In recent years, the art world has been revolutionized by the emergence of Non-Fungible Tokens (NFTs). These digital tokens are unique and can be used to represent anything from artwork to music, videos, and even tweets.
NFTs have gained widespread attention in 2021 as high-profile sales, such as the $69 million sale of Beeple's "The First 5000 Days" at Christie's auction house, have brought them into the mainstream.
So, what exactly are NFTs, and how do they work?
An NFT is a digital asset that is verified on a blockchain network, such as Ethereum. The blockchain acts as a ledger, recording every transaction made with the NFT. This means that ownership of the NFT can be traced and verified, making it a valuable asset for collectors and investors.
The appeal of NFTs lies in their uniqueness. Unlike other digital assets, such as JPEG images or MP3 files, NFTs are one-of-a-kind. This means that owning an NFT gives the owner exclusive ownership of that particular piece of digital art or media.
The art world has embraced NFTs as a new way to sell and collect digital art. Artists can create a limited edition of digital artwork and sell it as an NFT, with the buyer owning the exclusive rights to that artwork. This creates a new revenue stream for artists, as well as giving collectors a new way to invest in art.
The use of NFTs is not limited to the art world. Musicians and other creators are also using NFTs to monetize their work. For example, DJ 3LAU sold an NFT album for $11.6 million, while Grimes sold a collection of NFTs for $6 million.
WHERE DOES IT COME FROM?
Over the last several years, the art world has seen pieces appreciate in value 1000% + . Which is being touted all around. Creating whole new investment industries. I've even heard multiple advertisements for a company offering Fractional Ownership of Art Pieces, for investors.
This new Art investment resurgence over the last several years stems from Hedge Funds. Hedge Funds buy art, as a form of Hedging against their investments. So if they lose, the logic is that they could always sell the art. But this has created a massive artificial inflation of Art. They can keep passing around a piece between themselves, paying more money each sale, pumping the values up to ridiculous prices, in not-so-subtle collusion, to back up their gambling addiction in the market.
But looking at the art world at face value, your average investor is just seeing the potential profits, based off historical gains in this Inclusive Club they aren't a member of.
So NFTs were born. And it was a smashing hit in the investor market. Because trend seekers will trend seek. And then FOMA hit. Fear Of Missing Out. So this idea, that stemmed from seeing Billionaires and Millionaires exchange old art for growing profits, has in majority turned into the poor man's investment strategy. Unfortunately, the glass ceiling has already hit many people. The first NFT sold for $2million. The person who bought that NFT can't even sell it for $1,000.
The Hope for Artists and Musicians, is that this concept will take off, and they will earn more for their pieces, and get a percentage of resale value. But, as long as the market is restricted to the financial hobbyists, and the financially-hungry poor, NFTs will go no where.
Unfortunately, this is another dead end, in a way. a an art is only as valuable as people perceive it. Which turns every NFT into a Hot Potato. The last one holding it is the loser, if the aim is to get a return on investment any time in the future.
All anyone can suggest is to be careful. You worked very hard for your money. Every investment should be weighed out. Pros and Cons. Small Investments can create large gains. You just have to find the right opportunities.
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