speed up. Seven-figure sales at auction, once the sort of thing we witnessed in a few select venues throughout the year, can now happen over computer screens on a random Friday.

And then there was the appreciation. Nearly all the segments we track were up and many were up a lot: Hagerty’s Muscle Car index hit an all-time high; the top 10 Japanese vehicles we track in the Price Guide appreciated between 22 and 52 percent year-over-year; many new enthusiast cars immediately brought more than their sticker price; and many so-called analogue supercars, such as the Ferrari F40, Porsche Carrera GT, and the McLaren F1 had banner years. More vehicles gained value in the latest release of the Hagerty Price Guide—56.2 percent—than at any point since 2014.

All to say, we had plenty of vehicles to choose from when considering our Sale of the Year. It might seem rather odd then, that we settled on something that isn't a vehicle at all. In fact, it's something that many of us can't even describe (although we're about to try). At Las Vegas, in June, Barrett-Jackson sold a non-fungible token (hereafter “NFT”) of a new two-door Ford Bronco VIN 001 for $22,000. The $22,000 did not buy keys to a new truck. Instead, it was for the non-fungible token of the digital commemoration of the sale of that truck. At Scottsdale in March Barrett-Jackson had sold the actual truck as a charity lot for $1,075,000. March is also, incidentally, the month in which Christie's sold a 443,902,761 pixel digital collage, “Everydays: The First 5,000 Days,” by the artist known as Beeple, for $69,346,250.

Get comfortable: We're about to tell you what NFTs are

What did the buyer of “Everydays” or the B-J NFT actually get? The facile answer is “nothing,” yet in the context of “nothing”, the copyrights for J.K. Rowling’s Harry Potter books are similarly ephemeral. So, at the end of the day, is the very concept of "value" when ascribed to anything that can't be eaten, lived in, driven, smoked, etc. Somewhere in the dark reaches of prehistory, people had to agree that gold, a soft metal with little use in tools or weapons, was precious. We've also become accustomed to ascribing value to things few of us actually touch or understand. How many people can explain how fiat money works, or precisely what happens when you swipe your credit card at the grocery store?

Still, the concept of NFT is particularly difficult to grasp. We're going to do our best to explore it now. For starters, it’s key to understand that an NFT is not a “thing” nor is it even based on a thing. Rather, it is a unique sequence of records in a digital trail known as a blockchain. An NFT is somewhat like the quantum physicist’s “event”: “[T]he instantaneous physical situation or occurrence associated with a point in spacetime,” per the quantum physicists at Wikipedia.

Other cryptocurrencies, including Bitcoin and Ethereum (the platform that supports NFTs) use fundamentally similar technology. Where NFTs differ is spelled out right in their name—they are non-fungible. Whereas coins—digital or metal—are intended to be functionally the same—i.e., fungible—each NFT is, thanks to its digital trail, distinct and traceable to its creation and through its history.

However—and here's where things get really confusing—the non-fungible nature of an NFT does not come from the image associated with it. You can right click and copy the picture of VIN 001 Bronco or Beeple's collage. Rather, the distinctiveness comes from the digital trail.

There are issues with NFTs beyond their, ahem, cryptic nature. For one, they're not theft-proof. An NFT's digital trail is, by definition, open and accessible, only the identities of the owners of the digital “wallets” where the NFTs reside are hidden behind long, inscrutable passwords. The underlying “event” (in the quantum sense) to which the NFT ledger entries apply may be found on the internet. And if the financial allure is great enough, even the generally good misappropriation protection of the blockchain where the cryptocurrency Ethereum is recorded, where most NFTs are maintained, is not invulnerable.

If a nefarious hacker were to shut down the blockchain network(s) documenting NFTs—and hackers have successfully stolen millions of Bitcoins and no small amount of Ether—the whole ethereal network of ownership would collapse in an instant.

Then there is the ever-present hazard of forgetting or misplacing the multi-character key for accessing the digital wallet where one's stash of NFTs is stored. Lose the key and the wallet contents become in the most basic sense “ethereal”—no longer tradable.

