opening art: Beeple, Auto-Immune.
Have you been racking your brain trying to decipher what NFT stands for? Or maybe you’re considering investing in this new, sought-after asset? NFTs have been on everyone’s lips for the last few months, making the headlines and breaking records of all kinds. If you’re curious to find out what all the fuss is about, this guide is for you.
So what exactly are NFTs?
Non-Fungible Tokens are digital assets containing information recorded in so-called smart contracts – tiny bits of computer code that carry a set of instructions. They are part of the Ethereum blockchain and are similar to cryptocurrencies like Bitcoin.
The biggest difference, however, lies in the “non-fungible” part. NFTs are unique and cannot be replaced which means it’s not possible to exchange them for something identical or equal. If we own 100 dollars, it doesn’t matter if it’s the banknote we’ve been carrying in our wallet since last summer or a handful of coins in our piggy bank – the value remains the same.
It’d also be easy to divide the 100 dollars and spend half of it while saving the other half. That’s because we can replace and divide traditional assets. It’s not possible to do that with NFTs as none of them are alike.
NFTs are usually linked to a specific asset – this can be anything digital – drawings, music and, most importantly, art. Some interesting examples of items sold this way in the past few months include Nyan Cat, a viral meme from 2011, that was sold for $580,000, a 50-second video by Grimes, a popular Canadian musician, sold for $390,000 or the first tweet in history sold for a whooping sum of $2.5 million. Essentially, anything can be auctioned as an NFT.
When did it all start?
Although NFTs came under the spotlight very recently, they’ve been around for a while. They first hit the mainstream when CryptoKitties – a blockchain-based virtual game allowing players to adopt and trade virtual cats – became popular in 2017. People started collecting and trading them like crazy with some of the cats achieving prices as high as $100,000. That’s when investors first noticed NFTs which caused more companies and startups to create blockchain-based apps and games.
Hungry for more?What does it mean for the art world?
NFTs introduce a new, fully digital type of ownership and collecting. Digital files can be copied and reproduced by anyone and their ownership doesn’t come with copyrights. The buyer of an NFT artwork owns the token but intellectual and creative rights belong to the artist. It’s a whole new kind of collectibles that include artworks there wasn’t much of a market for before like GIFs, videos or virtual stickers. It’s an easily accessible investment that doesn’t require preparation or specialist knowledge – “buying is the new liking”, claim crypto art lovers.
Apart from being a new art form and investment, NFTs can also prove useful in the process of authenticating actual artworks. Some startups like Artory or Versiart already offer virtual certificates of authenticity in the form of NFTs. They are believed to be more reliable and harder to forge than traditional paper documentation due to their uniqueness. For the same reasons, NFTs can also be used as a modern proof of authenticity that could make many art transactions smoother.
Many experts praise NFTs as a game changer for artists – the digital world gives them a new, unlimited space to promote and sell their works. More importantly, it’s possible to enable a special feature that will automatically pay the artist royalties every time the NFT is sold or changes its owner, ensuring that they can benefit from the artwork’s popularity.
Could NFTs replace traditional art collecting?
Digital art like stickers or GIFs might not be appealing to traditional collectors.
NFTs are still a very young art form and the market for them, although growing, is relatively small – according to a recent survey, 53% of art collectors had only a vague understanding of how the technology works and 37% had “no clue” what NFTs were.
However, both Sotheby’s and Christie’s have gotten involved in selling NFT art which resulted in record-breaking auctions. In March, The First 5000 Days, a digital artwork by Beeple, was auctioned at Christie’s for $60.25 million. It seems that collectors, especially Millennials and Gen Zs, are becoming fascinated by this shockingly non-material art form. Noah Davis, a Christie’s specialist in Post-War and Contemporary Art, called the phenomenon “a thirst for something new and different and challenging — from both the literal, philosophical perspective but also from a very art historically-oriented perspective.” While NFTs are unlikely to replace traditional collecting any time soon, adding this kind of pieces to a collection will surely become a popular choice for tech-savvy art lovers.
Who are the hottest NFT artists?
The biggest name in the world of crypto art is without a doubt Beeple, an American graphic designer who creates various kinds of digital art, including short films and VR work. As of the end of March 2021, Beeple had sold 845 artworks for $113,544,319.92. He rose to fame working on concert visuals for musicians like Justin Bieber or Nicki Minaj.
Another popular artist is Mad Dog Jones, also known as Michah Dowbak, who creates multidisciplinary art. His REPLICATOR, a digital image of a fax machine that self-replicates over time, was sold two weeks ago by Phillips for $4.1 million, setting a record for a living Canadian artist.
The Fungible, a digital art collection created by Pak, was sold by Sotheby’s for almost $17 million in April. The artist, who has been active in the crypto art world for decades, remains anonymous. He’s known for experimenting with the use of NFTs and AI as forms of digital art.
Is it true that NFTs are bad for the environment?
Unfortunately – yes. Just like cryptocurrency, NFTs require huge amounts of energy to be created. According to independent researchers, producing an average NFT has the same environmental footprint as more than 200 kilograms of carbon which is the equivalent of driving 500 miles. Some artists, like Joanie Lemercier whose art is focused on climate activism, are trying to research more ethical and environmentally friendly ways to produce digital art and reduce NFTs’ impact on the planet.
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