Beyond the $67 Billion Art Market: NFTS’ Transformative Potential

[TL; DR]

The art market grew to over $67 billion dollars in 2022.

NFTs are democratizing the way artists create and sell their artworks.

Examples of popular NFT artists are Beeple, Pak, Trevor Jones, Krista Kim, Grimes, Fewocious, Mad Dog Jones, XCOPY, Josie Bellini, Slimesunday, Punk6529 and Pako Campo.

Introduction

The current digital developments have transformed the way we interact with each other and the world in general. Tokenization of physical assets and the emergence of non-fungible tokens have created huge investment possibilities.

Specifically, non-fungible tokens have changed the way artists create and sell their work. This article covers the transformative nature of NFTs in the art industry.

The Transformative Nature of Non-fungible Tokens (NFTs)

There is no doubt that the emergence of non-fungible tokens has transformed the way art is created, sold, purchased and stored. Basically, a non-fungible token is a one-of-a-kind digital asset that represents ownership of a specific item such as real-estate or piece of art. The NFTs, which exist on the blockchain, ensure transparency, immutability, uniqueness and provenance.

Related article: Asset Backed NFTs, The Best Investment Choice?

People can turn different items like videos, audios and images into NFTs. The fact that NFTs are not interchangeable make them good representations of digital art.

Recently, some prominent digital asset specialists including George Tung of the CryptosRUs YouTube channel and Rob Nelson pointed to the transformative power of NFTs in the digital art sector.

First, Nelson condemned the view which many people have that NFTs are mere pieces of art. Instead, he said that NFTs can revolutionize how both the financial and non-financial sectors function. He strongly believes that NFTs are important for fractionizing wealth, opening doors for use in both the profit-making and non-profit making sectors.

Nonetheless, Nelson said that the world can only harness the power of NFTs and other digital assets if national governments take a positive stance towards them. Specifically, he said that the U.S. Securities and Exchange Commission (SEC) needs to support various digital initiatives that relate to NFTs for them to have a strong positive impact on the lives of people.

Tung expressed the view that blockchain technology has a strong transformative influence on the current global business and art sectors. He emphasized the importance of a trustless which the blockchain enhances.

With blockchain technology verification of transactions or ownership of assets shifts from a centralized to networks and codes. Therefore, the blockchain technology creates a transparent, convenient and instant means of verification of digital assets. With that, there is no need for third parties to ascertain ownership of digital items or transactions.

Tung also touched on the versatility of tokenization. For instance, tokenization functions in various areas such as sports cards, e-tickets, real-estate and wills. There is a possibility of tokenization of both tangible and intangible assets which can improve transparency in terms of ownership and transfer of assets.

Read also about Static vs Dynamic NFTs, and about Fractional NFTs

Overview of the Art Market

The art market increased remarkably within the last decade, mainly as a result of digitization of artifacts. According to The Art Market 2023 Magazine which Dr. Clare McAndrew, the Founder of Arts Economics authored, the art market has been growing by 3% year-over-year for several years now.

As an instance, in 2022 the art market had a total value of $67.8 billion. On-line exhibitions, auctions and fairs resulted in the growth of the art sector over the years. The United States, China and the United Kingdom remain the top countries in terms of art volumes during the post-Covid 19 pandemic era.

At this stage, it is important to note that the art market comprises different elements like art collectors, dealers, the artists and intermediaries such as galleries and auction houses. Usually, the collectors who are either individuals or institutions are behind the success of the art market.

On the other hand, there are various market dynamics that determine the success of the art industry. Several factors influence the performance of the art market. In Particular, demographic and economic factors determine the vibrancy of the art market. For Example, when there is global economic prosperity there is an increase in art sales.

Nevertheless, the traditional art market faces many challenges such as providence disputes, art piracy and forgery as well as price manipulation. The good thing is that NFTs solve these key challenges.

Read also: Top 10 Most Expensive NFTs Ever Sold

NFTs in the Artworld

As already noted above, the NFT’s potential in the art sector is immense as it solves key challenges the industry is likely to face. Let’s briefly discuss the NFT impact on the success of artists and the NFT market in general.

Online identification: NFTs help artists to establish their identification online. With that they protect their property rights which enables them to generate much revenue.

Therefore, NFT art enables the artists to prevent forgery and duplication of their digital artwork. NFT traders can also verify the true owners of the artefacts which they buy and sell.

Provenance and Authenticity: In the past it was very difficult for digital artists to prove the authenticity and provenance of their work. However, NFTs are tamper-proof and prove ownership as well as transaction history of digital pieces of art.

