NFT’s are Non-Fungible Tokens. Fungible means that an item is one of many and has no unique identifiers, other than perhaps an issuing identification number, and can be traded for another item of the same value and likeness (Bitcoin, CS:GO, USD). Non-fungible denotes the opposite: an item is unique, or has variation, and it can only be traded for a different item (Mona Lisa, CSGO skin, Michael Jordan rookie card). A token is considered a representation of ownership or support. Why is this important? If you combine these definitions together, we set the stage for what NFT’s are and why there is an emerging platform for the future of content access, distribution, and ownership.
How does Art Work?
Consider the nature of fine art and the world of collecting such art. An art piece is a unique item that flows from the artist’s mind into a medium for the essence of that art to pass into. When this art piece is created, it has no real tangible value aside from the cost of supplies to create it, and the value that the artist allocates to it based on his own appraisal of his work. Art however, has the unique property in that it is driven by the value admirers of it choose to set upon it. A true admirer is often one who advocates for the artist and sees something deeper in their work or philosophy that is worth preserving or funding and, in some cases, obsessing over to the point of cult following.
These admirers are critical influencers that preserve the artistry world. An artist must remain dedicated to his work and campaigning to promote art is often expensive, removing an artist from their state of creation necessary to produce their craft. Admirers follow the artist, and increase the value of the produced art by either putting their own expenses on the line to own the works of the artist, or to bring awareness to the public, thus bringing added value by increasing the interest of more individuals. Influencers in the past were often rich individuals who sponsored the artist. This kept the artist at the behest of his patron, but enabled them to have the resources they needed. In recent decades actors and organizations used telemarketing and commercial ads to draw attention. In the modern dawn of the digital age, influencers have come in the form of social media profiles with mass followings and Twitch streamers that bring attention of the viewer audiences to new products and games.
What is the Value of Art?
This is what sets an artist like Leonardo Da Vinci apart from the local graffiti artist. Leonardo has a legacy and historical following that stretches the imagination. It is not because we in the current generation actually understand what makes his work great or why he deserves the status he has received, we nonetheless all hold him in high regard and the Mona Lisa is one of the most known paintings in the world. Returning to the mention of Graffiti, artists such as Banksy show how in the modern era, art has a broad definition and can include experiential dynamic art rather than simply static. Acting, music, and dance are living art which require a human to use their body as a medium. It can also be of great value not based on popularity (liked, promoted, positive reception), but infamy (pushes the line, the status quo, provokes), and scarcity (rare, few, perhaps one ever made).
People dont buy art any more. They access streaming platforms that allow them to sample the art based on subscription (Spotify, Netflix, Youtube) or purchasing content that can only be hosted on said platform (Apple Music, Amazon Prime). While this makes the content easily accessible, it removes the ability to truly own the piece of content without fear of losing right to it. It also puts a set of mediums between the artist and the consumer, directing a large portion of profits and royalty to distribution and label companies. In the “olden days” physical copies served as a medium of art that was created by the companies. Once the medium was owned, it still required a player (record, dvd, cd players). However, it was not necessary to purchase a player from the same company that issued the physical medium. Today, the company has become the medium for the art. Wasn’t art supposed to be the medium? Instead we see the artistic essence either lost or transferred into the marketing and distribution companies where it will forever remain with monetization as the priority. It’s strange that the two most impactful art forms, visual and audio, have almost completely moved away from viewing themselves as art but rather as a service. A service cannot be owned, it can only be paid for and accessed.
Originally, the value of art is beyond cognition within the artists mind. From there its value is put into the medium, that medium is then replicated and distributed, until the value is received by the new owner of said medium. These days, companies sign artists to create content that is marketable, the resources and mediums are all theirs, and the end value remains within the company with viewers renting access rights from the company. Artists have no leveraging power as they rely on the companies as mediums and the public as consumers to remain tuned into that medium without ever owning their art.
