Non-fungible tokens (NFTs) are taking the art world by storm. Digital artists, celebrities, musicians, and even luxury brands are launching their NFT collections, which are usually sold out in a matter of hours. Fans, on the other hand, are proudly displaying their NFTs on social platforms, particularly on Twitter where they can get a hex-shaped profile picture.
This exceptional growth in popularity of NFTs has increased the total monetary value of the market by multiple times. While there was just $94.9 million worth of NFT sales during the entirety of 2020, that figure spiked to around $25 billion next year, representing a growth of over 260-fold.
Non-fungible tokens have also been off to a remarkable start in 2022. In January alone, major NFT marketplace OpenSea set a record $5 billion in trading volume. This is the platform’s best month ever, topping its previous monthly record of $3.4 billion by a wide margin.
The Proponent’s POV
In 2021, sales of some NFTs, which are nothing more than a JPEG to the eyes of many, fetched six-figure sums: like Beeple’s ‘The First 5000 Days’ selling for an eye-popping $69 million. These exorbitant price tags have pushed some to call NFTs a fad, claiming that the hype around the space is not sustainable.
Others, including the British art critic Jonathan Jones, have related NFTs with “ego and money.” Jones argues that non-fungibles, in particular the popular Bored Ape collection, have nothing to do with empowering artists and everything with inflating the collector’s ego. And lastly, some claim that NFTs offer way less emotional connection than physical, tangible pieces of art. You cannot hang a digital file on the wall, they say.
There’s a grain of truth behind these concerns. The NFT market still needs to reach maturity, some non-fungibles are crude and overpriced, and we still need to come up with ways to determine their real value. However, as far as the art industry is concerned, this technology can be a real gamechanger.
Non-fungibles as The Future of Art
At their most basic level, NFTs are deeds of ownership to digital assets. Immutable, unmodifiable, and scarce, they are stored on a blockchain, with every action and resale recorded forever in the ledger. Any file or even physical object, – such as analog and digital artworks, music tracks, pieces of text, files, and so on – can be tokenized, which creates immense potential for using this technology in art and content creation.
Getting fairly paid and being dependent on centralized platforms are the two most pressing issues faced by a modern creator. Another far-reaching benefit offered by NFTs is the ability to automate revenue distribution from resales. With smart contracts, artists can get a fair cut from each resale without having to rely on a third party. The emergence of decentralized NFT platforms and digital art communities, on the other hand, empowers independent creators, giving them more exposure and access to new revenue streams.
According to American writer Stewart Brand, “information wants to be free.” Probably, for the first time in the history of the internet, NFTs add fairness to the equation. With their help, artists and other members of the creator economy, which encircles more than 50 million content creators, can display their works without having to worry about unauthorized reproduction and usage, or getting a fair portion of revenues. On top of that, by tracking transactions, every artist, seller, and buyer can have more confidence in the value of the work in question.
Driving the Adoption
As Kayvon Tehranian, CEO and founder of Foundation, stated in his TED talk, NFTs the building blocks of the internet of the future. However, the future is yet to arrive. Currently, only 2.8% of internet users in the US own NFTs, according to Finder’s NFT adoption report. If we look at the innovation adoption curve, we’ll see we’re around the start of the early adoption stage.
At this stage, criticism is inevitable. Every new piece of technology – even the web itself – has faced it before going into the mainstream and on to become an inseparable part of our lives. Given all their potential, I believe NFTs will go the same route. This leads us to another question: how can we help increase the adoption rate?
The most effective way to do that is to create more user trust and recognition for this technology. It can be achieved by creating new use cases, as well as building bridges between the physical and digital world: for example, embodying NFTs through tokenizing world-renowned artworks. As NFTs slowly become more familiar to the mainstream users, filling headlines, digital screens, and photo frames, and getting adopted by major brands, we’ll be able to enjoy more opportunities this technology brings to art, and many other industries.
Maria Tankushina, Content Director