NFTs, crypto art, or digital collectibles have recently taken over the internet. Some describe it as the future of art or even a piece of history while others still do not quite grasp what the craziness is really about. With some of the NFT art pieces being sold for more than millions of dollars at prestigious art auction houses all around the world, it might be worth getting the grip of what this NFT business is really about.
So, What is NFT Art?
The widely used term NFT is actually short for “non-fungible token”, which probably did not tell you more than you already presumed. NFTs are unique digital assets that, like any other piece of art, can be bought and sold. However, the difference between conventional art and NFT art, is that there is no tangible form. NFTs come in almost any digital format, whether it is a video, photo, audio, GIF, or even a tweet. And where do you get them? NFTs are mostly sold on digital art online auction marketplaces such as Nifty Gateway or OpenSea but you can alternatively get the finer pieces from art auction houses, such as Sotheby’s or Christie’s.
You might be wondering, who is willing to spend so much money on a digital art piece that can be copied and distributed online by practically anyone? Not to mention the fact that you cannot even hang it on your living room wall since it is all digital. However, this is where we are getting to the core idea behind NFT art: ownership. These virtual art pieces are “tokenized”, which creates a digital certificate of ownership that is then stored in an easily accessible blockchain-based public records system, that allows anyone to verify the full ownership history of the artefact.
The core idea behind owning a piece of fine art, whether it is tangible or not, remains the same. It doesn’t really matter if it is Mona Lisa or a GIF of Nyan Cat (which was by the way sold for 300.00 ETH which is roughly $1.4 million), anyone can have a copy, but only one person can own the original.
While Ethereum was the first blockchain that supported NFTs and is to this day the most popular one, many others have either already caught up or at least plan to, given the ever-growing popularity of the NFT art market.
A Little History …
The first NFT ever created saw the light of the day in May 2014. Quantum, an animation made completely out of code (also known as generative artwork), was created by a New-York based artist and associate professor in the Department of Art and Art Professions at NYU, Kevin McCoy. In the authors’ own words, the creation of Quantum was among others, inspired by the work of American science fiction writer Philip K. Dick. However, it was not until June early this year that Quantum sold to an unknown buyer bidding under the name @sillytuna for exactly $1,472,000 at Sotheby’s Natively Digital auction.
“2nd May 2014 21:27:34, Quantum stands alone in the precision of its timestamp – immutably, verifiably, trustlessly pure. If blockchain’s themselves are a radical recalibration of the concept of time, then the timing of Quantum takes on a pantheonic position within this new art history.”
In late 2015, the first NFT project Etheria was presented at Ethereum’s initial developer conference, in London (approximately 3 months after the launch of Ethereum blockchain). While all of the 457 tiles that together formed an almost Minecraft-like map remained unsold for the next 5 years after Etheria´s release, every single piece was sold in early March 2021 after the enormous spike in NFT buying madness. In about a day, all 457 Etheria tiles (worth $0.43 cents at the time of launch) were gone, making its creator Cyrus Adkisson about $1.4 million worth of Ethereum… Not bad at all.
Even though NFTs have been around since 2014, the huge popularity spike only happened over the past year. The rapid growth of the NFT market, as well as public awareness, followed after the huge success of CryptoKitties, an online game for adopting and trading virtual cats (some of which were selling for over $100 000). Players can buy and sell CryptoKitties using Ethereum and if the player owns two, they can even breed their own that can be further sold on the marketplace.
However, the major breakthrough after which the NFT popularity went through the roof happened in March earlier this year, when Christie’s sold “the first purely digital work of art ever offered by a major auction house”; Everydays: The First 5000 Days by Mike Winkelmann (also known as Beeple) for a whopping $69 million, making him one of the top 3 most valuable living artists of today. Only a few days later, the CEO of Twitter, Jack Dorsey, sold his first tweet as an NFT for $2.9 million. Following these staggering sales, the worldwide interest in NFTs surged by 426% in August 2021 alone according to Google Trends.
Future of NFTs
With the NFT market being worth more than $7 billion so far and with NFT art sales hitting approximately $2 billion monthly, according to JPMorgan, it is becoming clear that NFTs are here to stay. However, the impact of blockchain technology in the art business, particularly as a solution for provenance proof and transfer of ownership, goes far beyond NFT sales. But that is a whole other story …
Edited by: Anna Rauxloh