Are NFTs Good or Bad for Artists?
What Are Fungible vs Non Fungible Tokens?
In the dynamic world of digital art and the disruptive technology of cryptocurrency, Non-Fungible Tokens, also known as NFTs, have emerged as a controversial topic among artists, collectors, and enthusiasts. This technology challenges the traditional art market by allowing artists to tokenise art work and sell it as unique digital assets.
These unique tokens are built on blockchain technology. Let’s explore the potential benefits and drawbacks of NFTs for modern day artists. First, it’s crucial to understand fungible and non-fungible tokens and how they relate to NFTs.
Fungible vs Non-Fungible Tokens
Fungible tokens are interchangeable and identical in terms of value. Examples of fungible tokens are cryptocurrencies like Bitcoin, Ethereum, or Monero. Each token has the same value, and can be exchanged one-to-one. In contrast, non-fungible tokens are unique and indivisible. They indicate distinct ownership of an item or content, often digital in nature.
Digital drawings and illustrations, and even virtual real estate in online worlds are some examples of Non-fungible tokens. NFTs are built on blockchain technology, specifically on smart contract blockchains. They utilise the distributed ledger technology to authenticate and record ownership of each NFT in the blockchain.
Why are artists against NFTs?
Understandably, some artists remain sceptical of NFTs. There are concerns with the environmental impact due to the energy-intensive nature of some blockchains as they perform transactions. However, NFTs are not traded nearly often enough for this to pose a serious issue.
Additionally, there is reservation about the speculative nature of the NFT market. It can be very difficult to break into this market place and be financially successful. There is the potential for copyright infringement, and the lack of control over subsequent resales too. One school of thought believes that the artwork will devalue over time.
Are NFTs Bad for Artists?
The answer to whether NFTs are bad for artists or not is quite subjective. It all depends on how the individual approaches the topic. Even though copyright concerns are valid, NFTs present artists with opportunities to expand reach, and even gain recognition. Since there is no middle man, the originator of the artwork sets the price.
NFTs allow the creator to tap into new revenue streams. In some cases, the originator of the artwork will receive royalties each time the NFT changes ownership, thus ensuring ongoing revenue. This has also brought about debate with regards to what is fair compensation and the royalty structures.
Can Artists Benefit From NFTs?
The NFT market presents a fantastic opportunity for artists to reach a global audience. By monetising their digital creations in a direct-to-consumer model, they eliminating intermediaries, and can potentially earn more. This change in the global art market assists artists to retain control over their intellectual property rights, and leverage the scarcity of unique NFT products.
Why NFTs Are Good for Artists?
Historically, digital art has struggled to gain value in the traditional art market. NFT blockchain technology provides irrevocable records for authenticity and ownership. It’s a paradigm shift in the art market, and establishes a direct relationship between the artist and collector.
This has led to some spectacular success stories, including some astounding sales of the most expensive NFTs ever seen. Mike Winkelmann, known as Beeple, hit a record $69 million sale during an NFT auction of ‘Everydays: The First 5000 Days’ at Christie’s in 2021.
CryptoKitties is a blockchain game developed by Canadian studio Dapper Labs. Players can buy, sell, and even create their own NFTs on Ethereum. CryptoKitties is the first major game to use blockchain technology, and blazes ahead at a successful pace.
How do NFTs Work for Artists?
An NFT is created via a smart contract on a blockchain, which ensures verifiable ownership of the digital assets. Artists ‘mint’ their artwork as an NFT. It’s upload it to an NFT sales platform. This process generates unique cryptographic keys that identifies your work and grants you access. The public key is stored on the blockchain, but the private key is kept by the artist.
Once the NFT is sold, the tokens are stored on the blockchain, providing an unalterable record of ownership. It’s a ‘trustless’ and secure art market. Every time the artwork is sold, a new record is created for the purchaser. It’s history in the making via the blockchain.
Disruptive Technology for a New Art Age
Future markets are usually pioneered by visionaries and the brave. The meek follow when it’s safe. Despite the ongoing debates in this emerging digital market, it’s important to see the potential benefits NFTs present artists. The market may be volatile, but that is what sets it apart from the restrictions of traditional regulation.
NFTs have undoubtedly reshaped the art industry. As it matures, NFTs have the potential to empower artists by presenting them with monetary reward and greater exposure. Ultimately, it will depend on how the art community navigates and moulds this innovative stride forward. What do you think? Are NFTs good or bad for artists?