Of course, the risks of loss or theft is hardly novel: Ask anyone who’s been pickpocketed. A challenge more particular to NFTs, at least as far as currencies are concerned, is the energy they require. Creating and maintaining the blockchain that underpins NFTs and many cryptocurrencies requires a vast network of computing nodes. the energy use and resulting carbon footprint is staggering. Ethereum itself calculates that its current technology has about the same annual carbon footprint as Switzerland, a country of some 8.6 million people. Put it another way: If your TR3 gets 20 mpg (33.7 kwh equivalent) on the highway it could be driven 5.3 miles per Ethereum blockchain transaction. In 2021, there were, per Statista, more than a million of these transactions a day.

Newer NFT blockchains like Tezos, Flow or Solana, rely on a “proof of stake” process which uses much less energy. Ethereum in 2022 will transition to “proof of stake”.

So, why do people buy them?

Some of the “digital art”, like “Cryptopunks” or “Cool Cats NFT”, traded on NFT exchanges like OpenSea are childish, even large pixel images that would have been ridiculed as crude even back in the Space Invaders era. Other stuff is game drivel, like weapons and armor for online gaming platforms.

But let’s not forget that beople, oops, I mean “people”, are paying mega-money to own non-fungible tokens. They were prominent in this fall’s New York contemporary art auctions where another Beeple creation, “HUMAN ONE”, sold for $29 million, a physical object with a “dynamic NFT”—as described by Christie’s here:

Beeple (b. 1981), HUMAN ONE, 2021. Kinetic video sculpture—four video screens (16k resolution), polished aluminum metal, mahogany wood frame, dual media servers; endless video with corresponding dynamic NFT.

The “dynamic NFT” attribute of HUMAN ONE is that Beeple will continue to change it. The figure representation, background, motion and other observable attributes may change with Beeple’s whim. Could the figure be changed to look like Chewbacca? Could the background environment evolve to jungle, the moon or desert? The HUMAN ONE that was bought at Christie’s may not be the HUMAN ONE that its owner observes in the future, or even gets when the box is delivered.

Schrödinger’s Cat comes to mind. [Apologies if quantum theory has been taken too far.]

At this point the owner of the NFT marking the sale of a Ford Bronco at Barrett-Jackson has unqualified and documented ownership of only a blockchain record of certain digital bytes—which may not be exclusive—and a one-time admission for two to a B-J Muscle Lounge in 2022. B-J's NFT provider, motoclub.io, has yet to launch a marketplace, so we can't comment on secondary market values.

Hard to understand and somewhat unsettling—just like 2021

NFTs are novel, bright, shiny objects like a dangling mobile over a baby’s crib. They engender fascination and invite interaction. They inspire dreams of great and almost instant wealth, of value that their advocates believe the uninitiated, or merely the unimaginative, cannot appreciate.

Like the variegated tulips of seventeenth century Holland, or owning stock of forlorn and profitless GameStop, ownership of NFTs is admission to an exclusive club of self-selected insiders, a club with its own frequently impenetrable jargon, secret greetings, and even exclusive meeting places on the internet.

Assessing an NFT’s value is nearly as ephemeral as the NFT itself. There are no guidelines, no firmly rooted comparable transactions, no database of documented transactions in similar NFTs, no experts with years of experience holding forth with informed opinions.

It is pitched in esoteric, constantly changing, terms and phrases even more obscure than the rapidly fading language of old cars: spark plug heat ranges, valve clearances, point dwell, jets, needles and venturis. The NFT system evolves even faster than the automobile did 125 years ago and, unlike the automobile that would (until the advent of the Beetle and Mini) quickly settle on the système Panhard, there is no sign NFTs will adopt a common operating system, format or structure.

There is no telling whether or in what form NFTs will endure. Nevertheless their emergence in 2021 was certainly significant. At the very least the B-J NFTs epitomize the frenzied and unsettled nature of our times.

If all this seems about as appealing as going for a ride in an autonomous driving vehicle take some heart: The $22,000 that bought the Bronco NFT at Las Vegas also put the keys to a 1977 FJ40 Land Cruiser or a 2000 Corvette Convertible in the hands of B-J Las Vegas buyers. That is real money for real vehicles—even if they didn't come with Muscle Lounge access.

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Comments

  • Ramsey Potts says:

    Fun read, Rick & John!

  • OldFordMan says:

    Where does this story belong? I don’t have a clue but surely not on here!

    • MustangJim says:

      I can’t wrap my head around this stuff.

      • Rick Carey says:

        MustangJim: If you “can’t wrap your head around this stuff” then John and I with help from Editor David Zenlea didn’t do our job well enough. Ask me in Kissimmee next week, where I will be surprised if Mecum doesn’t have NFTs on the docket.