Additionally, in a digital age, art is slowly moving the majority of its substance into non-tangible art. Painters, sculptors, and physical artists will forever remain rooted in the material as it has been for millennia. Their art is subject to the principles of valuing art that has been discussed in this article, and have for recent ages of modern history been a protected and promoted class. With digital art such as computer generated images (CGI), videos, music, and games, there is no platform to allow them to receive the same treatment and protected benefits as physical art. It is probable that we live in an era where art is being consumed more than ever, and most of it through digital mediums, but it can be argued that it is being appreciated less while artists are starving more.
The alternative? Sacrifice the muse and learn what’s “pop” or marketable. Have we forgotten that art has any value at all because it is invaluable? Have we forgotten that the purpose of art is not to succeed but to play? The artist at play has affected the hearts of mankind, but without the freedom to play, the play becomes work, and work is rarely beautiful. One must work to play, but not all work is play.
This is where NFT’s do the work so Artists can play…
Call your attention to baseball cards. A pro baseball player in the mid-20th century needed to focus on baseball. In the mean time, small tradable cards of players were created and circulated each year to highlight that player, their stats, and build a collection. Fast forward to today, and we see these cards bought and sold for millions, some exponentially increasing in value based on the collection they rest in. Part of its value is the player and the affect they had on the game, another is the impact on the fan, another is the scarcity, condition, and demand for it. Inflation through time must be accounted for, and art is always exponentially increasing in value much the same as real estate. This creates a complex equation for estimating the value of art and the possible funding opportunities artists must navigate while trying to establish their career, fill out their portfolio, build a following, and then receive the rewards of that process. Imagine if baseball players had received direct profits from the sale and auction of their famous non-fungible tokens (trading cards).
NFT’s will serve these purposes, connect the artist directly to the process of distribution in an open market format, and provide rights of ownership and royalties to fans and owners of the content. It acts as an encrypted, accessible container that digital art can be placed inside of, and sealed with a smart contract and minters signature. The container is then minted (coded into the blockchain ledger) and issued to the personal wallet (i.e. MetaMask) of the individual either who minted or purchased it or to a wallet on a market platform (Gaian Road Exchange, Open Sea) to be sold. Once it is purchased, the rights of ownership are completely in the hands of the purchaser to transfer to whatever wallet they desire, and accessed through any supported player of their choice. This opens a world of possibilities for digital content in that purchased NFT’s can then be resold…for a higher value than originally purchased in relation to its growth of artistic value.
This is not currently possible in any other climate in realm of digital art and media. Members of the public might scoff at the idea of NFT’s while standing in front of an authentic Picasso claiming that they don’t understand why a silly cartoon drawing might sell for millions. This is not because the foundational principles of the NFT medium are unsound, or indeed any different than those of how art in the physical world is treated. In fact, as NFT’s are resold, depending on the Smart Contract deployed, royalties can be programmed in to return revenue to the original artist or minter. This provides a long term sustainable method to receive income off of the sale of an artistic asset. This is something not even possible for physical art (no, unfortunately no artist of a physical art piece will ever receive payment aside from the initial purchase, or via the contract with the distribution company). The fact that this has not been addressed has led to many artists such as Michael Jackson, Taylor Swift, and many others spending years and millions battling record labels in legal battles to have the rights to the money and content they earned and created. Innumerable copyright battles have taken place to protect against distribution of content for infringement on likeness and caricature.
Are Artists currently utilizing NFT’s?
Major artists in todays world have been making huge moves in the NFT frontier. Eminem launched a majorly profitable NFT campaign earlier in 2021. Logan Paul has done the same, and traded extremely valuable NFT’s along with FaZe Banks, founder of FaZe, a pro-gaming team, who has also seen major profits off of trading CryptoPunks pushing into the millions. Gary “Vee” Vaynerchuck, entrepreneur, marketing genius, and motivational speaker with influence over young inspired generations, has launched his major NFT platform promoting NFT’s to raise awareness and help artists and businessmen plug into opportunities of NFT implementation and long term profitability strategies. Tony Hawk released a video of “Tony Hawk performing his last Ollie 540” which represented a dynamic marketing campaign and one of the first news-cited NFT releases. Sports companies have begun to sell NFT’s of player card, autographs and original unedited cuts of vintage camera roll footage of iconic sports events.
