A quick & simple guide to NFTs
This article will be published in the upcoming fall edition of the Phiota magazine.
What is an NFT?
A non-fungible token or NFT is a digital asset that uses the blockchain for its creation and exchange.
They tend to be unique, one-of-a-kind pieces or of limited minting. The first one that comes to mind is a pixelated representation of some fictional character. However, they can also represent a unique or rare item on a game, a playable character as is the case of Axie Infinity, or simply a unique piece of art like the Bored Apes. In theory, the ownership of an NFT gives you a tamper-proof contract of your ownership of the said item.
With that in mind, it’s important to note that an NFT can be any digital image. It can be something purposely created to be an NFT, such as a Bored Ape. Or it could be something else, like a screenshot of Elon Musk’s first tweet.
Or this drawing of a rock that sold for 1.7 million dollars.
Yet, there is an actual business application to it, despite what naysayers claim.
Major brands such as the NBA have quickly capitalized on this new technology. As of March 2021, the NBA had over $230 Million in gross sales in their NBA Top Shot product. In case you don’t know what a “Top Shot” is, they are short game highlights of the top moments of popular players.
For perspective, the NFT market in 2021 was worth over $41 billion, 30% less than the traditional fine art market in the same year. These numbers are huge. The most expensive NFT in 2021 went for a whopping $69.3 million or 38,525 ETH.
The honor goes to Beeple’s Everyday’s: The First 500 Days. See it below.
Five of the top 10 NFT’s sold are CryptoPunks, a limited run of 10,000 unique 24x24 pixel characters.
Let’s zoom out. The most expensive painting sold in 2021 was Pablo Picasso’s Femme assise pres d’une fenetre, which went for $103.4 million.
What happens if we remove the line between digital and physical art? If we combine the top ten pieces sold, Beeple’s piece was the 8th most expensive art piece in 2021, making it more valuable than Jackson Pollock’s Number 17, which sold for $61.1 million.
NFT as a Collectible
For now, many are viewing NFT as a collectible digital piece. Be it an NBA highlight, a crypto punk, or a horse depiction. Yes, they can be profitable if selected correctly. Still, overall, they do little beyond being able to use them in your Twitter as an image or having your private collection in OpenSea, or a similar service.
However, NFTs can be much more. That is the trend we see in the market. NFTs cannot only be collectible art pieces; they are turning more utilitarian through games and events. Owning and NFT can now open the doors to private lounges and special events or be a way to gain an advantage in a game. CryptoWorldCon in Miami, for example, offered a tokenized NFT for different packages; the more you paid, the rarer it became. The most expensive package offers a unique NFT painting from a known artist in Miami. At other events owning a certain NFT allows you access to VIP rooms.
A great example of capitalization on an NFT is Seth Green’s tv show, revolving around his NFT as the main character. He ended up paying $300,000 US dollars to get it back after it was stolen. Another example of capitalization of an NFT is NAS’s sale of his song “Rare” as an NFT, tokenizing .00143% with each $50 sale, meaning you can now own part of the rights to that song and make money on it (Team Ripple, 2022). You can also help a foundation do good work by buying their NFT, and every sale after that will continue to donate to them.
The Future of NFTs
NFTs are also starting to make inroads as art. After all, it is just a different expression of it, to some, a more pixelated and less sophisticated. The Mona Lisa is just an expression of her own time as much as a Bored Ape is of ours. Why not digitalize our art as well? Maybe have a hybrid where you own digital and physical rights to it. Many younger generations are starting to collect NFTs. Why not add a classic/digital painting to it?
Many think NFTs are just a fad and will go away. Not to me.
Too much money has been invested, and its technology is so rich that the possibilities are endless. Companies such as MasterWorks and Liquid Market Place allow retail investors to buy small shares of a Picasso or Rare Pokémon card. In the case of Liquid Marketplace, you can now purchase part of a Crypto Punk or part of a plot of land in the Bored Ape Yacht Club Metaverse. This is a modern way of utilizing blockchain technology for art ownership of a physical asset.
What we are doing with NFTs
At Grow Grandes, we have digitalized private art collections, entire collections designed to work as an NFT, and classic art pieces from several artists. We are trying to connect traditional and new art enthusiasts with art that is not only digital but also physical. We believe in a digital world, but as fine-art lovers, we see the benefits of owning physical pieces. Because of this, we are trying to create physical and virtual art collections that everyone can enjoy in the physical and virtual world. In other words, if you buy the NFT, we hand-deliver the physical piece.
Why? We realize art collectors understand that now art goes beyond being able to hang a piece in your house. There is a whole new world of digital rights and collectibles. With that, a world of possibilities emerges. With that, an artist can also exhibit digital rights for the consumption of the masses but leave physical ones to friends and family. This should allow for new income streams. This will increase the price of unknown pieces as more people enjoy them. Furthermore, it will open the door for the artist to a whole new consumer target.
Our latest collaboration is with E. Aragundi, an artist with over 30 years of trajectory in international markets. We are managing his never sold footage, exclusive paintings, and hypermedia art. What makes it unique? Well, not only are we selling the digital rights to the image itself, but we are also shipping a physical copy of the art piece to the buyer's house.
Non-Fungible Token, Art or Fiction?
The number of dollars in NFTs is crazy. $15.70 Billion in 2021 alone and expected to reach $122.43 Billion by 2028. This shows the power and interest this new technology has generated.
What will be the future? It is hard to tell, but NFTs are here to stay. I believe that they will integrate more with games, sports, and popular culture to generate a strong foothold in modern culture.
The amount of money invested in them shows that people won’t give up. Everyone is trying to get their NFT on; indeed, early adopters have already made a good chunk of money.