NFTs or non-fungible tokens have revolutionized the art world and the art market by creating communities and collaborations between artists, fans and customers. Digital art has been undervalued for years due to its immense availability. NFTs offer artists full creative and financial control over their products, as well as generating immense opportunities yet to be explored, such as their participation in the creation and design of metaverses.
How have NFTs impacted the art market?
Creating an NFT on an asset (physical or digital) provides a series of advantages that are more difficult to obtain with traditional mechanisms, especially for new or lesser-known artists, such as proof of ownership, greater reach and scarcity or exclusivity. Proof of ownership is key, because in the digital world everything can be copied and to sell an asset it is very important to be able to prove its ownership and originality; and thus begins the revolution of the art market, providing transparency. As the ownership records registered in blockchain are public, they can serve to demonstrate who is the true owner of a work.
In addition, blockchain and NFTs are also changing the way people think about art, whether it is owned or bought and sold. For example, in many cases, owning an NFT does not mean physical ownership of the work, as they are sometimes sold only digitally.
NFTs have disrupted the traditional way of trading art by eliminating intermediaries, so that buyers and sellers can negotiate with each other directly, facilitating trade and reducing operational costs. In general, a young, emerging artist first relies on an art gallery to offer his or her pieces for sale, then a secondary market is born with his or her more mature works, and once the artist has sold them, he or she no longer makes a profit no matter how much his or her art is resold. Instead, thanks to this revolution, new artists can promote themselves autonomously on various platforms, so that they themselves control the prices of their works.
Moreover, thanks to smart contracts, it is possible to include clauses whereby the artist collects royalties for his royalties; that is, every time his NFT is resold, he collects a percentage of the profits. This drastic change allows for the possibility of the current art market to be replaced by a much more liberal and decentralized one, driven by the participants (buyers and sellers).
A non-fungible token can be generated from anything: from an autograph to a digital artwork. In fact, you are surely familiar with the collections of NFTs from Bored Apes and CryptoPunks. They consist of rudimentary illustrations published in packs of 10 000 where each individual work sells for between $350,000 and $500,000, the most expensive reaching $11.7 million. But has the bubble burst yet or is it all just speculation? In total, sales for the first 4 months of this year total $12 billion. It is a very volatile market in which prices change drastically, as the price of a work depends on its social status. The peak in the market was in August 2021, when more than 200,000 sales of NFTs were generated every day worth $400 million. Since then sales have calmed down quite a bit and on average between 10,000 and 30,000 sales are generated per day.
In conclusion, NFTs are not going to replace traditional art such as photography, oil painting or sculpture, but complement it by offering new possibilities to their creators, whether physical or directly digital works. And they are therefore revolutionizing the art market for the better, since they facilitate the sale and purchase of both physical and digital works, acting as a dynamic element and even a sponsor of the art sector.
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