What a year for the digital art world!
NFTs have been shaking up the art world in 2021 and their performance is not showing any signs of slowing down as we head into 2022. In March it was reported that Mike Winklemann aka “Beeple”, a relatively unknown artist, sold a JPEG for $69 million. He had only started to explore the NFT world in October 2020 and has now become the third richest living artist and is a globally recognized digital creator.
This has projected the NFT industry into the stratosphere, with sales surging from $200 million in 2020 and increasing by 5,350% to $10.7 billion in Q3 of 2021.
NFTs have clearly benefited from the crypto frenzy that we have seen in the last 12 months and although still somewhat unknown, anre taking off at a rapid pace.
The value of computer-generated art has catapulted with the likes of CryptoPunks, Bored Ape Yacht Club (BAYC), MekaVerse, and many more. In September, Sotheby’s sold a bundle of CryptoPunks for $24.4 million. BAYC, selling at launch for $215 in April, has already had trading of over $540 million in the last six months. Such collections are known as PFP Art, or profile pics, and are computer-generated so that each NFT is unique, with some having more rarity and scarcity than others.
Why are NFTs so important?
For those who are unfamiliar with NFTs, it stands for non-fungible token, and they are a unique, non-interchangeable unit of data stored on a digital ledger using blockchain technology to establish proof of ownership. NFTs are collectable digital assets. And these are revolutionizing sectors such as art, gaming, music, real estate, entertainment, sport, and many more everyday.
In simple terms, NFTs are digital tokens like Bitcoin and Ethereum, but an NFT is unique and can not be exchanged like-for-like, and thus non-fungible. All kinds of easily reproduced digital files can be stored as NFTs in order to identify the original copy.
NFTs can be made from almost anything unique that can be stored digitally and which in essence holds value. Instead of receiving a physical collectible, an NFT owner gets a JPEG file with the proof that you own the original copy.
NFTs sit on a blockchain ledger maintaining the individual identity and ownership of the NFTs. And the NFT that identifies the ownership of the digital asset can be bought and sold, and the price is determined primarily by the market demand.
How important are NFTs for the art world?
In the art world, for the majority of artists, it has always been a struggle to gain visibility and a steady revenue stream, especially in recent years. The main source of income comes from “originals” and “prints”. But only a few can command high prices. And art collecting has always been reserved for the “elite”.
It has been a challenge for graphic artists to build up a good income. Some are lucky to be able to work with brands and clients, and do graphic work for them to supplement their “art income”. Now, with NFTs, all artists are able to sell unique artworks as NFTs and create a new revenue stream.
Each NFT comprises a smart contract that provides the license to use the digital asset. What is amazing with NFTs is that the original creator also gets a percentage of future sales in addition to the original sale value. Given the high demand for many types of NFTs, NFT collections are often released as “drops” so the buyers must be quick on the day and time of the drop and be registered, have enough cryptocurrency in their wallet, and ready to buy. After the purchase, NFTs are traded on many NFT portals such as Opensea, Rarible, Nifty Gateway, and many more.
What is amazing is that NFTs democratized art and opened up so many opportunities between investors and the art world, and created a new asset class for almost anybody to be a part of.
NFTs are here to stay
Here are some interesting stats about NFT owners and their huge growth potential:
4,662.5M internet users
2,890M Facebook users
300M discord users
189.2M Twitter users
10.1M defi users
0.3M opensea (NFT marketplace) users
0.0009% of internet users own an NFT (Sept. 2021)
So, we are just in the very early days of massive growth in this industry, but exciting times lie ahead, so it’s time to get on board or risk being left behind.