NFT art: what is it, how it works and what it means for the creative industry

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NFT is Non-fungible token.

Explained below.

“Non-fungible” is more or less means a unique token/id which cannot be replaced with something else. One such example is a bitcoin, which is fungible — trade one for another bitcoin and you will have the same amount. A Unique trading card, however, is called non-fungible. NFT – this new crypto-trend is the hottest topic in the digital space right now.

Working of a NFT?

At a very high level, most NFTs are part of the Ethereum blockchain. Ethereum is a cryptocurrency, like bitcoin , but its blockchain also supports these NFTs, which store extra information that makes them work differently from, for example, an ETH coin. It is worth noting that other blockchains can implement their own versions of NFTs. An NFT is the registration of ownership of a digital object on a blockchain. it can be any type of media including but not limited to art, videos, music, GIFs, games, tweets and memes. the non-fungible part means the object is unique, making it irreplaceable. ‘a bitcoin is fungible — trade one for another bitcoin, and you’ll have exactly the same thing,’ explains the verge. ‘a one-of-a-kind trading card, however, is non-fungible. if you traded it for a different card, you’d have something completely different.’

Should you trade in NFTs?

NFTs can really be anything digital (such as paintings, drawings, music, your brain downloaded and turned into an AI), but a lot of the current excitement is around using the tech to sell digital art.

Current popularity

Till march 12, 2021 NFTs have seen a historic, record-breaking sale. minted exclusively for christie’s auction house, a monumental digital collage by artist mike winkelmann, aka beeple was offered as a single lot sale at a whopping $69,346,250 to entrepreneur, coder, and blockchain angel investor metakovan, the pseudonymous founder and financer of metapurse. the sale of ‘EVERYDAYS: THE FIRST 5000 DAYS‘ (see artwork below) marks two industry firsts: christie’s is the first major auction house to offer a purely digital work with a unique NFT, and to accept cryptocurrency in addition to standard forms of

payment for the lot. the sale also positions him among the top three most valuable living artists.

so why all the fuss around NFTs? they are proving to be a catalyst in the transformation of the economics of creative activities, allowing creators to monetize directly with their fans. being able to create artworks on the blockchain as NFTs means an artist’s content can be sold globally on decentralized marketplaces. as if that wasn’t enough, NFTs also have a feature that pays the artist a percentage every time the NFT is sold or changes owner.

If you haven’t yet heard of NFT’s or NFT art, I suggest taking a look at your wifi connection. In the last 4-5 months, NFT talk has literally broken the internet. From platforms like TikTok and Twitter to CNN News, the trending topic has left millions wondering, what is it and how can it work for me?

Its recent rise in popularity has promised to revolutionize the creative industry. As a graphic designer and artist, I’m here to ask, “What’s in it for me?” Let’s begin with a definition.

What is NFT art?

An NFT is a digital asset that exists completely in the digital universe—you can’t touch it, but you can own it. An NFT can be any type of digital file: an artwork, an article, music or even a meme such as “Disaster Girl”, the original photo of which sold for $500k earlier this year.

NFT stands for ‘Non Fungible Token’, but what does that mean? Well, it helps to first understand what a ‘Fungible Token’ is. If we think of it in terms of money: a 100 dollar bill can be swapped for five 20 dollar bills and still hold the same value, which means a 100 dollar bill is a fungible token.

If this 100 dollar bill is signed by Banksy, it becomes a totally unique product. Its value is then much harder to determine, as it’s no longer simply worth five 20 dollar bills. This means a Non Fungible Token cannot be swapped for any equivalent value. It also means that, like any investment, its value can increase or decrease in the future depending on the circumstances.

What we’re particularly interested in is: how will this new, digital means of selling art affect creators and the creative industry?

What do NFTs mean for creators?