  • Sonny McCutcheon says:

    I don’t care about NFT, blockchains, cryptocurrencies, etc., nor do I care to read about them. Give me stories about cars, that’s all.

  • Ray Go4th says:

    Say What?

  • Lou Visone says:

    I read the whole explanation twice and I still don’t get it. My dad had saying, there’s an ass for every seat. But in this case there is no seat.

    • Jim Rosenthal says:

      Snake oil, sold to people with money to throw away and no brains at all to regulate said activity. It isn’t even automobile ephemera, as in a sense it has nothing at all to do with the auto hobby- it just occurred at the same time and venue. Honestly, the less attention paid to NFTs and similar vapor in a site such as this, the better off we all are.

  • Jody Amblard says:

    That was a beautifully written piece. I enjoyed every elegant phrase & allegory as if I were savouring a piece of visual art, often with the same delightful feeling of my understanding resolving in and out of focus. It was such a pleasant read. My thanks to all who were responsible.

  • wdb says:

    To paraphrase Denzel Washington: talk to me like I’m a second grader.

    Wow. I’m pretty nerdy and this made my head spin. Maybe these things will have a place in the metaverse…

  • Faisal HUDA says:

    An NFT is technobabble for ‘certificate of authenticity’, albeit in digital form. In my opinion, an NFT is worth $0 unless the “event” (as in the words of this article) that the NFT authenticates can be monetised. For example, if an NFT is generated and attached to the first public uploading of the text of a new Harry Potter novel, that NFT essentially documents the copyright ownership of that new novel. This can easily be monetised, so that NFT will attract monetary value over time. On the other hand, that Barrett Jackson NFT documenting the auction sale of the Ford Bronco cannot (reasonably speaking) be monetised. Maybe it will carry some value for the buyer or the seller of the actual car, but who the heck else would care about that sale event? Therefore, monetary value is basically $0.

    • Jamez Giarc says:

      I was born at night, but I wasn’t born LAST night. But I still cannot fathom why anyone with $22,000 + for a ‘sniff’ at a mass production vehicle would not be considered an imbecile for not ponying up the actual difference and HAVE A VEHICLE for their trouble.

      Sounds a bit too much like a scene in “Scamville” . Maybe Lindello the Pillow Clown can explain it all to us. us…

  • Alan Comfort says:

    I think that I will go out and take the MG TC for a drive. That will certainly clear this kind of BS from my 19th century mind. By the way, I’ll pay for the gas with cash. It would be better to trade for a basket of eggs or a cord of firewood, but those days have passed. Is cash far behind?

  • Will Pena says:

    Sorry but I cannot believe in this new way of investing or buying things that are not tangible things. Call me old or whatever you want but my best investments that have gained the most value are old school tangible items. Classic cars, gold, silver etc. I like investing in things that are not highly volatile or speculative things that change minute to minute. In 10 years my $125,000 investment in classic cars has resulted in a $500,000 car collection. I rather have a return in an investment like that then this get rich quick investments. I have seen too many of those blow up in investors faces. Those who don’t know history are doomed to repeat it. Invest in something that you are highly familiar with and have a good understanding of the history of the type of investment you are about to put your money into.

  • iluvkars says:

    I think I have a pretty good idea of what an NFT is (heaven knows I’ve read enough explanations), but I have no clue as to why I would ever want one.

  • Lar says:

    Thanks for this article. I think it is very relevant to the “Hagerty community” because, in general, it deals with the matter of how things tangible or intangible are valued but most importantly because it deals with the matter of speculative valuation excesses. It may be that NFTs are a difficult matter/concept to understand (in part because they rely upon technology about which most people are ignorant) but I assure you that many of the “investors” in NFTs and cryptocurrencies are themselves similarly ignorant.

  • Jim Baker says:

    I still havent mastered the meaning/usage of the W0ke term…..now NFT…. What is the world comung to/ 2021 surely was a confusing year. 2022 can only be better.

  • Cliff Oxford says:

    Written as well as I have seen on NFT topic – nice job. You just have to hang with it all the way through and suspend disbelief. People are thinking they don’t understand it because we can’t be that dumb. Mania. Happens in Humans!

  • Rick McCarty says:

    So to paraphrase, A NFT is really nothing like crypto currencies. You will never get any value for you money unless you find a bigger sucker then you were.

