Abuzz with the speculation of its possibilities after a 10-second video recently sold $6.6 million, NFTs are on the tip of everybody’s tongue. Spoken of in the same breath as cryptocurrencies like Bitcoin, we look at where art and technology collided and why this could be set to change the landscape of art forever.
Non-Fungible Tokens (NFTs) are tokens, much like Bitcoin, Ethereum or Reddit favourite Dogecoin. These tokens represent ownership of digital goods, much like a certificate of ownership would with a physical good. While these tokens can be applied to a plethora of goods like online properties, domain names and digital collectibles - our focus is on art.
Cryptocurrencies have been in the public realm of discussion since Bitcoin’s initial mega-boom of 2017, where the value peaked at slightly over $20,000 per coin. A subsequent drop in value meant that conversation and hype surrounding crypto largely subsided, with major financial voices criticising their volatility.
That is, until early this year, when a single Bitcoin’s value eventually regained that $20,000 valuation, before surpassing several milestones up to the $55,000 mark in late February of 2021. It is difficult to think that NFTs would receive the attention they have without the mainstream coverage of Bitcoin, despite their purpose being vastly different.
NFTs, as per their name, builds on the concept of fungibility - where one asset can be exchanged for another identical asset. If you swapped a $10 dollar note for a $10 note, this would be an example of fungibility. Therefore, to be non-fungible means to represent the value of something not mutually interchangeable. In essence, they represent something unique with an independent value.
Ownership and authenticity is key to art when we view it as a commodity. The scarcity and originality of each item contribute largely to its value. With more and more art being created digitally, where assets can so easily be copied and reproduced, NFTs remedy this challenge. Like the other cryptocurrencies mentioned, NFTs are able to do this by functioning as part of a blockchain system.
Blockchain is an online ledger, where each transaction made between users is given a unique code - called hash - to verify that it happened. In that sense, it is a very secure way to record transactions and authenticate them, making this a perfect foundation for recording ownership and authenticity of art in a secure manner.
With so much of our lives spent digitally, the market is there. Where there is a market, there are also marketplaces. SuperRare is one of the largest, a social platform for trading with NFTs that considers itself being where ‘Instagram meets Christies’. Another is OpenSea, a market aggregator, who have seen a huge surge in interested at the turn of the year.
Citing sales of $8 million in January, that multiplied tenfold the following month, reaching $86.3 million in February 2021. Naturally, at a time when there is so much hype, these figures are bound to be unsustainable. But, what they do say is that this is an emerging market, one still very much in its infancy that has huge potential for artists to continue exploring and as a fertile grounds for growth in new directions.
Cutting out the middleman of gallery and dealer fees, selling digital art through NFTs is more equitable for the artist, but of equal value to the artist is the way that NFTs change the way we perceive the digital life - real life dichotomy. Art that appears online for free (which is still the majority of these works for sale) is liked, shared and viewed. Their value beyond that is limited. Not because of their contents, but because there had never been a way to genuinely measure or understand their value.
Through the use of NFTs, artists are now able to trade digital art like ‘real’ art, where the economic value realised by the tokens has paved the way for how audiences and artists alike will value these pieces in the same terms as physical art would be valued - whether that's technical prowess, innovation or deep aesthetic beauty.
NFTs empower art and artists alike, creating a new language and mechanism for understanding art through the lens of our digital lives - a moment that, in many ways, feels long overdue.
In the second part of our deep-dive into NFTs - published online later this week - we will take a closer look at the possibilities that this emerging artistic could will have in the future.
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