NFTs the Future of Digital Art

Are NFTs a breakthrough for creators and artists?
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NFTs – Examining the Good and the Bad

Digital art has never really taken off and accepted as a legitimate art form in its own right. This is even though there are some wildly talented artists and the medium has been around for decades.

The main reason is because artworks derive their value from the scarcity factor where it is the exclusive property of the owner. Digital artworks are able to be copied many times without any loss of quality in the artwork. Due to this it loses its prestige and has been shunned by the mainstream art world.

This is where NFTs come in. For those that have never heard about NFTs it is quite a strange concept. It is the future of digital art. If you are not familiar with what NFTs are then you can have a look at the article what are NFTs to give you the basics.

There is real world demand for NFT art. There are those that are valued at double digits amounts, but there are also those that fetch millions. For example this Beeple artwork sold for $69.3 million at a Christie’s auction.

Image source Christie’s

The Advantages of NFT’s

NFTs ‘solve the digital scarcity problem’ as Cameron Winklevoss has stated on an interview on Forbes. Artists do have the option to create more than one digital copy of their art, however this will reduce the value of it. It is more worthwhile for them to only mint one copy of the artwork for sale.

It is the technological leap that is going be disrupting the art world. That is to say it is going to propel digital artists forward and bring digital art into the mainstream art space. It has gotten digital artists excited and the space is getting more coverage in the media and getting more popular.

NFT’s are sold on online marketplaces mostly designed specifically to cater for them. They enable artists to make an income from their work. There is an added bonus as artists can also collect royalties on resale of the artwork. This would be the case should the buyer then decide to resell the work at a later date.

If the artwork was a collaborative effort, each artists could get a cut. It is all managed through the marketplace platform without artists having to continually organise anything from their end. The platforms are built to monitor every sale and ensure DRM (digital rights management).

Issues of the NFT Marketplace

There are some issues that people need to be aware of in the NFT space. The space is only new and has some teething problems like everything else that starts out. Eventually these issues will be ironed out, but for the time being it is good to be aware of them.

Fraudsters

This issue applies to both artists and buyers alike. Unfortunately there are fraudsters setting up accounts on online marketplaces and impersonating legitimate artists. This is not a new phenomenon by any means online as there are fraudsters on social media and other platforms. Marketplaces for NFT’s are just a new platform for fraudsters.

There have been cases recorded of scams where fraudsters managed to make money off of the marketplaces. There was one incident with the artist Derek Laufman who was alerted by his fans. He lamented on Twitter about the issue and Rarible quickly brought down the profile of the fraudster. Unfortunately someone had already purchased the ‘artwork’.

As in the case with anything online, as a buyer you always have to do some due diligence. For artists they just need to flag any impersonators once they are aware of them much like Derek Laufman had done.

Gas fees

At times when there is a high demand on the Ethereum platform gas fees can go up quite considerably. These fees are paid when artists or buyers set up their account and whenever buyers purchase artwork. Lately fees have gone up as high as $100/€82/£71 in the equivalent cryptocurrency you would need to pay with. It can go higher or lower.

There is going to be some progress made on this front however as the Ethereum platform is going to be upgraded. With the Ethereum 2.0 upgrade the gas fees required will be going down. In other words it may be an issue now, but will be overcome in the not so distance future.

Loss of artwork

NFT marketplaces are experiencing a boom at the moment. Rightly so, but it looks like it might experience a boom and bust cycle. It could be compared to the initial stages of the dot com bubble which eventually burst in the year 2000.

A lot of tech companies at the time ended up failing. However out of the ashes emerged some companies like Google and Amazon which grew to become behemoths. Quite a few of the NFT marketplaces might end up vanishing in a crash and your digital art will go along with it.

There are ways to mitigate this risk artists could also host their files on an IPFS (InterPlanetary File System) so that the client is safeguarded. However, there is no guarantee that the IPFS will not also go bust.

There is also the risk of link rot. This is the process by which a hyperlink eventually stops linking to the correct source. There were a couple of studies done that confirmed a half-life of a link is 2 years.

Artwork loss is by far the biggest risk which needs to be addressed. Critics of the NFTs space will question the legitimacy of the space for this reason. After supporting NFTs and the amounts of money poured into purchasing artwork the last thing buyers would want would be to lose access to the artwork.

NFTs Conclusion

Safeguarding buyers and art collectors needs to be the top priority of the NFT space. Otherwise without the proper infrastructure in place to guarantee ownership the whole space will become untrustworthy. However like everything that is new, the space has its issues to deal with, which given time will be resolved.

NFTs are definitely a fantastic opportunity for digital artists and collectors alike. They should take part and contribute to this growing space. At the same time both parties should be mindful about ownership and what is the best approach to safeguard it.   

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