    • Lar says:

      Not sure I agree. It is certainly reasonable to suggest that cryptocurrencies are substantially or even wildly over-valued due to speculative excess driving inordinate demand and that like any other “asset” so affected, one’s ability to come out whole or make a profit is a function of continued or additional interest by more “suckers” entering the market.

    • Jamez Giarc says:

      An AFT seems to me to be just about equal to a lottery ticket after it’s purchased, but it could be eternity before the winning balls are drawn. Perhaps the initial “shares” are smaller ….but?

  • JLl says:

    NFT’s for Dummies – nicely written.

    Always interesting that the inventors are these exotic techno-schemes are never identified. Dumb money or smart money? The mafia or Wall Street? I suspect the later. Exploitation or monetization of the block chain must be a top priority for all the newly minted MBA folks.

    I remember saying: What’s the internet good for? Who needs bitcoin, etc? Easy to dismiss and discount during early adoption, but new forms of value are being created right before our disbelieving eyes. So, I’ll watch from the sidelines with a big bucket of popcorn, but I won’t dismiss the notion that the wild wild west of the Metaverse is just getting started.

    • Rick Carey says:

      JLI: I’m not so sure it’s MBAs. The Harvard Business Review had an extended and informative article on NFTs in, I think, November. If MBAs understood the concept HBR would not have wasted the space.
      If pressed, I’d say the buyers are likely to be early cryptocurrency adopters who got in with a few thousand dollars of bitcoin at $500/each and are now sitting on a vast fortune. NFTs give them a way to get in on the ground floor of a new crypto-fad without any real investment, just redeployment of a small portion of their crypto winnings. The buyer of “First 5,000 Days” is self-identified as a crypto multi-millionaire.

  • Jon Jonz, mhfm says:

    Secure certification of authenticity or documentation of title, yes.

    Blockchain also is excellent for secure value transfers in the monetary coin of choice, yes.

    But simultaneously a huge waste of money and addition to thermal pollution, trivial use of blockchain technology solely for personal gain whether financial or for vane status seeking is, IMO, both unethical and possibly chargeable in the future as criminally negligent behavior.

    A huge waste if resources carrying a huge potential for harm.

  • Texas Gen X Car guy says:

    Gen X Texas car guy here – As a professional car and truck builder / Asset Manager for more than 25 years and yes I wear ALL the hats and do 100 % of the work myself – keeps me out of trouble lol
    I always wanted to have a product business as well as a service based and in the last 10 years I have been able to successfully move in that direction of buying and selling and I mention that because some wonder what relevance there is to this article . There is so much money being thrown at all kinds of things right now that as most of you know if you are selling – you have the upper hand . Personally I am building gen 2 Trans ams for a client from north Texas and am greatful for the work because I am holding onto my classic cars and trucks for the immediate future .
    That being said Think Metaverse indeed ( Web 3 + Blockchain + Virtual reality ) / Trillions are and will be made for sure .
    We Gen Xers are a bunch of guys and girls who are NOT even mentioned in most advertising thought circles and while we are in the thick of things we will soon be passed by like every other generation ( 20 years each ) yet we must understand that we all are really connected whether we like it or not – otherwise how could we share and glean wisdom in our walk of life !!
    The people who are in the 20 under group ( gen Z ) and of course the new generation starting at 2020 are and will be sold a VIRTUAL world which does not need approval or understanding by anyone except those who are making a TON of money and living in THEIR world !!
    Just try and wrap your head around real estate in the metaverse right now and it will BLOW your mind
    There are a lot of gen x y and z who were mining for bit coin in the 2010 ish era and were probably considered fools by most and they have made so much money it is insane . They have and continue to make a major amount of money in the crypto game and are buying a lot of cool cars and trucks especially Japanese and are effecting the marketplace tremendously .
    As some may know the number of available tokens diminishes with the block chain process and so the myriad of new ALT coins is presenting itself for your perusal and I personally lost count at 50 . The beauty of the ALT coin game is that is was originally DECENTRALIZED as opposed to our banking system which is CENTRALIZED and now with mainstream asset companies buying in there goes the DE part like it or not .
    As many know in the early 70s we were taken off of the Gold standard and instead of trusting in something we were asked to trust in someone ( federal reserve etc ) and look how that has worked out . We all use paper money that is really as worthless as the altcoin if you want to compare and the value is Perceived at any given point in time .
    This being said there is so much money available not only through generational transfer but through this world of virtuality that most over 25 will not ever get and there is nothing wrong with that – as some have said who can REALLY drive or truly enjoy a token anyway LOL
    As we ALL go forth in this oft crazy world let us understand that the only things we truly want to understand are those that appeal to us individually and as this ball floating in the middle of now where continues to spin – let us hope we can hang on !! Cheers

  • Brian Thomlinson says:

    That was about “the best” load of undeterminableshite I have seen in this publication. Can we come back to earth?

