Part 5: A Comprehensive NFT Guide for Artists
Artists: Embracing Future Technologies: Part 5
In recent years, the emergence of blockchain technology and cryptocurrency has brought benefits and challenges to various industries, including the art world.
One of the most talked-about innovations in this space is the Non-Fungible Token (NFT). NFTs have gained popularity as a way to establish ownership, authenticate originality, and monetise digital art in a new and exciting way.
As an artist, understanding the potential of NFTs could open up opportunities in the digital art market.
This guide will take a closer look at NFTs, explaining the concept of NFTs and discussing their potential benefits and risks. This guide will provide a useful summary for any artist interested in the future of digital art.
Table of Contents
What Are Non-Fungible Tokens (NFTs)?
Why should an artist create a NFT?
How can physical artworks become NFTs?
Potential Future Developments for NFTs
What Are Non-Fungible Tokens (NFTs)?
Non-Fungible Tokens (NFTs) are digital assets that represent ownership of a unique, one-of-a-kind, piece of content, such as a piece of digital art, although it could apply to other applications, as will be explained below.
How NFTs Differ from Cryptocurrencies
Unlike cryptocurrencies, NFTs have a unique value based on their rarity and authenticity. By contrast, cryptocurrencies are a unit of currency, where all coins have the same properties.
NFTs are considered to be their own asset class within the crypto investment space.
Understanding the Blockchain Technology behind NFTs
NFTs are built on blockchain technology, which is a decentralised, distributed ledger that records transactions in a secure and transparent way. The blockchain allows for NFTs to be verified and authenticated, ensuring that they are unique and one-of-a-kind.
For a more detailed review of blockchain technology, please see Part 2 of my Artists: Embracing Future Technologies series.
Examples of NFTs in the Art World
The art world has seen a surge in the use of NFTs, with several high-profile examples of digital artwork selling for millions of dollars.
One of the most well-known examples is Beeple's ‘Everydays: The First 5000 Days,’ which sold for $69 million at Christie's auction house in March 2021. This landmark sale demonstrated the potential for NFTs to revolutionise the way artists monetize their digital artwork.
Another high-profile example is that of Trevor Jones, a painter who creates colourful and vibrant works that often incorporate pop culture icons and symbols. In March 2021, Jones released a collection of NFTs on the Nifty Gateway platform, which sold for a total of $3.1 million.
The collection, titled ‘The Bull Run’ featured a series of digital art pieces that were inspired by the recent surge in the cryptocurrency market. The pieces featured a colorful bull that was often associated with the stock market, reimagined as a digital avatar surrounded by a variety of pop culture references and symbols.
By using NFTs to sell his artwork, Trevor Jones was able to create a new revenue stream and offer collectors a new way to own and display his art in a way that was transparent, secure, and verifiable.
In the following sections, I take a closer look at how NFTs work and the benefits they offer to artists and art collectors.
How Do NFTs Work?
Creating and selling NFTs involves several steps, but the process is relatively straightforward. Here's a high-level overview:
Create a digital asset - This can be anything from a piece of artwork or a photo to a tweet or a video clip.
Mint an NFT - Use a blockchain-based platform, such as Ethereum, Solana or Polygon to mint an NFT. This will represent ownership of the digital asset. This process involves creating a smart contract, which is a self-executing code that verifies and authenticates the NFT. Please see Part 4 of my Artists: Embracing Future Technologies series for information about smart contracts and Part 6 to find out how to mint an NFT.
Sell the NFT - List the NFT for sale on a marketplace, such as OpenSea or Nifty Gateway. The NFT will be sold to the highest bidder, with the proceeds going to the creator of the digital asset.
Why should an artist create an NFT?
As the world becomes increasingly digital, the art world is following suit, and more and more artists are turning to NFTs. NFTs as a form of art will not suit everyone, but in this section I explore some of the key reasons why NFTs are becoming popular to help artists decide if they could be a good fit for their work.
NFTs are used to monetise art - One of the primary reasons that artists create NFTs is to monetise their artwork. There are various ways to do this; by selling the NFTs on various platforms and also through royalties. For example, an NFT could be resold for a different price, and the artist could retain a percentage of any future sales of the NFTs. This creates a new way for artists to earn ongoing (recurring) revenue from their work, rather than just a one-time sale.
NFTs use blockchain technology to establish ownership and authenticity of digital assets - When an artist creates an NFT, they can prove that they are the original creator of the artwork, and that it is a unique and one-of-a-kind creation.
To gain exposure and recognition - Creating an NFT can be a great way for artists to gain exposure to new audiences. Since NFTs are a relatively new phenomenon, many collectors and art enthusiasts are eager to explore this emerging market and discover new artists. They also provide a new way for artists to connect and engage with their fans. For example, an NFT could unlock access to a private video message or private group chat or community.
