In the last few years, there have been some major developments in the art world: non-fungible tokens (NFTs) have led to dramatic changes in how both established and aspiring artists are creating and selling their work. NFTs are digital tokens on blockchain networks that are authenticated and decentralized. They are part of the latest wave of innovation in the art market, and the impact of their rise has been considerable. In this article, we’ll explain what NFTs are, investigate how they’re changing the art market, and consider some of the advantages and drawbacks of this new technology.
What are NFTs?
NFTs first gained traction in 2017 and have made waves ever since. By representation, an NFT is a type of digital asset (like a photo, video, or artwork) that’s stored on a blockchain network and is cryptographically signed. As the name suggests, they’re non-fungible, which means that each token is unique and distinguishable from other assets of the same kind. As a result, NFTs are considered to have real value, since their ownership can be verified and tracked.
NFTs have a wide range of use cases, from gaming and collectibles to art. Generally speaking, they’re used to ensure digital scarcity and ownership rights, which is valuable to artists who are choosing new ways to monetize their creative efforts. To “mint” an NFT, an artist will typically use a platform like OpenSea or Rarible that allows them to create their own digital art and turn it into collectible tokens. Although minting an NFT can be an arduous process, the end result is a tokenized representation of the artwork with a verifiable ownership record — something that was not possible before.
Impact of NFTs on Artists
Since the launch of NFTs, more and more artists have seen the potential of leveraging this technology to monetize their work. It’s given them a new way to create a secure and unshakable record of ownership for their digital creations. Unlike before, when their works could be quickly and easily replicated, artists are now able to have control over their art and thoughtfully control the supply. Thanks to NFTs, they can sell digital original artwork and prevent replication, making their work more valuable.
The impact of NFTs goes beyond the technological advantages. Artists have also gained more freedom over the artwork that they create. By accepting cryptocurrency as payment and enabling fractionalization of their artwork, artists can set prices and decide who will have access to it. For some, this has given artists an extra layer of economic freedom, allowing them to monetize their works on their own terms.
Boom in Demand for NFTs
The release of NFTs has created a surge in digital collecting and investments in digital art. Compared to traditional art, digital art is often seen as a low-cost and low-risk entry point into the art market, which has made it appealing to a range of buyers who are curious but may not posses the knowledge to confidently invest in fine art. This, plus the potential to make a profit as digital art is resold, has caused a boom in demand for NFTs and, by extension, digital art.
This demand has only intensified further over the past year. Covid-19 has caused the art market to suffer massive losses. Across the world, galleries and museums have been shuttered, cutting off traditional channels of distribution and leaving more people to explore new ways of buying and selling art. Digital art offers an alternative to physical artwork, so it’s not surprising that interest in NFTs has greatly increased in 2020.
Pros and Cons of NFTs
Of course, the rise of NFTs has also presented some challenges. As with many cryptocurrency-related concepts, NFTs can be difficult to understand for those unfamiliar with the technology, making it an exclusive market to enter. This can be limiting for new artists who are just starting out, as they wouldn’t be able to just “go in the market” without first mastering the process. It’s also important to note that there are still risks; NFTs are digital assets, so they’re vulnerable to scams, malicious activity and cyberattacks, just like any other digital asset.
The advantages of NFTs are also notable. For artists, they’re revolutionary in terms of monetization potential. By creating an unshakable record of ownership, NFTs make it easier for them to protect their work from counterfeits, establish scarcity and prove the authenticity of their art. This is important for ambitious artists eager to move into the world of art investing, as it gives them a secure platform for doing so. Lastly, the expansion of NFTs has the potential to revolutionize how people view art, as people can now buy and trade digital works of art and have a verifiable record of ownership.
Overall, the emergence of NFTs has had a major impact on the art market. It has opened the door to the field of digital art and has given artists of all levels more control over their work. Despite some of the risks involved, NFTs are here to stay, and the art world is much better off for it. Will NFTs continue to redefine the art market and revolutionize how art is bought, sold, and valued? Only time will tell, but so far, it’s clear that blockchain-based tokens are creating a much-needed expansion of the art market and bringing new opportunities to the world of digital art.