We live in a world where every aspect of our daily life, be it education, shopping, meetings, and of course, playing games, etc. is shifting online. Hence, it was only a matter of time before ‘creative’ expression would also transition to the virtual world. Well, the blockchain art market is up and running – zooming, in fact. It has taken the world by quite a storm. There are a maddening number of people across the world who are investing in ‘digital art’ through the process of tokenization. These tokens are referred to as NFTs or Non-Fungible Tokens.
However, this is not as simple as it sounds. Though NFTs have been grabbing media headlines left and right for quite some time now, many critics are doubtful of the ‘art’ underlying these NFTs. Art like, digital avatars of penguins, cats, apes, and the likes currently dominate a major share of the NFT market.
On the other hand, many artists and consumer brands have also launched their ‘limited collection’ NFTs. They are selling digital files of their work for millions of dollars on the blockchain. It seems that NFTs are the way forward for the concept of revenue generation in the world.
What really is an NFT?
As mentioned earlier, NFT stands for Non-Fungible Token. Non-fungible refers to something which is unique and cannot be duplicated. NFTs represent such one-of-a-kind digital assets, like songs, drawings, stickers, etc. They are cryptographic tokens hosted on a blockchain. Typically, NFTs were hosted only by Ethereum, but other cryptos like Solana have also joined the bandwagon, and many others are also working towards the same. These NFTs attract investors or rather ‘collectors’ for the same reason a Van Gogh painting does – because there is only one of them.
But this is where lines start getting a little bit blurry. Because, in essence, you can copy and download a digital file as many times as you want. And you can do the same for the art underlying an NFT.
Well then, why are people spending millions of dollars buying an NFT? This is because buying an NFT gives an investor something that can’t be copied – ownership of the work. But the artist can still claim copyright and reproduction rights, just like with physical art. It’s a one-of-a-kind trading card. For instance, we have Pokémon cards – wherein you can only exchange one card for another, or buy it off someone for a higher price. The same goes on with NFTs, and the original artist gets a royalty every time his NFT art swaps hands.
Many feel that NFTs could become like art collecting. Grimes sold a 50-second video last year for $39 million. Another artist, Beeple (an American digital artist) auctioned off one of his works at Christie’s for $69 million. This is $15 million more than what an original Monet painting fetched, back in 2014.
NFT Communities
Just like in any other commodity trading, NFTs have also started having their own, dedicated communities. The first such community, called CryptoPunks, was founded in 2017. It is a series of 10,000 pixelated characters, each worth millions of dollars. This paved the way for the next community – the Bored Apes Yacht Club – a group of 10,000 cartoon apes. Each of these cartoon apes now sells for an average of $45,000. The latest community to jump on the train is the ‘Pudgy Penguins’. This community hosts a collection of 8,888 unique penguins with different combinations of clothing, facial expressions, and accessories.
Community NFTs typically entitle buyers to exclusive benefits, like membership of a Discord server, or access to a private Telegram channel, where you can socialize with other fellow buyers. The biggest perk, however, is being able to flex your NFT as a digital avatar on your Twitter profile picture. Plus you get to be a part of an elite crowd.
NFTs are quickly becoming a status symbol, especially community NFTs. This is primarily because they offer social standing and connections to buyers, along with a potentially profitable investment.
Buying and Selling NFTs
Dealing with NFTs is nothing complex. There are many NFT marketplaces now, where you can register yourself and buy or sell NFTs. OpenSea is the oldest NFT market and the most popular one. If you’re an artist and wish to list your NFTs, you can upload your artwork on this marketplace, ‘mint’ it to your profile, and list it for sale. You will also need a crypto wallet compatible with the blockchain you are using.
The minting process is as simple as uploading your files, inputting your work’s description, making your profile, determining your royalty fees, and completing the listing. Every time the NFT changes hand, you will earn a royalty. So, if and when, your work becomes popular, you will also receive some of its benefits.
Just like in cryptocurrency, to buy an NFT, what you need is a digital wallet to store your investment. Ethereum is the most widely accepted crypto in the NFT world. NFTs can also work as speculative assets. That is, you buy them with the hopes of selling them in the future for a higher price.
NFTs are here to stay!
Brands across all sectors are entering the NFT space. And they are not doing so just to be a part of the trend. NFTs can enable brands to increase their revenue opportunities by a manifold. From celebrities to startups, everyone is coming up with their category of NFTs. Brands like Coca-Cola, Marvel Comics, McDonald’s and Gucci are not just selling NFTs, but auctioning them off.
In India, popular celebrities like Amitabh Bachchan, Ritviz, Sunny Leone, Sonu Nigam, Nucleya, Yuvraj Singh, have launched their own NFTs in 2021. In fact, T-Series, which is Asia’s largest music label, is also foraying into the NFT market. Initially, they will launch digital arts for popular movies, in collaboration with Hungama, which is developing its own metaverse of entertainment. All in all, NFTs are the future of commodity trading. And all these brands venturing into the Web 3.0 space are making this a reality.
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