By: Maria Paz Galarraga
What is an NFT? Why are there monkey animations getting so much money? Where is this money going? And where is it coming from? Are NFTs even art? All these questions have popped into our minds at least once in the past year but still no answer has made it clear enough.
As a definition an NFT is a non-fungible token meaning it is unique and can’t be replaced. Often the confusion comes when we relate bitcoin to NFTs, while an NFT is irreplaceable, a bitcoin is fungible and exchangeable. These tokens consist of anything digital stored in the blockchain. Today we see most NFTs as digital art, yet it can be anything from a video to a picture to a simple tweet.
Digitalization has revolutionized everything in our world, technologies allowed the transformation of information, communication and art. Today most NFTs sold in the market are fine art collectables and their price and purpose depend both on the artist and the buyer. For an artist the expression of themes and emotions is a huge part of it. Yet the boom of NFTs has allowed the market to become extremely profitable. Money and business also make up part of the reasons for their production. For the buyer owning an NFT comes with the pleasure of owning any collectable unique piece of art. NFTs are investments made because of passion and these come with usage rights and bragging rights. Like many high-priced goods, NFTs work like any other speculative asset, their price is determined by their limited low supply and high demand. Some NFTs are a singular art piece, and some could be within a limited number of copies. Sometimes it is easier to think about NFTs as any other trading card rather than a piece of art.
While it is easy to understand what an NFT is, understanding how the market works is harder. NFTs are mostly part of the Ethereum blockchain, this is a decentralized, open source blockchain with smart contract functionality. To understand it better, one must break down some concepts. On one hand, blockchain is a way to store data without having to trust a 3rd party with it. On the other hand, Ethereum is a cryptocurrency like Bitcoin or Dogecoin; this one, however, is stored in the blockchain keeping track of all its movements. Although Ethereum is the most common blockchain for NFTs exchange, these are not limited to it, and one might be able to find different versions of NFTs in other blockchains.
Now the question is, where can we buy or sell NFTs? Like any other good or service, there are few marketplaces where these tokens can be found. Open Sea, Magic Eden, Rarible, Nifty Getaway, Binance, Coinbase and SuperRare are only some of the websites where one could interact either as a seller or as a buyer. Each marketplace has its own terms and conditions, where fees, royalties and currency types are defined. Most of them are aimed at being user-friendly, providing decent liquidity and a safe auction space. Other questions about copyrights, property rights, property protection might rise. Given that the blockchain keeps track of who holds the NFT, it is hard and even impossible to steal the piece. While it is true that one could easily copy a file, NFT guarantees your ownership of the art piece. For instance, The Creation of Adam is owned by the Vatican, yet pictures of it are used everywhere; taking only a 5 second research in google to find it. So, why travel all the way to Rome to see it? NFTs holds their own magic, purpose and pleasure, the same way art does. Anyone can buy or use a print of it but only 1 person owns the art piece.
Unquestionably, art has evolved with time, and today technology is considered a new medium for creation. New media art is defined as the creative practice of technology, whether it is in the form of a digital photograph, or an AI-produced art piece. Digitalization offeres artists different tools such as digital cameras, digital pads for design, photoshop apps and even AI art generators. Digital art is an ever evolving and radical way to produce art, resulting in digital final products aimed at virtual marketplaces giving birth to NFTs. Historically art has been able to evolve as a response to change in our time and surroundings, techniques, color schemes and themes do not stay behind. Some advantages to digital art/NFTs are lower costs, less equipment making it easier to open opportunities for artists to create and sell. Digital art is just a new adaptation of artists due to technological evolution as a response to digitalization. As for any other good, art brings up markets, and with digital art the birth of a digital market space.
Finally, is the future of NFTs reliable? There is an increasing trend towards the support of the metaverse and digital spaces where NFT stands as a strong and growing market. Today, we see big investments in videos and drawings or any other form of digital art. Even though sales have decreased since their first peak, like everything in the crypto world no one truly knows the future. Speculation favors the market, and there is still a big number of believers that the NFT market is still a profitable space for investments and a good business. In the case of the Bored Ape Yacht Club, the sales went crazy, breaking the blockchain for hours because of their popularity. People always tend to form communities based on the things they own, for instance those owning a Ferrari are part of the community and relate to others owners of a Ferrari too. The sense of belonging and community is also a characteristic of NFT ownership. It is because of that community that the token provides that the market is still afloat and thriving. Innovation has made already big known brands join the NFTs production aimed towards their communities and target market. The future relies in the hands of people’s interest.
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