One of the most respected visual artists and examples of revolutionary artistic impact, is Alex Gray. Alex was a visual artist engineer for popular movies and Hollywood productions until he left working on Jurassic Park to join the band TOOL. This prog rock group produced new sounds and visuals that inspired millions and impacted more. The iconic art Alex produced for the band has become sensational and even created a new style of art and subcategory of psychedelic art. What has he chosen to do in his next ventures as a visual artist? Create his own NFT line of art and distribute it on marketplaces such as Open Sea.
What can NFT’s do better?
Within the nature of minting NFT’s, aside from Smart contract parameters and providing a platform for distribution, there is the included metric of scarcity. Artists can create a limited amount of their asset to be sold. This can raise the value and rarity that will drive long term collectible value. This creates asset liquidity ventures where collectors could make initial purchases, auction the NFT, and quickly scale the value of it, like a blend between flipping houses and scalping tickets to events. Imagine if a sensational artist such as Beyoncé created a NFT song with only 10 copies to be issued. These 10 copies would be valued initially no doubt in the millions. The demand and rarity of it will quickly scale the value of it exponentially…all while continually paying the original artist royalties to scale while owners gain profits from the sale.
The argument might be made that once an NFT is purchased, it may be copied and distributed for free or for cheaper value. Efforts are being made to protect against piracy such as hashing images or creating safeguards to reduce quality when content is copied or ripped. However, this is something that already exists in art. One might buy a print of a Picasso, but its value will be evident in its quality and it will never hold the same value. Its entirely possible however, that viewing houses and gallery services will hold certain rare NFT’s and have the ability to receive payment for access. This is only plausible or profitable if the NFT’s have a factor of rarity or if the gallery is able to provide access to a large library of content at a cheaper rate. It does not eliminate the value in owning an NFT, just as subscribers to Spotify or Apple Music might still purchase a vinyl record of their favorite album.
There are a variety of interesting use cases for NFT and for unique Smart contract coding. One is tickets for events. Event attendees would purchase tickets as an NFT that will be theirs forever. It would be a voucher for entrance to an event and remain a collectors item for attendees in much the same way individuals collect movie and event tickets today. This also gives attendees to online streaming events the same experience of receiving a collectible ticket. If a digital image to the invent was included, the NFT acts as an art piece as well. NFT owners could also have access to video streaming or recordings of the event or seminar.
Another example, mentioned by Gary Vee, is a pizza parlor can create NFT loyalty cards that are good for one free slice a day and sell it at a set price. A club member would hold the card and utilize it as long they wanted to or for a set period in the contract. The member could then sell the pass for a minimum price to the new holder and its possible that the pizza parlor would receive revenue from the resell of the NFT. This carves a clear space for retailers and service industries to create a seamless system for rewards, and loyalty benefit services.
As with any attempt to explain NFT’s, the question is simple and begins in one place. However, to convince someone of its usefulness and array of possibilities takes going full circle across a range of topics and use cases. While the average individual might not make the connection and still wonder why anyone would choose such a complex service, NFT’s will fundamentally change the relationship between artist, art, and admirer. The tools of greatest value are only seen by those who understand the nature of the work and the need for specialized instruments and strategy. To a developer, the value is in the open source engine. To a user, the value is in the product developed on the engine. A user/consumer may not understand or appreciate what a artist/developer takes as par for the course.
NFT’s are primarily traded via the Ethereum blockchain with its ERC-20 standard for Smart Contracts and tokens. Other blockchains have implemented their own NFT infrastructure and more are coming to the table. Depending on the marketplace, NFT’s can be purchased with a variety of international currencies and cryptocurrency. Make sure to do research on deFi, wallets, and information regarding the marketplace you choose before purchasing an NFT. When entering the digital world,
By creating trustless systems, and direct ownership, NFT’s and blockchain technology help to create a new world where art can truly be appreciated and artists directly receive the portion for their work without a company between them retaining the rights and renting access. For too long and at an alarmingly growing rate, middle men have acted as pimps for peepshows of true art while artists have violated their creativity to provide something worth showing. The power must return to the hand of the creator.