†Economics is the study of scarcity. Scarcity creates value. Value drives prices/money.For example, economics came to me during my graduation from my then professor. NFTs or Non-functioning tokens do exactly the same with the art arena: they give value to contemporary art by making it digitally scarce.
An NFT is a digital certificate of ownership of artworks stored in the form of a hash, using smart contracts, over a blockchain. Unlike Bitcoin or other paper currencies, you cannot replicate a non-fungible token, ie they can be replicated and exchanged with a token or bill of the same value. Each NFT is thus a unique token that represents a digital or realistic artwork, in part or as a whole.
Even if the original artwork is copied or downloaded thousands of times from the internet, its originality cannot be denied as its value is stored in an NFT. For example, you must have seen millions of replicas of the famous Monalisa, still the value of the original artwork in the Louvre, Paris is intact.
The digital world has been swinging to NFT rhythms ever since beeple first hit gold at Christie’s with his “Everydays” artwork. Since then, the NFT craze has almost turned into a mania with tweets, GIFs, memes, videos, animations, music pieces, signature dance moves, and almost anything slammed into an NFT.
From the fury of NBA collectors to Lindsay Lohan who handles NFTs on Twitter, from Jack Dorsey selling his very first tweet to Shawn Mendes making his own guitars – the list is endless. The NFT market is worth hundreds of millions today.
How are NFTs drastically changing the digital art market?
The shift from physical auctions and art galleries to the digital NFT marketplace was inevitable, especially for the digital artists who found it extremely difficult to monetize their art on the open internet space. Most of them were still stuck on Instagram, waiting to be seen and make a possible deal.
to this, beeplethe million dollar baby at Christie’s says:“NFT-designed art is immediately distinguishable from Instagram and identifies them as a collectible.”
NFTs open up a world of possibilities that have never existed before. There are quite a few reasons for the migration of contemporary artists to digital NFT space:
NFTs are revolutionizing ownership
In the past, artists earned their living by serving and painting for their clients. NFTs allow the artists to find a way to monetize their art by restoring this creator-pattern duality in a more democratic format.
Whether experienced or new, artists can compete on the same stage to capture the attention of art collectors, NFT traders, NBA fans, and anyone who seems even remotely interested in them.
While mining an NFT, an artist himself gets to write the terms of sale and ownership, which would be written forever in the form of a smart contract. The artwork may be owned by anyone, but it will always be attributed to the original artist.
NFTs also make it easy to track the provenance and transaction history of the NFT artwork, which is now immutably stored in a block. Unlike real-life scenarios where an artist can only earn from the first sale, in digital space, every time a resale is made, the royalties gained from the sale can go to the original artist.
Speaking of the physical works of art, an artist can choose to transfer or keep the physical ownership of their original work. The contemporary artists who may be struggling for space to display or make a living from their art would feel empowered, wouldn’t they?
Each artwork can be minted as a single NFT or as fractional shards that anyone can purchase individually. Whitney Biennials89 seconds at Alcazar’, a 12-minute video, is carved into a 2,304-piece grid. Each 20×20 pixel clip could be purchased separately and viewed as a small movie. With such use cases at hand, property will be democratized.
Boundless digital marketplaces
The great thing about NFTs is that they can be used to assign value to anything and everything. Artists like gig artists and meme creators who previously relied on social media to monetize their work can now turn them into assets worth owning.
The millennials and Gen Z today lead extended digital lives and also want to own things digitally. As such, the collectors thronging digital auctions and marketplaces are an equal mix of old and young. If one looks at the demographics, 64% of the participants in the Beeple auction at Christie’s were Gen Z and millennials.
NFTs that promote equality
Physical art markets or galleries are highly biased towards a minority of well-known names while the majority of lesser known artists are dependent on key holders ie the biased art institutions. The markets are fragmented, inclusive and arbitrary. NFTs are an extended use case where blockchain’s tools are used to dissolve marketplaces and establish direct connections between the artists and collectors through the NFT gateways.
Artist from Chennai Dhanya Ajith As of March 2020, it was able to sell more than 60 of its NFTs on three different global NFT marketplaces.
Speaking of demographics, Elizabeth Meggs, a New York-based oil artist, points out that: 87% of major US museum collections are male, of which 85% are white males. According to her, NFTs could create a level playing field without conventional prejudice for male and female artists to sell their artworks, “I strongly encourage all female artists I know to create NFTs right away. This is an opportunity!”
NFTs that immortalize art
The art space had been untouched for a long time. NFT, as a force, is here to disrupt it. By hashing the artwork over a blockchain, an artist grants tremendous immutability to his artwork. Even if the physical artwork ceases to exist, is destroyed or tampered with, the original copy remains digitally intact.
NFTs can be quite fruitful for buskers and performers, graffiti artists or those who create ice or sand sculptures and want to use their unique creativity. Pascal Boyart’s Modernized Street Art, a mural based on Eugene Delacroix’s masterpiece “Freedom leads the people, democratized by the French authorities because it is controversial. Boyart’s message was obliterated, but the original work survives with 100 NFTs selling for 0.5 ETH each.
Many physical works, as they are digitized, are enlivened with movement, audio and augmented reality. Beeple’s work “Crossroads” in the 10-second clip shows people moving back and forth in front of a heavily graffitied Trump (as it appears) lying face down on the grass and birds chirping in the background.
By creating digital scarcity, NFTs create an alternative asset class that could undermine intellectual property and property rights in the near future† They are a step forward towards a robust digital art community that collectively owns art.
Nischal Shetty is the founder, CEO of WazirX, India’s largest cryptocurrency exchange (recently acquired by Binance). He is a huge blockchain advocate and influencer with over 100,000 followers. He has also been on the Forbes ’30 under 30′ list in the past. Nischal has been active in the space for a long time with a mission to get everyone involved in the blockchain revolution.