1. Ownership of digital art

Prior to the existence of Cryptocurrency, we never really got to own something that was completely digital. We passed around videos and motion graphics, repurposing and reposting them, but there wasn’t this current opportunity to automatically assume complete, concrete ownership over a digital file or artwork. The rise of NFT’s changes this, allowing creators the authority to rent digital artworks out, to sell them or display them how they wish.

In order to sell them, designers need to get some kind of ‘legal’ ownership of their work. So, after NFT art is created, it’s ‘minted’ or tokenized on the cryptocurrency service, Blockchain. The Blockchain is a digital transaction system that records information in a way that makes it very difficult to hack or scam, which means it’s extremely useful for tracking copyright ownership and maintaining records of creation. Theoretically, any digital masterpiece you create and mint will lead solely to you.

Ultimately, this process should allow digital artists to gain formal recognition for their work, similarly to how a painter like Gustav Klimt is credited with his infamous painting, The Kiss. The issue surrounding this very new concept is that although Blockchain does have contracts in place to support the legalities of minting and copyrighting cryptoart, none of these have yet been tried or tested in court.

Artists have already come forward with the news that they have had their work fraudulently minted and sold by scammers.  But without relevant protection by the law or any preexisting legislation on this topic, it remains speculative as to what these artists will be able to do about this.

2. A novel way to generate income

NFT art is a totally new way of categorizing digital artworks that enables designers to monetize their work. It’s supposed to be a quicker process and a more accessible way for designers to produce work and reap the rewards for their creativity. There’s no chasing clients for payment, there’s no preparing files for print and there’s no waiting to hear feedback or changing and editing your work to suit a client’s needs.

Royalties

Some NFT art comes with royalties to the artist, meaning every time the artwork is sold on, the artist can receive 8-10% of all future sales. This depends upon which platform the artist is using; Zora, for instance, is an NFT platform with the “Creative Share” option, meaning users can buy and trade artworks immediately.

NFTs can’t stand alone

Another thing that’s affecting the design industry hugely by the outbreak of NFTs is value. How do you value a physical artwork in comparison to a virtual work of art. Also the value of NFT’s and CryptoArt is solely based on the value of Cryptocurrency. Because NFTs are sold on the basis of Ethereum, and that’s translated into monetary value, for example an NFT sells for 2 Ethereum, which is translated to us as about $2,255 dollars. But if the value of Ethereum were to drop, then so does the value of the artwork: its value is continually dependant upon the cryptocoin.

3. A global reach

Previously, the exclusive, illustrious world of art collecting and selling has been something that’s generally happened in physical spaces concerning physical artworks. Designers and artists made money from IRL events like exhibitions and markets until recent world events meant that many of these avenues were stopped. The rise of NFT trading means that art collecting has been able to move online, opening it up to many artists, on a global scale, who may not have previously had the chance to sell their work to buyers.

Similarly, for many graphic designers it can be really difficult to hold down a steady means of income without doing odd jobs or unrelated work. Stability is a slow bloomer and can be found in loyal clients or through a consistent, timely turnover of projects. But, if you’re not already well-established it can be tricky to find your feet in this competitive industry. So, the immediacy in which an NFT can generate income could, theoretically, open a tidal wave of opportunity for a huge number of creatives, especially those who are less privileged.

Like social media, NFT platforms grant designers immediate access to global audiences. And, often, having a pre-existing online following will help artists gain exposure in the NFT market. The tricky part for designers is working out how to convert their audiences into buyers. Like any other brand, you must find your audience and learn how to establish an emotional connection with them. This means that you’ll need to investigate brand strategies to find what works for you. If you don’t have much of an online presence already, also take a deeper look at your approach to marketing.

Inclusivity versus exclusivity

The art sector of NFTs professes to create an inclusive, protecting environment for digital artists to make money. Anyone with access to a computer can make an NFT and have the potential for it to blow up: whether your niche is realistic, 3D motion graphics or blocky pixels like the Nyan Cat video (which sold for $600,00, might I add). This has the potential to be life-changing for millions of creatives worldwide.

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