How NFTs can transform the art industry?
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The Internet sensation- NFT has created a strong buzz in the Art market. Are NFTs transforming the Art market? Maybe yes or maybe not! the out-turn will take its course to establish the real impact. But speaking of the present, it is undeniable that NFTs are in momentum, defining new dimensions for the Art market, especially how artworks are traded. Now, here ‘art’ is a very broad category. It refers, not just, to aesthetic artworks but also music, text publications, and commercial design contents like those used in the fashion and entertainment industry.
This article will cover in details everything about NFTs in Art. However, before initiating the discussion, let’s set the framework of this article. NFTs make more sense for digital arts, like a digital painting, an e-Book, a Gif, a digital image or any video clip. It is not that NFTs cannot be associated with physical artworks. However, at its core, NFTs are digital, so this article will specifically speak about NFTs of digital arts.
Table of Content:
- What are NFTs?
- What are the key characteristics of NFTs?
- What makes NFTs so important or valuable in the art market?
- How are NFTs used in the Art market?
- How to capitalize on NFTs?
- How can LeewayHertz help you launch your custom NFT marketplace?
NFT means Non-fungible token. Maybe that expansion doesn’t make it any clearer. So, for the sake of definition, understand an NFT as a unit of data recorded on Blockchain. This data (or NFT) certifies a digital asset to be unique and proves who the digital asset owner is.
In simple words, every NFT is a crypto token representing a particular digital asset like a photo, a video clip, a Gif, an article, or even a Tweet. At present, NFTs are popularly being used to tokenize digital artworks, and then these NFTs are traded in NFT marketplaces to earn a profit.
Now, it is important to understand that NFT itself is not the Art or the asset; it is just the record of that Art. While NFTs are stored in the decentralized Blockchain, the Art itself is stored in some other off-chain databases, like servers, computer systems, and others.
NFTs are powered by Blockchain. The mention of Blockchain right away reminds us of cryptocurrencies. Do NFTs have any similarities with cryptocurrencies? Partially yes, because NFTs are also crypto tokens, just as Bitcoins and Dogecoins are. So, being a crypto token, an NFT also bears blockchain-typical properties like decentralization, recording of transactions in a distributed ledger, the immutability of records, indestructible and verifiable.
But despite these similarities, NFTs differ from cryptocurrencies in a very sharp way.
Cryptocurrencies like Bitcoin, Ether, Litecoin are fungible, while NFTs are non-fungible. Fungibility means the ability of an asset to be interchanged for another of like-kind. For instance, 1 Bitcoin can be interchanged with another Bitcoin as their values are the same.
A note of one hundred dollars is exchangeable with five notes of 20 dollars, again because values are the same. But one diamond cannot be exchanged with another diamond because no two diamonds in the earth are the same; that is why diamonds are called non-fungible, which means non-exchangeable. NFTs are also non-fungible in the same way.
Every NFT is unique, and you cannot exchange or replace one NFT for another. NFTs are made unique by encoding it with a unique blockchain-native identification code that is immutable and unchangeable.
Some basic but obvious attributes to NFTs are:
- NFTs are cryptographically authenticated.
- The trading of NFTs happens using cryptocurrencies.
- The value or price of NFTs fluctuates; it may increase or decrease over time.
- One NFT can have only one owner at a particular time.
With this basic understanding of what NFTs are, let’s understand the scope of an NFT in Art. What makes them so valuable is that they are being sold or bought for millions. Twitter’s CEO Jack Dorsey’s first tweet was sold for $2.9 Million, Beeple’s digital Art: The First 5000 Days was bought for $69 million, Lindsey Lohan’s NFTs are quite popular and highly valued.
Needless to say that digital art is one of the dominating forms of modern art. But, the problem with digital content or art is that it can be copied easily, and there can be n number of copies available on the Internet. What is needed is the authentication of the original art. A Netflix documentary on fraud art, titled Made You Look, very well explains the importance of authentication in the art world.
NFT has emerged as a solution that can indisputably authenticate the original digital art. The artist can create an NFT for his digital art, which will create an indestructible and immutable record in the Blockchain and thereby will certify the art as original and unique. The artists can also use NFT to monetize this artwork. Over NFT marketplaces, he can sell his NFT directly to an interested buyer.
Blockchain smart contracts facilitate NFT trading, and the transfer of ownership from the seller to buyer gets recorded in Blockchain. This way, an NFT always functions as an authentic proof of ownership.
So, if you own an NFT for artwork, you can always prove that you are the owner of the particular digital art tagged to the NFT owned by you, no matter how many identical copies of the art are viral on the Internet. The Beeple’s digital Art: The First 5000 Days is easily available for download on the Internet, but just having a copy of the image doesn’t make us the owner of the art. The Beeple 5000 days art is owned by that person, who bought the NFT of that art for $69 million. Only owning the NFT can make us the owner and give us the right to sell the artwork in the future.
One point to be noted here is that transferring of ownership is not identical to copyrights. The artist or creator retains the copyright but transfers the ownership to the new buyer.
