A still-emerging technology is, as they say, “having its moment” in the art world. And it’s a moment that may be extended, as NFTs are turning the rules of digital ownership on their heads. These non-fungible tokens have elevated the status of digital art, so artists are making good money for the first time, and buyers have access to a broad range of artworks.
Let’s dive into the world of digital artists and NFTs.
What are NFTs?
These rare tokens are interchangeable units of data housed on a blockchain, a kind of digital ledger. Several varieties, including the popular Bitcoin, are available using some form of cryptocurrency. NFTs can be purchased, sold, and traded online. Further, NFTs allow holders to prove their ownership and authenticate their purchases.
A good way to think of NFTs is as physical collector’s items, only in digital form. In art, you get a digital file instead of purchasing a physical sculpture to display on a pedestal in your foyer,
In addition to art, NFTs represent videos, music, and in-game items. Digital files can be anything from an audio clip or GIF to an image.
How are NFTs Faring in the Marketplace?
These tokens have been around for eight years but have hit their stride recently, largely owing to the art space. In the last five years, some $174 million has been spent on non-fungible tokens.
What’s this About Proof of Ownership?
As we say, NFTs provide ownership authenticity. Say you’ve created 2,000 copies of the same image and minted 2,000 NFTs to represent ownership. Each image copy will be distinct from the other 1,999, based on each token’s metadata.
Thus, though 2,000 collectors may each have the same-looking image in “wallets,” each collector can appropriately claim ownership of, say, copy number 332. In this realm, that’s how art investment works.
What Does “Fungible” Mean?
NFTs are unique in that each one can be mutually exchanged for a similar item. For example, U.S. dollars are fungible. If I give my friend a $1 bill, and he gives me one of his, we will have equal buying power. It’s the same idea with cryptocurrency, the “money” used to buy NFTs in the art realm and elsewhere.
NFTs and Art
Using NFTs, artists can sell their works in digital form directly to buyers internationally without the use of a gallery or auction house. This makes such art more accessible to buyers and allows artists to keep considerably more of the profits.
Moreover, royalties can be built into digital artwork, allowing an artist to get a cut of profits whenever the piece is sold to a new owner. NFTs have also brought long-sought transparency to the art space, since the blockchain ledgers on which NFTs are stored are public.
How Does it Work?
NFTs have unique valuations that the bidder establishes at auction. Artists wishing to peddle their pieces as NFTs must register with a marketplace and “mint” the tokens by adding their info to the secure blockchain. This typically costs around $40 and sometimes as much as $200. Afterward, artists can list their works for auction on an NFT marketplace.
So, there you have it: digital artists and NFTs. However, as popular as NFTs are, it’s still risky business. Safer forms of art investments can be found using the alternative platform Yieldstreet, which offers an art fund that can be joined, and a “fractional” program. You can access a diversified pool of artworks by mid-career and blue-chip creators using Yieldstreet.