How NFT Can Transform the Art Industry?
We will tell how NFT is going to change the Art Industry. We will uncover the advantages and disadvantages of the new technology for the Art Market and the main NFT working processes.
In March 2021, an American digital artist, Mike Winkelmann, sold his picture at the Christie’s auction for 69 million dollars. The bidder has not received a physical picture, nor a digital copy. Instead, he became the owner of a non-fungible token, also known as NFT. This was the very first case when an NFT art piece was sold at Christie’s. Next, we are going to tell you what NFT is and how this technology can change the art industry in the near future.
NFT art, namely crypto art, is digital artworks that apply non-fungible tokens («NFT») for trades. NFT — is a cryptocurrency token that has a unique identification number. What differs them from regular tokens is that they are not interchangeable. By this, I mean that each NFT is unique. In contrast to bitcoins, dollars, or gold, one non-fungible token is not equal to the other. Furthermore, NFT cannot be divided, combined, or duplicated.
The art industry uses non-fungible tokens to pass the right of ownership of certain artworks via a blockchain system. NFT blockchains supply a non-changeable recording of the trading operation of an NFT between the counteragents in a public register.
How do NFTs work on the ground level? Source
Furthermore, as the blockchain structure is compatible with NFT technology, metadata can be added to these tokens. Metadata can include legal details (such as what copyrights a particular token gives), a small text describing the underlying asset, or even a small image.
There are three types of NFT artworks. They all depend on the way of storing: on the same blockchain, on the other blockchain, on decentralized storage.
The most obvious way of artwork (audio, video, animation) storing is on the same blockchain the NFT is run on. This option is the most secure, since even if the project development team stops or quits and their website is deleted out of the internet, then the artwork still will exist in the blockchain.
The most reliable storage mechanism for your NFT art is when the artwork and the NFT token are in the same blockchain. Source
The second solution that works as a bridge between the NFT and the work of art is when the image, audio, or video file that helps to identify a certain artwork, is stored on the other blockchain. Else, it can use decentralized storage (Arweave, IPFS). For example, the NFT is stored on the Ethereum blockchain, while the image is on the FileCoin blockchain. FileCoin is a decentralized network that works on IPFS as cloud storage.
NFT token is on the blockchain, the file of the artwork is stored personally by the company that runs the token. Source
Examples of these projects are:
«Everydays: The First 5000 Days» — sold for $69 millions. Source
Another example of NFT art being sold at a traditional auction house is the recent announcement that Sotheby's will be selling the first minted NFT, Kevin McCoy's 2014 animated “Quantum” drawing.
«Quantum» — first NFT, by Kevin McCoy. Source
At the same time, the digital art market will retain all its advantages, such as ease of access, speed, and security, and will gain new opportunities thanks to blockchain technology and smart contacts. This is easy to understand if we compare two examples: the sale of Leonardo da Vinci's Mona Lisa and the sale of any NFT:
Twelve-years-old, Benyamin Ahmed makes $400,000 from whale NFTS. Source
In contrast to the traditional market, which is hardly accessible, NFT art is global and accessible to everyone.
Before blockchain and NFTs, we never had to own anything completely digital. We used to download images, videos, and animated graphics, repurposing and sharing them as we pleased, without any regard for copyright.
NFTs, blockchain, and other innovative technologies are changing that, allowing creators of art to track their distribution on the Internet, which in turn allows them to protect their copyrights online.
For example, if you create your digital artwork and want to copyright it, you need to mint an NFT on one of the NFT platforms. You will then be able to use this NFT as proof of copyright on the Internet. You can track and monitor the infringement of such a right by using specialized services. The simplest example is a Google search for a given image or a YouTube search for your video content. Moreover, on YouTube, it is possible not only to track the distribution of your content but also to receive money for the views on the channels which use it.
It is just the beginning, thanks to the development of deep neural network technology (artificial intelligence), we can expect that in the future there will be many services for the purchase and sale of digital content and tracking it online.
In addition to the benefits described above, NFTs can also increase artists' income. For instance, there is already evidence that some artists have been able to double their monthly income by selling NFTs. This is possible because when using NFT, artists can bypass art dealers and sell their works directly to end buyers (which saves 10 to 60% of the transaction).
But that's just the beginning, as NFT allows new revenue models to be created:
However, even the most technologically advanced depositories are not able to store valuable art objects forever, as they will eventually collapse or lose their appearance. Moreover, it is impossible to protect architectural objects from the influence of unfavorable factors — the fire in Notre Dame Cathedral is a vivid example of this. And then there are temporary art objects, such as the Triumphal Arch designed by Christo Yavashev and draped in white paper, which “live” for weeks, days, or even minutes. In the real world, it is impossible to preserve all these works of art without losing their “original” status.
This problem can be solved by digitizing physical art objects and assigning a specific digital copy the status of “original” with the help of NFTs. This is the only way to preserve the art object and its value when transferring it to “digital”.
The NFT industry strives to create an inclusive, protective environment in which digital artists can make money. Anyone with access to the Internet can create an NFT and have the ability to monetize it: whether it's a photograph, a digital painting, a 3-D animated graphic or block pixels like the Nyan Cat video (which was sold for $600.00). It could change the lives of millions of bright minds around the world.
However, there are a couple of things to be aware of: