The NFT art market has seen a dramatic increase in interest in the last few weeks with the most recent peak of Beeple’s record breaking “Everydays: The First 5,000 Days” $69,000,000 sale including auction house premium last month at Christie, and this trend is set to continue into 2022. Buying and selling NFT art using cryptocurrency is the latest craze and is extending into trading collectible sports cards now.
The NFT art market is a social community that showcases work created by established and emerging artists. Specializing in modern pop and illustrative art and crypto-art, the NFT art market uses the blockchain to allow people to own unique assets.
Let’s look at how the recent NFT Art market boom is affecting the traditional art market with art collector Richart Ruddie and understand how these new opportunities provided to artists who may want to create NFT art pieces to capitalize on the newest innovation in the art world.
What is NFT art?
First off we should understand what NFT Art is. NFT stands for Non Fungible Tokens. The term NFTs referrers to a tokenizable virtual asset such as a piece of art, collectible card, or a game item. NFTs are often described as being computer files that are combined with proof of ownership, similar to a deed.
NFT’s can be used to prove the authenticity of art on the
public blockchain. They can also retain their original value and may even
increase in worth, much like traditional artwork. While arguably duplicatable,
the original NFT art will be worth a lot more, much like in the conventional
art market. The original Mona Lisa painting is worth a substantial amount more
than any copies that have been made.
So why is it gaining so much traction now? “The reason it’s gaining traction is that the cryptocurrency market is gaining adoption as almost all crypto asset classes have gained substantially in the last 12 months. Meanwhile you have had NFT’s and art previously being sold but the fact that it was auctioned off by Christies one of two leading auction houses, art can be speculative, and the excitement of the bidding process between heavy hitters in the cryptocurrency world help propel the auction (they allowed the buyer to pay in cryptocurrency) and has now put NFT art on the market so that any piece that sells has a baseline to compare it to. If you purchase a $250,000 NFT piece you know it has potential to run up to as high as $69,000,000 now. That creates desire and longevity at least for the time being” according to Richart Ruddie an avid art collector and early cryptocurrency adopter.
NFT’s are similar to cryptocurrencies such as Bitcoin in that they exist on a blockchain. The valuation of NFTs is set by the highest bidder and now we’re seeing trading cards that have seen a boom in the last 12 months as live action sports were temporarily canceled now are seeing even bigger growth with NFT’s being integrated.
The Recent Boom in NFT art is here to stay
There are many NFT art market places, and these help to index NFT’s and encourage sales. The recent boom has seen the number of marketplaces selling NFT’s increase to meet demand. Buying and selling NFT’s is attracting a unique mix of artists and collectors and those looking for a quick way to get rich.
According to NonFungible.com, a market tracker, in 2020, investors and art collectors spent $250 million on NFT’s. Throughout 2020 collecting NFT’s increased in popularity, and at the beginning of 2021, over $200 million was spent on NFT artwork in just one month.
Sports businesses and celebrities are also starting to sell NFT’s. The National Basketball Association has started to sell digital trading cards on their website, which have proven to be extremely popular.
How is NFT art going to affect the traditional art market?
The popularity of digital art will likely force auction houses to adopt some new practices as they continue to evolve with the market just as they had to with the pandemic last year. Selling traditional art from old masters may also become more challenging with speculators wanting to purchase NFT’s with the assumption that they can sell it for even more in a short time period. However, many experienced art collectors are older and aren’t interested in digital art or NFT’s unless they know with a high degree of certainty, they can make a big return on the purchase. It’s unlikely that traditional art collectors are all going to start buying NTF’s instead but you will see it creep in just like Bitcoin has slid into mutual funds portfolio.
After Beeple’s record breaking NFT sale this prompted rival auction house Sotheby’s who has performed quite well over the last year to create a partnership with another digital artist known as Pak. The traditional art market may not yet be wholly taken over by digital artists, but they do understand the genre and have realized that it has financial potential.
Artists making NFT art
The number of artists who want to create NFT artwork is also increasing as artists spot an opportunity to make some extra cash and the field is becoming very crowded very fast. Digital artists who plan to turn their art into NFTs first have to sign up with a marketplace that trades in NFT’s. They then need to pay to “mint” their artwork to receive a digital token by imputing and validating their artwork and information onto a blockchain. It costs between $40 to $200 for an artist to turn their art into an NFT, which can then be put up for auction.
NFTs have allowed digital artists to receive greater profits for their work. In the past, digital artists were creating images that were shared on platforms such as Facebook or Instagram. Many felt undervalued and digital creations were often given away for free. Usually, the artist would get very little in the way of a monetary return. The creation of NFTs has allowed digital artists to transform their creative process and receive greater recognition and value for their work.
It’s now possible to actually own or sell a piece of digital art, which appeals to people from different backgrounds. Artists are potentially able to build a career based on selling NFT’s. There may even be a blockchain revolution that will help NFTs transform consumer capitalism.
The NFT art market has changed the way digital art is sold. Many emerging and established artists are turning their hand to making digital art and creating NFT’s. There are some worries about entry barriers as it takes some technical skills and costs money to create an NFT. Art collectors and investors have spent large amounts of cash on NFT’s over the last couple of years, and this trend is expected to continue well into 2022.
Maybe now is the time to invest in some digital art especially when an art expert like Richart Ruddie advised so back in 2020!