Who would have seen art as one of the first use cases of blockchain?
NFT stands for non-fungible token and is a digital asset with unique properties that represents real-world objects like art and music. Or a tweet. NFTs are about ownership within the digital space.
The NFT space is predominantly filled with a lot of artists at the moment, Becky Perfect said at a panel discussion at the MWC22 Barcelona connectivity trade show. She is the founder of Nifty World, a YouTube educational channel for NFTs.
Thanks to the blockchain, NFTs are about true transparency as well, according to Perfect. You have more control and a more well-rounded view of what you are purchasing.
She warns that investors have to be cautious when it comes to any new emerging space. As this space is not regulated yet, there is a lack of accountability. “You won’t see who the person is behind the creator so you have to trust what they are saying. The creators can walk away, they can delete their Twitter accounts and their profiles. You have absolute unanimity on Web3 and that is part of the problem. There are also scams, where people can drain your wallet if you click on the wrong link.”
NFTs can take a number of different forms, such as one-on-one art and utility. It may cost you millions to purchase a real-life piece of art from artists like, for example, Damien Hurst. The NFT space allows art purchases to be initially much more affordable. Hurst released a 10,000-piece NFT collection at the price of $2,000 each. "Not the cheapest, but more affordable than his real-life works. And that will go up in value with Hurst’s name attached to it," she added.
As for the utility side of the NFT, it is also an access token. When you purchase an NFT, you are not just purchasing a cartoon ape or some weird gif, you are purchasing a token which gives you access to a membership club, merchandise, things in the metaverse, as well as to real-life events and networking. You can also generate residual income through, for instance, staking. NFT staking means locking up NFTs on a platform to receive staking rewards. This allows NFT holders to earn a passive income while still maintaining ownership of their NFTs. You may even get your money back on your initial investment if the project is popular, without you having to sell it.
For the buyer, an NFT is about control, understanding, accessibility, being in charge of what you are going to purchase and not having to rely on financial or art advisors. For the creators, it gives them the opportunity to sell their art without having to worry about galleries and create some residual income for themselves.
What is NFT art? - Sotheby’s
The way that we access, consume, discover, purchase and collect art has changed significantly, said Charles Stewart, CEO of auction house Sotheby’s. The art itself has migrated into the digital arena as well. “You don’t have to be a billionaire to approach the art market,” he said.
Sotheby’s, which was founded in London in 1744, recognized that the NFT market was an exciting new market with an exciting new audience. Last year just on the OpenSea platform, which is the largest community of NFTs, around 8 million tokens changed hands. That is a dramatic increase in scale and scope and audience engagement. It has also exponentially expanded the audience for art.
As a result, NFTs became one of Sotheby’s 70 art categories. When the company enters a new market segment they come in at the top end. NFT was no different. The vast majority of bids that they take in their auctions are online bids, and the majority of those come from mobile devices. Stewart believes that the integration and immersion of art and technology are here to stay. People are increasingly using their mobile devices and engaging with technology to pursue culture.
NFTs are becoming more innovative in terms of aggregating audio and video. People went from buying NFTs to asking themselves, 'what do I do with them?' They are focusing on where to display them, whether it is on the metaverse, or using screen technology in their homes. NFTs are portable. You can show them in multiple places at the same time. We can have an art exhibition in several different locations around the world and engage a global audience simultaneously with the same art. NFTs are also used to create community.
This is a global phenomenon that is largely about access. Sotheby’s saw activity from over 40 countries in their NFT offerings last year. Blockchain also offers new ways to collect. Collective or fractional ownership will be a strong trend this year, he believes.