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In the above segment, it has been explained that NFTs are valuable in the art market for two reasons:
- It certifies uniqueness to a piece of Art and thus makes it valuable
- NFTs are indisputable records of ownership
Now, let’s understand how NFTs are used in the Art market.
For ages, artworks are used as an investment; art lovers, collectors or investors buy them, and when they feel that the market value for that artwork has been appreciated, they auction it or sell it, making profits. The same business model applies to NFT-backed digital artworks also. As the supply and demand for digital arts have increased more and more art galleries and auction houses are adopting the trading of NFTs. Also, there are NFT marketplaces, where artists can directly create NFTS for their artworks and put them up for sell.
You may ask, why would anyone be interested in owning an NFT? Perhaps, because NFTs are unique and exist as high-valued social assets that can offer customers a certain status, something to flaunt about.
Now, one very obvious question here is how the value of NFTs gets decided? The value of NFT can be anything that the creator wants it to be. Whether or not anyone will pay the price for that value depends on many factors, like the popularity of the artists, the scarcity of the artwork, or how it aligns with the buyer’s interest. So, in conclusion, the perceived value of an NFT is linked to the perceived value of the creator or brand behind the NFT.
NFT in Art has opened up new prospects for brands associated with industries like Fashion and Entertainment.
- NFTs are the new trendy ways of interaction to improve brand awareness and affinity.
- NFTs can be used to build a buzz for the pre-launch of a product.
- Brands can use NFTs as a medium to promote the collectible assets relevant to the brands.
- Brands can facilitate token sales with NFTs to raise funds and support causes they care about.
- NFTs can be the way to monetize their best-performing ads. Customers might be interested in buying a piece of the brand’s history.
- NFTs can be a great way to reward crowd-funding.
- Create and sell NFTs
As discussed above, one way of monetizing NFTs is simply to create and sell NFTs. Digital artists and content creators are creating NFTs to sell their artworks and also to reach out to secondary markets. Every future sale of an NFT earns a loyalty income for the original NFT creator. Thus, NFT helps artists or creators to build an unbreakable revenue stream, as NFTS are meant to be timeless.
- Invest and trade NFTs
Investors and collectors engage with the NFT market just as they engage with the stock market or cryptocurrency market. They invest, wait for value appreciation, then sell and earn profit. Some of the popular marketplaces to buy and sell NFTs are:
- Myth Market
- Launch your own NFT marketplace Another way to capitalize on the rage and popularity of NFTs is to launch your own NFT marketplace. The booming commerce of NFTs has also created the burgeoning demand for NFT marketplaces. After all, it is the marketplace that drives the whole market of NFT trading, just the way retail marketplaces like Amazon drive eCommerce. NFT marketplaces are in popular demand at present as the market for NFTs surged to new highs with $2.5bn in sales in the second quarter of this year.
Art galleries, auction houses, and entrepreneurs interested in NFT trading can create a vested NFT-driven business model by launching their own custom NFT marketplaces.
As a software development company, we also extensively work in the space of Blockchain technology for startups and enterprises. Specialized in leading blockchain protocols like Ethereum, Stellar, Croda, Hyperledger, Hathor, and others, we take up on-demand projects and also offer quick-to-deploy custom solutions. One such offering of ours is the NFT white-label marketplace solution.
Our NFT marketplace solution helps Blockchain-focused entrepreneurs, art platforms, start-ups, game publishers, and other interested businesses to launch their own NFT marketplace and cut the time-to-market. It facilitates bidding, selling, and trading of NFT-backed digital arts or other assets. Apart from catering to the Art market, our solution also serves industries like Games, Music, Audio/video, Sports, Real Estate, and Digital Collectibles. Some of the key features of LeewayHertz’s NFT white-label marketplace solution are
- NFT Rankings on an hourly basis
- The listing of tokens as a collection
- Search filters
- Easy browsing by categories
- Unlockable Content
- Mark favorites
- The option to add a collaborator
- Wallet integration and much more.
Regarding NFT in Art, it can be concluded that NFTs are currently demonstrating the promising potential to become the future of artwork. But the use cases for NFTs are not merely limited to art ownership. It goes much beyond that and finds application in other industries such as online gaming, live events, virtual reality, and real-world documentation. NFT is a vast space, and you can do a lot more reading and learning related to it. We have more insights covering other prospects related to NFTs.
If you are interested in launching your own custom NFT marketplace, then we would be very happy to partner with you. You can book a free demo of our white-label NFT marketplace solution.
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NFTs in music provide promising opportunities for the industry and a wide range of benefits for artists and music enthusiasts. Musicians receive fair compensation for their work, and fans can directly interact with them.
A fractionalized NFT is an NFT broken down into smaller fractions to be sold individually. Each fraction represents a portion of the NFT’s ownership, enabling multiple people to own a single token.
NFT marketplaces are undoubtedly a profitable business. NFT marketplaces will invariably deliver desired results when developed with certain dos and don’ts in mind.