NFT: Future or Fad?
Crypto took the world by storm, went stagnant, then rose again. With crypto came NFT’s, non-fungible tokens. Artists picked this up quickly as a means to gain a new form of income and exposure for their creations. Many have either heard of them, don’t understand them or have created some. For anyone who hasn’t, what are they? Why have artists participated in their creation? Are they the future or just a fad? Let’s explore this new space.
What Are They?
NFT’s are non-fungible tokens but what does that actually mean? It means they can’t be faked or duplicated, no counterfeits. NFT’s are unique, digital pieces that can take the form of music, artwork, collectible nostalgic items etc. Anyone can create one with a little know-how of digital wallets and crypto. Once created, the piece is given a unique code. This code is based on the Ethereum blockchain code. Yes, there’s a connection to cryptocurrency here, Ethereum is a crypto coin that can be exchanged. This code acts as a ledger, it explains who created the piece and who purchased it. This code follows the piece every time it changes hands and everything is recorded and tracked within the code.
The code given to NFT’s is the key; once someone purchases the NFT in an online auction, they receive this code with an added extension. This extension is unique to the purchaser, they are the only one with the specific code, it can not be duplicated. Essentially, you are purchasing a 1/1 piece of work that can be stored in a digital wallet that can not be faked. No one can have the same code and no two people can own the same NFT at one time. It’s a very secure way to own a token of digital artwork.
Why Participate?
Artists of all kinds found NFT’s to be an opportunity to create rare pieces in a new digital space and sell them without losing ownership of their work. How is this possible? If a piece is sold, the ownership goes to the buyer. Normally yes but then there’s that code, the blockchain code that records and tracks everything. That code that’s given to an NFT upon its creation has the name of the creator/artist within it. That piece of code alone allows the creator/artist to maintain ownership of the artwork throughout its digital life. The purchaser owns a token of that work and the rights to store it in their own digital wallet.
https://opensea.io/assets/0x67d9417c9c3c250f61a83c7e8658dac487b56b09/3989/
The ability to keep the ownership over a piece of created work is very important to a lot of artists and creatives. Another reason creators have participated in this space, is the control one has over the product. NFT’s are sold in an online auction, similar to that of a real-life auction with time frames and bids. The main difference is the creator is in control of the auction, not a third paty (auctioneer). Creators can also have some control over the amount a piece is sold at if being sold at a fixed price or a limit/reserve price.
Future or Fad?
The timing of this new digital market grew rapidly while the world was in lockdown in 2020. There has been a gradual increase of NFT’s being created and sold in the past two years. Due to this rapid growth, many speculate the market for NFT’s will die fast (decline drastically). Others are more optimistic, thinking NFT’s will flow more similarly to the crypto market. Since they are based from one of the main cryptocurrencies, Ethereum, NFT’s will rise and fall along the cryptocurrency market.
Whether the market rises or falls, it’s safe to say it is highly unpredictable this early into the game. Is this the future for artists or a fad? The next few years will have the answer. Many artists and creators are taking advantage of this rising market and making a handsome sum for their work but there are also many communities who do not support NFT’s as a real art form.