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“Artists don’t get rich until they die” is an old axiom that might be about to change. Non-fungible tokens (NFTs) offer artists, musicians, photographers and other content creators digital protection and a platform to profit from their work. NFTs – also often called crypto-collectables – function as legally binding contracts that are traded on the blockchain. They authenticate digital and physical assets and enable artists, musicians, writers, photographers and other intellectual property owners to protect and sell their work.
A variety of digital assets have already been created as NFTs, and the market has grown exponentially over the past year. More than $25 billion in digitally stamped assets were traded in 2021, including music, photographs, videos, game skins, sports collectibles, and memes.
Kings of Leon released the first NFT compatible album When you see yourself in September 2021, and media outlets, including Quartz and The New York Times sold items as NFT.
But the artists experience the most joy. Digital art sales account for about a quarter of NFT sales volume. According to NonFungible, digital art has generated over $1.9 billion. Digital artists Bored Ape Yacht Club, Doodles and Art Blocks are among the top five selling projects.
NFTs tear down the limiting paradigms of the art world and will change digital art forever. In fact, crypto collectibles have been predicted to transform the entire physical art market over the next five years.
Related: What is an NFT? Inside the next billion-dollar crypto sensation.
The art of NFT
The application encoded with digital property increases potential earnings for creatives and entrepreneurs. There is still the small matter of marketing and hitting the sweet spot that allows you to capitalize on the market, but digital tokens completely eliminate one-time revenue and copyright infringement.
Each non-fungible token has a unique identification code that assigns it to an individual or business. Since digital assets exchanged via the blockchain cannot be altered, NFT tokens affix works of art and other types of intellectual property with a certificate of authenticity and unequivocally establish the identity of the creator of the asset. origin.
The creator of an NFT-enabled digital asset can determine how many copies of their work can be distributed and downloaded before making it available to the public. A buyer becomes the owner of the NFT but not the owner of the intellectual property.
The owners have the right to sell the NFT to other buyers at the price of their choice. The key ingredient for creators here is that a piece of code written into the digital asset names them as the original owner.
This incorruptible piece of code is where creatives and entrepreneurs earn their due throughout their lives. The vast majority of NFTs are traded through the Ethereum blockchain, which uses smart contracts to record the type of asset and the transaction that took place.
Creators can include royalties in a smart contract. This means that each time an owner sells an NFT, the original creator receives a percentage of the proceeds. Transaction records stored on the blockchain – a distributed public ledger that records all types of exchanges between two or more parties – cannot be altered or fraudulently created. Data is stored by a network of “nodes”.
Related: Can everything be an NFT? Here’s what you need to know.
Ethereum describes smart contracts as irreversible interactions between users that cannot be deleted. More importantly, they are not controlled by users, but allow transactions to “perform a function defined on the smart contract”.
In the existing art market, artists receive a one-time payment. Most of the proceeds go to the owner – usually an auction house or business that sells the artwork. NFTs allow artists to make continued profits throughout their lives.
The proverbial “struggling artist” can still only get rich in the afterlife, but NFTs and blockchain at least provide a platform to monetize masterpieces so they can earn their live permanently in this life.
Buyers can pay for NFTs using either credit cards or cryptocurrency like Ethereum. Since NFTs can be traded directly with consumers, artists with an entrepreneurial spirit and a knack for promoting themselves can even cut out the middleman and retain the majority of the profits.
A universal space for digital art
The first crypto collectibles appeared in 2012. They remained a somewhat niche trading tool for almost a decade before the market exploded in 2021.
According to Time, NFTs have been fueled by art collectors and speculators. Artwork sells for millions due to its rarity, and because NFTs mean original paintings cannot be duplicated, genuine pieces are protected forever. Counterfeits represent at least 40% of the art market.
NFTs started gaining momentum around 2018, but grew exponentially in 2020 after a digital artwork – Every day – The first 5000 days by 39-year-old graphic designer Mike Winkelmann – sold for nearly $70 million at Christie’s. This was the first time digital art was sold through a major auction house.
This turning point for crypto collectibles has sparked exponential growth. NFT’s highest recorded sales were in the last three quarters of 2021. NonFungible reported that average sales were $10-20 million per week.
A prime example of how NFT-mania can generate rags-to-riches stories is Loaded Lions, the first NFT collection of profile pictures created by a crypto exchange. The coins were initially minted by crypto.com with a price tag of $200 coin but soon received much higher bids. Charged Lion 1969 – the Mars astronaut – left for $1 million.
Creators from outside the art world are also seeking to seize market opportunities. The Associated Press recently announced a marketplace that will welcome the work of photojournalists.
AP has partnered with Xooa to create an “eco-friendly” online shopping window on the Polygon blockchain. The collection includes the news agency’s “award-winning contemporary and historic photojournalism.” The first collection of photos will be launched on January 31, 2022.
Related: Adidas’ First NFT Drop Rake Over $22 Million
The explosion of the NFT market over the past year isn’t likely to last – at least not in terms of multi-million dollar sales. We are in the middle of a bubble that is already showing signs of bursting.
However, NFTs and blockchain certification allow artists, creatives, and entrepreneurs to enter the market safely, knowing that their intellectual property will be protected against copyright theft and tampering.