This is because when NFT artists create their digital artworks they can embed certificates of authenticity on the blockchain. Such transparent and immutable records enable collectors to verify the legitimacy of any digital piece of art.

Control of Ownership: One problem with digital artwork is that other people may duplicate artefacts without the creators’ knowledge and consent. Nevertheless, NFTs ensure that NFT artists maintain control over their creation.

The NFT artists can use smart contracts to include specific terms and conditions on their artworks. For Example, the artist can include the condition that only the owner has the right to display the artwork in virtual galleries and digital worlds. Through controlling the usage rights, the NFT artists protect their reputation and brands.

Fair Compensation: Another important NFT effect in the digital artworld is the enhancement of fair compensation for the artists. This is because the artist can embed a condition that he/she gets a royalty every time the NFT artwork changes hands. With this provision an artist continues to benefit from his/her work, especially if the value of NFT increases.

Accessibility and Exposure: Most NFT marketplaces which enable artists to create their NFT art are accessible worldwide. This means that any NFT artwork that exists on such platforms is available to people around the globe. As a result, the income and reputation of NFT artists are high due to the great exposure and accessibility of their digital works.

The Democratizing Effect NFT Art

The future of NFTs depends on their democratizing effect on the art industry. The truth is that anyone who has internet access and the right gadgets can create digital art or collect NFT artworks from anywhere around the globe. There is a vibrant global and decentralized NFT artwork marketplace that gives everyone the right to participate and enjoy the benefits of digital art.

There are no longer marketplaces for elite artists only. The combination of artificial intelligence (AI) and NFT artwork broadens the participation of individuals around the world. For Example, some people who are not naturally artistic can now use the power of artificial intelligence to create world class artworks which are accessible to many people around the world.

NFT artwork and the decentralized digital marketplaces enable creators to earn more income from their creations than before. They can earn money from any part of the world and at any time. This shows that the NFT future is brighter than ever before. More interestingly, NFT artists can monetize their skills irrespective of their political and socio-economic backgrounds.

Also, digital artists can create NFTs with near-zero overheads at notable international marketplaces like Mintable and OpenSea. These smart contract-based protocols enable artists to upload their artwork on the blockchain.

Prominent Artists and Artworks

Already, the transformation of NFTs is evident on a global scale since there are many notable NFT artists like Beeple, Pak, Trevor Jones, Krista Kim, Grimes, Fewocious, Mad Dog Jones, XCOPY, Josie Bellini, Slimesunday, Punk6529 and Pako Campo. These NFT artists have made outstanding contributions to the artworld.

As an Example, Beeple is well-known for his artwork, entitled “Everydays: The First 5000 Days” which sold for $69 million in March 2021. Trevor Jones became popular for his series of stunning “Bitcoin Angel” pieces which he created using a 3D modelling software. Pak became popular for his masterpiece entitled “Metarift” which fetched $900,000. The following table shows some popular NFTs and their value when they were sold.

Read also: Celebrities that have entered the NFT world（like owning BAYC)

Conclusion

The art market has been growing remarkably over the years due to the prominence of NFT artwork. The major contributing factor is the use of the blockchain technology in creating NFT artwork. With NFT art the artists are able to have much control over their work as well as generating additional revenue streams. Beeple, Pak, Trevor Jones, Krista Kim, Grimes, Fewocious, Mad Dog Jones, XCOPY, Josie Bellini, Slimesunday, Punk6529 and Pako Campo are Examples of well-known NFT artists.

FAQs about NFTs

What are potentials of NFTs?

NFTs have created many opportunities in the art market, real-estate and financial sectors. For Example, artists can turn their digital creations like videos, images and audios into NFTs which they can sell on different marketplaces. This enables the artists to earn royalties when their NFT art changes hands.

How do NFTs increase in value?

The main factor that enables the value of an NFT to increase is its demand on the market. However, its unique traits attract many people to have interest in it. NFTs that belong to popular individuals like celebrities appreciate over time when many people come to know about them.

Is NFT a disruptive innovation?

The NFT technology is disruptive in nature as it has brought many benefits for different industries. Their main contributions include being proof of ownership, authenticity and provenance. In the art sector, they have also democratized how artists create and sell their artwork.

What is the goal of NFTs?

NFTs act as representations of tangible and intangible items. They help individuals to prove ownership of goods and services. Although NFTs are mostly used in the art sector, people can use them for other purposes.