For the past month, the art world has been enthralled with NFTs, or non-fungible tokens. The art market has been moving towards digitization, however it was difficult to foresee the craze around NFTs we are witnessing right now. The future of NFTs is really unknown, however many people believe they are here to stay due to the benefits they provide artists; they help answer key questions of authenticity and ownership, while also providing artists with additional sources of revenue.
Authenticity and ownership are major questions that accompany each artwork, but NFTs can clear up many of these concerns due to the nature of the artwork. Lots of information surrounding the artwork is included in the blockchain that makes up a NFT, such as the artist, and documentation of all sales of the NFT including who bought the piece, when, and for how much. This is a key difference with NFTs and regular artworks because a collector has all previous sale information of the piece, allowing them to have a clearer picture of the true value of the piece. This comprehensive list allows for a more democratized process of buying and selling artwork because of the transparency of the process. Other information that can be included in the blockchain are contracts that govern the sale of the piece. This allows artists to have provisions that allow them to collect commissions on the resale of their pieces.
Another important factor to the rise of NFTs has been the appeal to artists due to the additional revenue it provides artists. Artists receive a larger percentage of the initial sale of the NFT in addition to the ability to receive money from the resale of the token. When selling artworks in a gallery, the gallery will take a large commission on the piece, leaving many artists with less revenue from the sale of their work. Platforms that sell NFTs take a much lower commission, typically around ten to fifteen percent, compared to around fifty percent charged by galleries. This additional revenue allows for the growth of a “middle-class” of artists to grow and succeed.
While NFTs offer greater information about the NFT through blockchain and revenue for artists, the uncertainty surrounding the future of NFTs leaves some collectors weary of the future value of their NFTs. There have been large discussions about whether the current fascination with NFTs has created a bubble in prices for the tokens or if NFTs are the future of the art market; nonetheless, these tokens provide a more democratized way to create and trade artworks. In the past few years, we have seen lots of movement towards the digitization of the art industry. In the face of the COVID-19 pandemic, we have seen the introduction and rise in popularity of virtual art auctions, fairs, and online art shows. The digitization of the art world changes the way we view and experience art, and allows more people to engage with art.
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