To be part of a new and exciting movement - Creating an NFT is a way for artists to be part of a new and exciting movement in which the art and technology worlds collide. By creating an NFT, digital artists can be at the forefront of this movement and help shape the future of the art world.
Virtual Art Exhibitions - One exciting use case for NFTs is the creation of virtual art and immersive art exhibitions within a digital space, perhaps in combination with technological developments, such as the metaverse (see Part 7 of this current series for more information on the metaverse). Virtual art and immersive exhibitions can allow for new and innovative ways of experiencing art. Imagine a virtual gallery space that provides an immersive and interactive experience, allowing people to view art in a way that is not possible in the physical world. I have previously written a number of articles about immersive art.
How can physical artworks become NFTs?
Many people do not realise that physical artworks can also become NFTs, opening up a whole new world of possibilities for artists and collectors alike.
So, how can a physical artwork become an NFT? It's actually quite simple!
An artist can take a high-quality photograph of their artwork to create a digital representation of it. This digital representation can then be turned into an NFT, which is stored on a blockchain and can be sold just like any other digital asset.
The main benefit to turning physical artworks into NFTs is the ability to monetise the artwork in an innovative way. Like with digital artforms, NFTs provide another arena in which an artist can sell and promote their artwork. In this case, the artist would be selling the digital representation, not the physical piece.
Some artists have sold the NFT, but included the physical artwork as a condition of the sale within the smart contract. As this space develops, there will increasingly be new ways in which a physical artform can be represented and exchanged in the digital space.
Potential Future Developments for NFTs
Increased Integration with Social Media Platforms - One exciting prospect is the increased integration of NFTs with social media platforms. It’s likely to be possible for artists to showcase their digital art to a wider audience, with the click of a button. As NFTs become more accessible, social media platforms could provide a powerful platform for artists to connect with their fans and sell their work.
Enhancing the Digital Art Collecting Experience - Another potential development for NFTs is the enhancement of the digital art collecting experience. With the use of virtual and augmented reality technology, collectors could immerse themselves in the art they own, creating a unique and engaging experience. This could increase the value of digital art and make it more attractive to collectors who are looking for a different kind of art collecting experience.
Expanding to Other Creative Industries - The possibilities for NFTs are not limited to the world of visual art. NFTs could be used to tokenise other forms of creative work, such as music, literature, and film. This could allow creators to build a loyal fan base. NFTs have also been used as a form of ticket for entrance to events.
It's an exciting time for many artists and creatives, as we explore the endless possibilities of blockchain technology and NFTs.
What are the risks and challenges of using NFTs?
There are challenges associated with the legal and regulatory landscape surrounding NFTs. Since NFTs are a relatively new technology, there is still a lot of uncertainty around issues. I have listed some of the main risks and concerns below:
Lack of Regulation and Oversight - The world of NFTs is largely unregulated, meaning there is no central authority or oversight to ensure the authenticity of an NFT. This lack of regulation has created a breeding ground for scammers, who may create fake NFTs or engage in other types of fraudulent activity to dupe unsuspecting investors.
To protect yourself from these risks, it's important to thoroughly research the NFT and the seller before making a purchase. Look for reputable marketplaces and sellers with a history of successful transactions, and avoid deals that seem too good to be true.
Vulnerability to Hacking - Because NFTs are digital assets, they are vulnerable to hacking and fraud. Cybercriminals may target NFT owners to steal or duplicate their tokens, which can result in financial losses and reputational damage.
To protect your NFTs from these risks, it's important to use secure storage and backup solutions. Consider using a cold storage wallet or other offline storage options to protect your NFTs from cyber threats.
Difficulty in Verifying Authenticity of NFTs - One of the primary benefits of NFTs is their uniqueness and authenticity. However, verifying the authenticity of an NFT can be difficult, especially for novice buyers.
Environmental Concerns with NFTs - NFTs have come under fire for their potential environmental impact, namely through the energy used to store and create them. To address concerns about the environmental impact of NFTs, there are efforts underway to create more sustainable blockchain technology and to offset the carbon emissions associated with NFTs.
Volatility and Price Fluctuations - The cost of minting or purchasing an NFT is inherently linked to the platform and cryptocurrency. However the value of cryptocurrencies are very volatile. This means that the value of an NFT can vary significantly one day to the next.
My Final Thoughts on NFTs
There is a lot of innovation happening in this space at the moment, so it is difficult to imagine exactly how we will be using NFTs in a year or two from now, but I am excited to see how they will become part of our mainstream world and culture.
I hope you have found this NFT summary useful. There is still a lot to learn about other new technologies, please read the following blog posts to find out more:
