Last updated on January 20th, 2022 at 03:27 pm
If the hype around NFTs turns out to be accurate, they are set to disrupt the art world, altering not just how art is purchased and sold, but also what type of art we appreciate and which artists. NFTs are projected to reinvent the present trading model in the art market, particularly in the digital art market. NFTs will not just bring digital art to the forefront, they intend to introduce transparency into the art world. It will reward artists far more fairly than has been the case in the past.
What Role is NFT playing in the Art World?
A Non-Fungible Token (NFT) is a digital token that represents ownership of an asset. Non-fungibility is the property of a good where each of the individual units cannot be replaced with each other. Art is a great example of something that is non-fungible.
If you buy the NFT of artwork, you would own that piece of art and the record of ownership would be kept secure digitally using blockchain technology.
A commonly asked question here is that if it is all digital, then why not just copy and paste the image? The answer to that is that owning an NFT is the same as owning an original piece of art along with a certificate of authenticity. One of the key reasons that NFTs have gained this wide popularity is because they simplify this authentication process.
What is The Point of An NFT in Art?
The reason for someone to actually spend money and buy an authentic piece of digital art instead of just downloading it off the internet is ownership. Look at it this way, anyone could have a picture of a famous piece of artwork like the Mona Lisa on their wall but it’s just not quite the same as the real thing like the Mona Lisa kept at the Louvre Museum. People prefer to own the original artwork as it provides them with social and monetary value. Art can be an asset that maintains and even appreciates in value. Similarly, it offers a social benefit of being the only person to own specific artwork or being regarded as a prospective collector based on the pieces which you own, as seen by the 50 billion dollars traditional art market.
So, while you could copy and paste the image associated with an NFT just as easily as you could buy a replica or counterfeit painting, it simply isn’t the same as owning the original. You would have the image but you wouldn’t have the assets. Ownership is key. Another aspect that is really important that NFTs help address is that it creates scarcity. If you want to sell something that exists digitally where everything can be infinitely copied, NFTs allow you to distinguish the copies from the “original”.
What Do NFTs Mean For Art Creators?
NFTs have democratized art, allowing anyone the access to buy whichever pieces they want. Unlike how it is in the traditional art market, where galleries are known for being quite opaque. Usually, prices are not listed and only certain chosen pieces are given to chosen clients based on their previous relationship with the client or that client’s stature in the art community. In the NFT space, because Non-Fungible Tokens exist on a public ledger, the previous transactions recorded can be verified. There is a degree of transparency in this system and anyone is capable of finding out if the piece is authentic, who has owned it and what it was sold for. This makes the authentication process quicker and easier for both buyers and auction houses.
It would be hard for auction houses to not take advantage of this since it takes long periods of time and a number of specialists to authenticate certain artworks, resulting in an expensive and time-consuming burden. Another key benefit of NFTs is the option of consistent royalties. In the case of art, most of the larger sales happen on the secondary market, i.e., someone other than the artist is selling their work, which means that it doesn’t matter at what price the artwork is going to be sold, the artist doesn’t see any of the money from secondary market trading.
NFTs offers an interesting solution to this problem. When minting an NFT, the artist can choose to receive royalty on the work, which will cause the artist to receive a percentage of future sales of that piece. Since these are programmed into the NFT, they cannot be changed or removed.
NFTs make creating multiple editions of the same work easier than ever. When an artist is minting their work into an NFT, they can decide if they want to mint one single edition or multiple editions of the same work. In the past, it was much more labor-intensive to do this physically instead of digitally.
Do NFTs Pose a Threat To Traditional Art Galleries?
This combination of certification of ownership and the creation of scarcity allows digital art to be collected and traded in ways similar to non-digital artworks. There are ways in which NFTs may be disrupting the traditional art market. We have already started seeing that the way art is perceived is changing. In the future, we may see changes in the way that art is traded, and even defined. Creators of digital artworks can sell directly to collectors through a platform like OpenSea, SuperRare, or Nifty Gateway. This cuts out middlemen like dealers and galleries. This may explain why auction houses are interested in entering this market. Historically, artists have not always benefited from the resales of their own work. Enabling royalties with every sale through smart contracts will cause quite a few things to change in the art industry.
Will The NFT Art Industry Have Longevity?
Many people, including Beeple, think that this is a bubble. There are a number of important risks that potential NFT buyers need to keep in mind. It is uncertain as to how much the current market activity is being led by collectors who are truly interested in the underlying artwork or object versus speculators who just want to drive prices up.
Then there is the potential of surplus supply: each individual object is unique or restricted in quantity, but there is a potentially infinite number of NFTs that can be generated with minimal effort. Any digital picture, video, or text can be an NFT. We see this as many renowned individuals and organizations are attempting to hop on board and produce their own NFTs. And not all of these will be valuable in the long run.
There is a whole lot of uncertainty about the valuations of NFTs. However, even if some of the current hype goes away, NFTs will be here to stay as the concept is very powerful and can help solve a lot of problems regarding ownership and also help the creator economy.
The Future Potential For Arts Due To NFTs
Although people believe that even if art-derived NFTs are a bubble that will eventually burst, there is immense potential for digital art that can help provide an alternative to our current economic systems around art.
To conclude
In overview, the advantages of NFTs include the viability of digital works as art and assets, openness and transparency for buyers, a more accurate, faster, and less expensive authentication process, perpetual royalties on future sales for artists, and the ability to duplicate originals at a low labour cost. There are undoubtedly certain advantages to using NFTs in the art sector.