  • Patrick H Plankenhorn says:

    Huh? NTF or WTF?

  • Mike Roberts says:

    Thanx Rick. Was a well done read. I try to wrap my mind around it. I like out of the box stuff. Cheers.

  • L. Arning says:

    Rick Carey & John Wiley are to be commended for: [a] continuing to establish Hagerty Insider/Media as a trusted source in this hobby **which includes bringing subjects like this to the fore** (sorry that it seems so many commenters have lost their curiosity about the world -many of these very folks used to read newspapers once upon a time and may not have liked every article in the paper, yet they **trusted the source(s)** to bring them current information -no different here); [b] excellent job helping your audience learn, by offering clarity and perspective; and [c] excellent job of including the environmental impact of blockchain sustainability. Good Work.

    • Rick Carey says:

      Thanks. This is exactly what we were trying to accomplish. It’s not intended to be either for or against, just a somewhat skeptical review of the technology, function and terminology.

      • Garagemahal says:

        Rick,
        The collectible automobile NFT showroom, market and platform already exist at MotoBloq.com. With limited production numbers and prices from less than $25 for a VW Beetle to thousands of dollars, both young and old auto enthusiasts are buying MotoBloq NFTs. They’re being collected alongside actual cars (as permanent souvenirs of all the cool cars they have owned) or to collect rare and exotic cars they may never have the opportunity to own in the ‘real’ world. A car enthusiast isn’t limited to the guy with a garage full of collector cars, it can be a kid collecting Hot Wheels, a gamer playing GranTurismo, or someone collecting MotoBloq NFTs which are also all 3D and AR enabled for future utility. Who wouldn’t want to show off their new Bugatti (NFT) sitting in their very own driveway alongside their actual classic? With MotoBloq and your smartphone you can do it now. 2022 will mark much greater integration with the virtual and physical automotive worlds for MotoBloq NFTs. Stay tuned for the enthusiast’s evolution.

  • Rudy DeLaurentis says:

    Question: who is the creator of the Bronco NFT? Is it the owner, Ford, the B-J auction? And, what does the NFT actually allow its owner to do, besides sell it? Very confusing. I’d rather have an actual car, please!

    • Rick Carey says:

      The creator is Barrett-Jackson through its NFT partner motoclub.io. What can you do with it? Not much except sell it to some other fan of the New Bronco, or NFTs. There are the two B-J Muscle Lounge admissions during a 2022 B-J auction to give ownership a tangible benefit and an open bar.
      Rather have a “real car”? That’s why we closed by noting that $22,000 could have bought an FJ-40 or a Corvette.

  • Don D. Riveria says:

    Let’s get with it folks. Get on the band wagon or get out of the way. I am creating Schrodinger WTF’s and selling them. All within thee darkest reaches of the dark web. One advantage they have over NFT’s is that the buyer receives a physical entity. One that you can place upon your mantle to observe as you will, even showing them off during holiday parties.

    What are they then? Simply, it is one or more lottery tickets that are encased in a hermetically sealed acrylic box. The ticket(s) are purchased and sealed into the box prior to the lottery call date. And there they remain, in unknown value, and point in time, and quite possibly in two places at the same instant in time, much like the cat.

    A second advantage is that I include shipping in the price paid.

    So far doing well for a start up. I expect that very soon I will have earned enough to purchase a 1955 Buick Century 2 door hardtop.

    In case you think you discover any typos in this document, they are in fact NOT. They are abbreviations that I have copyrighted in the United States Office of WTF.

    • Rick Carey says:

      Don,
      I think you have the concept, although perhaps your idea could be improved, as with Banksy’s Girl With Balloon, by having the lottery ticket shredded upon the passage of the final date for its redemption: $25 million reduced to strips of paper. Thank you for tickling my funny bone.

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