The rise of NFTs : Disrupting Art industries
What do a 2007 YouTube video, a piece of crypto-art and a photograph of a rose have in common? While at first glance the answer would appear to be “not a whole lot,” they are actually part of a phenomenon that is revolutionizing finance, particularly around the way people invest in art, music and sports.
Welcome to the world of non-fungible tokens (NFTs), which are being regarded by many as the new frontier of revenue generation, specifically with regard to the arts. The term non-fungible means there is no equivalent for which the item can be exchanged. When it comes to NFTs, blockchain technology is used to establish the uniqueness and ownership of a piece of digital art, which is then sold via a platform. Furthermore, each sale of this art is recorded on the blockchain, creating a digital provenance that is inalterable by anyone.
Actually, NFTs are nothing new — they’ve been around since 2014 — but like a musician who has played the club circuit for years and suddenly “hits it big,” they have skyrocketed in popularity during the past several months. There were over $2.5 billion in NFT sales in the first half of 2021, $1.2 billion in the month of July alone. This kind of exponential growth has been seen across the blockchain space over the course of the pandemic. Even major brands have jumped on the bandwagon, including Coca-Cola, which sold a four-piece collection and donated the proceeds to Special Olympics International.
NFTs are bringing the possibility of art ownership to the masses, which historically has been reserved for the wealthy. They are also especially appealing to millennials and zoomers, who tend to have a greater appreciation for digital platforms.
The value of art, regardless of its form, has always been a subjective thing; now, instead of that value being determined by a relatively small group of experts, it is now determined by the public.
This allows artists to monetize works such as memes that are shared for free over social media and elsewhere on the web. As mentioned previously, almost anything can be turned into an NFT — from crypto-art, as in the case of Nyan Cat, which sold for $580,000, to Kevin Abosch’s photograph “Forever Rose,” which sold for $1 million dollars in 2018. Even newspaper articles can be NFTs — for example, “Buy This Column on the Blockchain!,” which was published by the New York Times and sold for more than $550,000.
And let’s not forget the ultimate game changer: the artist Beeple’s collection “Everydays: The First 5000 Days,” which sold at Christie’s for $69.3 million. However, most NFTs actually sell for less than $200.
This leads to a discussion of an even more exciting subset of the blockchain universe — the fractional non-fungible tokens (F-NFT). Similar to crowdfunding, F-NFTs make it possible for the average person to invest by purchasing a fractional interest of the whole. Let’s say, for example, that a musician creates a series of clips of live performances over the course of months or years. For a small sum, fans can become owners/investors by buying a piece of those collections, just as they can with collections of playing cards.
Along with the excitement is a fair, and perhaps justifiable, skepticism about NFTs. First, many people cannot seem to get their minds around the fact that the pieces selling for these astronomical amounts can be viewed by anyone on the web. While this may seem strange, it actually signifies a shift in perspective about what art is and how we access it. During the pandemic, we saw that we cannot always travel to see a painting or sculpture, but we could see them — and other pieces that brought us humor, joy and comfort — online. As mentioned above, it also levels the playing field in terms of who can own this art, while making it possible for otherwise “starving” artists to be compensated for their work.
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