Non-Fungible Tokens (NFTs) seem to be changing the world quickly. More than likely, you’ve recently become aware of NFTs, like most of us. What was a fairly small market in 2020, exploded in 2021 and continues to rise in total market value. A market value of $100 million in 2020 increased to $22 billion in 2021.
Jeremy Berman says that If you’re new to NFTs, a quick explanation would be that NFTs are a unique digital identifier using the same technology as cyber currencies, the blockchain. Each NFT is totally unique and they initially began as a way to prove sole ownership of digital assets, like art or music. Now they are also being attached to physical assets as well. Being a unique identifier that can never be faked or stolen, NFTs have become the ultimate deed to assets.
NFTs are now attached to everything from digital trading cards, assets bought in virtual worlds, and even a 12-year-old’s pixel whale art that made him $400,000 in just two months. Jack Dorsey, CEO of Twitter, even sold his first-ever tweet for $2.9 million.
NFTs and Digital Art
Jeremy Berman explains that digitally created work has been much of the original NFT market. The most famous example is an NFT auction through Christie’s for a Beeple image. Beeple, an artist that had never sold anything more valuable than a $100 print, sold a digital print consisting of an arrangement of art pieces he had created every day for 5,000 days for $69 million.
The auction winner got a digital file with a unique identifier that proves it is his. Its collector has indicated that he wants everyone to have a free copy.
Other digital works are being auctioned for millions as well, but there is concern that the market is extremely overvalued. It might be time to reiterate that a 12-year-old made $400,000 selling small digital whale files. More than likely, it is the concept of scarcity along with the newness of technology that has driven prices.
NFTs and Physical Art
Jeremy Berman continues to say that Physical Art tied to an NFT offers a great opportunity for an artist to sell artwork without paying a commission to a gallery. The artwork can be sold alongside the NFT or both can be sold separately. Either way, it is important that the work is photographed or scanned in high quality and that colors are properly represented.
Some other options artists have used to sell the NFT include:
- Selling the NFT and then destroying the original artwork
- Selling the work in pieces to different collectors after creating the NFT
- Selling the different stages of the creation of the work as NFT
All of this can sound a little crazy for those of us new to the NFT market. NFTs are certainly changing the way art is sold and collected. Where this all goes and how it all works out remain to be seen. It might be time to go create some digital whales.
Jeremy Berman is an art aficionado and collector. He is closely watching the NFT market to see where all of this ends up.