Allowing traceable ownership of artwork in a digital way, NFTs are shaping a new world through redefining value, economy, creation and art itself. The traditional art industry is gradually being taken over by NFTs.
What is NFT Art and Why it is Important
What is art anyway? Literature, music, or faces on a magazine, art used to be confined to physical forms or mediums, but not in the modern era. Science and technology has changed everything. It has broadened the coverage of art to any general human activity or creation of emotional, aesthetic value. NFTs, Non-Fungible Tokens, usually refer to cryptocurrencies developed on the ERC721 standard of the Ethereum Blockchain, however similar standards have also been implemented on other chains. Different from fungible tokens like ETH, the native token of Ethereum or BTC, Non-Fungible Tokens are unique in nature and cannot be exchanged with one another at the same value
This is exactly why NFTs and art make a perfect match. Just like artwork, NFTs are unique and their value varies. It broadens the definitions of art and offers more freedom to artists. NFT art is now one of the hottest trends sweeping the world of art today.
Be it doodles or a clip of videos, NFT art takes many forms and has become extremely popular among artists and celebrities. Mick Jagger, frontman of legendary rock band The Rolling Stones, launched a 3D animated video NFT this April. Kings of Leon and rapper Snoop Dogg also joined the movement, releasing their own NFT works. Old-fashioned lifestyle magazine Playboy will also launch a line of NFTs. Traditional artists are tapping into NFTs and crypto artists are finding their place in the traditional art world.
Earlier this year, Christie’s Auction House, the oldest and most influential art dealer in the world, successfully auctioned a collection of NFTs called “EVERYDAYS: THE FIRST 5000 DAYS” by crypto artist Beeple. The very first NFT auction in the traditional art world hit a staggering record high of approximately $69,340,000 USD (around $92 million AUD), making Beeple one of the most commercially successful artists in recent history.
The explosive growth of NFT art is proved by the fact that traditional art marketplaces are embracing NFTs one by one. Sotheby’s, following suit, decided to provide crypto as a payment option right after their first-ever NFT art auction and launched Sotheby’s Metaverse, a selected NFT art platform to explore the crypto art market. This indicates that traditional auction houses are embracing the NFT art world with Sotheby’s recently auctioning, popular NFT art collection, Bored Ape Yacht Club.
NFT Art Finance and Creator Economy
Most of the time, financial motivation can help artists better create whether in the traditional art world or crypto industry. NFT art acts as a way for artists to continually garner revenue from their work, and allow for greater exposure.
Take painting in the traditional art world as an example, the value of the artwork may grow over time with the help from art galleries, media, museums, or collectors. The painter, however, will not be able to benefit from the reselling of his or her own creation as the ownership of the physical painting is no longer in their control. Bigger players, galleries or collectors are the ones that take part in the art economy and they often profit more than the creators. This may hurt prominent painters and younger artists financially as they must survive with fewer royalties.
NFT art is an entirely different story. With the magic of NFT art, artists will always be able to get a slice of profit in further transactions through royalties of secondary sales. NFT art finance is dethroning third-party agents and returning the crown to the artists themselves.
Whilst the crypto native community is seeing the rise of NFT art marketplaces like OpenSea or SuperRare, which are empowering artists to partially control the swelling value of their creations through crypto, traditional mediums are involved with NFT art in their own way. Content creators on social media platforms like Twitter or TikTok, for example, are able to mint their work through NFTs. Jack Dorsey, CEO of Twitter, minted his first Twitter text in an NFT and sold it at a whopping $2.9 million (around $3.8 million AUD). Is Jack an artist? Apparently, the buyer who purchased the NFT text believed in the value of Jack’s creation.
This community-oriented economy is thriving and it is expanding the definition of art. Creators get to tokenise the intrinsic value of their original work and better control the way their creations should be handled.
As one of the most disruptive technologies in the Blockchain industry, NFTs are undergoing a fascinating transition when it comes to NFT standards or protocols. Apart from the ERC721 standard mentioned at the beginning of this article, NFTs are witnessing the expansion of different protocols that offer increasing diversification and interoperation.
ERC721 is undoubtedly the most widely adopted NFT standard. CryptoKitties, the very first NFT hit during the 2017 bull run, was based on the ERC721 NFT standard. Adorable digital kitties with unique features were so popular that they clogged the Ethereum network.
Whilst ERC721 dominates most NFTs, ERC 1155 was designed to reduce the cost and cut the time of transaction. A perfect choice for artwork wholesalers or game developers, the ERC1155 token is sometimes called a semi-fungible token as it tells tokens apart from each other according to their class instead of tagging them one by one.
Another NFT standard worth attention is ERC998, Composable NFTs, i.e. CNFT. ERC998 allows one NFT to combine with another NFT or FT as it works as a standard extension. When you transfer a CNFT, you are transferring the whole structure and ownership it holds. To put it simply, ERC998 tokens can include many ERC721 and ERC20 tokens.
There are also ERC809, ERC875, ERC994 to add to the ongoing list. More proposals are being designed to improve NFT standards on the Ethereum Blockchain in a broader sense. For instance, EIP2981, an Ethereum Improvement Proposal, may serve a critical role in the future NFT art world as the proposal is written to allow a simple, standardized, and GAS-efficient solution to third parties. It makes contract royalties predictable and helps creators earn more. Fixed or dynamic, there are many flexible royalty options for creators to choose from, which can help promote NFT artwork for artists.
According to Cryptoslam, Ethereum currently holds the highest NFT sales volume of all time. However, the second-largest market cap crypto in the world has fewer NFT transactions or buyers than its competitors like Solana, Ronin, or Flow, which are designed for NFT collectibles and crypto games. Heating competition between different Blockchains will certainly help in diversifying the NFT art world.
Different NFT standards may help NFT art to thrive in different ways, creators and artists will find new NFT standards helpful in cultivating new types of art as well. Tech standards of NFT are irrelevant to the value of art as there is not much difference between NFT art and traditional art. Perhaps a more urgent question is, is NFT art a fad?
Is NFT Art a Fad?
NFTs indeed shed some light on the future of art. But NFT art is surprisingly rejected by some people. Critics believe that NFT art is a fad just like other cryptocurrencies. They argue that NFT art is a new tulip bubble and riddled with issues like piracy or possible money laundering. However, It is not fair to blame it on the newborn technology as the same problems exist in the traditional art world. If anything, NFT is helping art in improving transparency and ascertaining provenance through Blockchain tech. While the future of NFT art is still up for debate, the traditional art world has taken notice and has begun to adapt.