It seems incredible now that even a few short years ago Non Fungible Tokens weren’t a glimmer in a potential investor’s eye. But today, they are undoubtedly one of the most significant developments to emerge from blockchain technology.
The principle behind them might be simplicity itself – unique digital assets that can be sold to the highest bidder – but their effect on all kinds of worlds is nothing short of earth-shattering.
This is never more evident than in the art market, arguably the first area of NFT trading that captured the general public’s attention.
It took the sale of a piece of work by the digital artist Mike Winklemann, a.k.a. Beeple, to bring this new form of art into the mainstream. March 2021 saw his artwork called Everyday: The first 5,000 days being sold for $69.3 million at auction, the figure generally only associated with the sale of masterpieces by artists like Van Gogh, Rembrandt, and Da Vinci.
Other names like CryptoPunk, who gives his work numbers in place of titles, have also seen their pieces sold for millions of dollars. There’s also the example of the WikiLeaks founder Julian Assange whose collaboration with the artist Pak, called Clock, sold for $52.7 million, a proportion of which is intended to cover Assange’s ongoing legal fees.
What it means for artists?
The art world has always been an uneasy combination of creativity and commerce. But for the creators of the work itself, NFTs are widely heralded as good news.
One of the main reasons for this is that it has started to have a tremendous democratizing effect on art. In the traditional system, it has been necessary for any unknown artist to acquire a patron or gallery owner to promote their work.
Inevitably, this excluded many artists without the connections and backgrounds that would enable this initial step. But now an artist simply has to master the technical requirements of how to make an NFT and start to raise their profile via social media and other channels.
Already, this is starting to create a more diverse art world than ever before. In particular, women artists and those from ethnic groups not often represented in the traditional art world now have a far more significant presence.
And not only are many artists now able to sell their work for reasonable prices but there is also a royalty system in place. Until now, many artists have resented that once a piece of their art has been sold, it has become a commodity for others to profit from.
But the new system means the original creator will continue to receive a proportion of the money each time their original piece is sold.
The effect on buyers
One of the first effects of the emergence of NFTs in terms of buyers is to introduce a whole new kind of a person into this arena.
Away from the slight fuddy-duddy and traditional model of attending auctions and visiting galleries, this has had the same democratizing effect that NFTs have had on the creators of the art themselves.
The fact that many purchases are made in cryptocurrency has also helped to change the profile of the typical buyer even more.
That said, the main issue that faces buyers of NFTs is how to estimate what is a reasonable price to pay for artwork. There are often recent previous sales with established artists that can be used as a yardstick. But for new artists, it is very much driven by what other buyers are prepared to pay.
This way, NFTs can probably be regarded as more risky investments than a traditional, physical art. Of course, the same can be said of cryptocurrencies, whose long-term value is yet to be seen.
Is this the future of art?
Another question that some are asking is how much NFTs will become a dominant force in art.
However, the prevailing opinion is that physical art that you can hang on the wall or display on a plinth will continue to dominate. Indeed, the future of NFTs will always rely on their tangible counterparts.
That’s not to say that NFTs might also expand what is thought to be art as new, experimental artists enter the world. So the physical and the digital are set to complement each other rather than compete for dominance.
It’s also hoped that this is just a starting point and that NFTs can do much more than simply shake up the art world.
So there are undoubtedly exciting times ahead. Not least, as we wait to discover what form the digital art gallery of the future will take.
