Do NFTs actually support artists and art enthusiasts? | 3 Ways NFTs can revolutionize art collecting
First of all, what even is an NFT?
An NFT is a non-fungible token, which just means it’s a title deed with a unique identifier that cannot be altered and is a proof of ownership.
There’s much skepticism with NFTs, and rightfully so. As with any new technology, it takes time for norms and protocols to stabilize. It has also raised many eyebrows in terms of the value of digital ownership.
One of the most common criticisms for NFTs is that the art can easily be reproduced, despite having a unique identifier associated with it. This is not an unfamiliar concept in the art world. We see reprints and remakes of famous art pieces, including Mona Lisa and Starry Night. NFTs are not intended to prevent reproduction.
Rather, NFTs are intended to be an immutable proof of ownership that can be traced straight to the true source — the artist themselves.
But what gives value to the art? Clearly, the original Mona Lisa hanging in the Louvre Museum is much more valuable, even with reprints and JPEG files ceaselessly available on the internet.
So, the value of art — that’s a subjective question, and not necessarily specific to NFTs. People purchase art and claim ownership of original pieces for a myriad of reasons. Some enjoy the thrill of the search. Others want to be a part of the cultural capital that comes with unique and original pieces. Yet others purchase art for investment, or even money laundering.
The value is ascribed based on the collector/buyer (or even the community of collectors/buyers; re: the economic concept of supply and demand).
To use a cliche, beauty is in the eye of the beholder.
So, why would an artist choose to ‘NFT’ their work? Why would art collectors and enthusiasts even value an NFT?
While the reasons are endless, here are some specific use cases that can be of value to an artist (spoiler alert: collective ownership, smart contracts, and traceability):
NFTs enable collective ownership. Perhaps I cannot afford to buy the Mona Lisa single-handedly for US$860 million, but I can share ownership with millions of others and purchase a tokenized fraction to claim a part of rich cultural history. (Again, intent may vary from buyer to buyer.)
This concept alone upholds a core value of the blockchain framework: democratizing access. Perhaps fine art does not need to lie in the hands of a few wealthy individuals, but the joy can be shared across many — even millions — of enthusiasts, collectors, and general buyers.
While the Mona Lisa is one example, this concept of collective ownership can be replicated for any and all art values.
We can observe a real life example of collective ownership with Beeple’s art collection. Artist Mike Winkelmann (digitally known as Beeple) sold a subset of his art collection of 20 pieces for US$69 million, the third highest price granted to a living artist in history.
Beeple was eventually purchased by a collector group called Metapurse, and tokenized for any and all to purchase a share of the ownership. Today, Beeple (token: B20) has over 5,000 holders. The art piece has a maximum supply of 10,000,000 tokens that can be redistributed to interested shareholders and buyers.
Smart Contracts within NFTs
Smart contracts are essentially conditions that are pre-programmed onto a blockchain and automatically triggered when a condition is met.
Smart contracts serve many benefits, many of which we are still discovering. For starters, they reduce the need for middlemen. Artists can exchange their work without an intermediary. In addition, the contracts can ensure that artists and collectors alike are receiving their fair dues.
In a nutshell, NFTs themselves are a type of smart contract that is a proof of ownership that traces back to the source (the artist). However, additional conditions can be deployed on the Ethereum blockchain that ensure credit and dues alike are ascribed to all parties involved.
Smart contracts can determine the cost of minting an NFT and determine the residual amounts that are awarded to the originators/artists as exchanges are continuously committed. This not only eliminates the need for a middleman, but also protects the artists’ rights with immutable conditions.
Smart contracts are incredibly customizable and programmable, thus giving an artist and art collectors the flexibility to choose an NFT contract that appeals to their interests.
Traceability and Proof of Ownership
Perhaps the single most important use case for an NFT is proof of ownership. As with the entire blockchain framework (from NFTs to cryptocurrencies), all transactions are made available on a public ledger. Thus, ownership is made very clear and artists’ rights are protected.
While the value of NFTs is a hot topic for debate, traceability and ownership is an unquestionable value-add for tokenized art. Even as art is exchanged from collector to collector, one can always verify the authenticity of ownership real-time with an NFT.
NFTs are an ever-changing landscape, as is the case with any new technology. It’ll take some time for NFTs to stabilize as a concept, as it is a dynamic shift from how we view art ownership/exchanges today. However, as we consider the multi-sided marketplace of art, NFTs hold a strong value proposition potential to protect artists, art collectors, and enthusiasts alike.