Crypto art has been around for more than a decade, but for people outside of the blockchain technology craze, these digital assets known as non-fungible tokens or NFTs, have gained popularity over the past year. An NFT can be anything digital and can represent real items such as artwork, collectables, tickets, music or even videos.
While traditional artwork has always been invaluable, NFTs are becoming an increasingly popular way to buy and sell digital artwork. The question is why would someone pay almost as much as a traditional piece of artwork for virtual ownership of digital art? The answer is simple – ownership.
The scarce nature of NFTs and the high demand for them from collectors, and investors have created a lot of hype about tokens. For example, the founder of Twitter sold one for just under $3 million. In January and February alone, there were $300 million in NFT sales, according to Cointelegraph. Creators and buyers have seen significant profit from crypto art. In February 2021, Miami-based art collector Pablo Rodriguez-Fraile resold a piece by Beeple for a nearly 1,000 percent increase over its original price, demonstrating first hand how lucrative the market can be.
According to Ivan Nefedkin, founder of Generative Gallery, the art market is taking on new forms, but the possibilities for gallery owners are the same as those for artists. Technology allows us to completely transfer all the features of the art market to the digital format and enrich them with completely new ones that come from DeFi.
People across the globe are finally starting to pay attention to the phenomenon that has existed for nearly decades. Moreover, they are willing to pay real-world money for it. An upsurge of interest is evident from collectors, venture investors and art-related companies that are keen to have their fingers on the pulse. Last year the market saw an increase in NFT interest from three types of investors: collectors, venture investors and art-related businesses.
Art collectors have speculated on NFTs for some time and are now investing in them in the hope the value goes up so they can sell it for a profit.
Venture investors are using the pick-and-shovel strategy known since the Gold Fever times when gold mining tool producers raised much more money than gold diggers and benefited regardless of the latter finding gold. Throughout 2021, institutional and venture investors put up capital across different stages of NFT start-ups, NFT art and emerging NFT artists. These investors are willing to follow an opportunistic investment approach and short-term investments from six months to two years.
Venture investors are also interested in NFT art advancement too, together with a new type of art funds establishment known as DAO, decentralised autonomous organization. In fact, DAO is a smart contract venture fund with portfolio assets selected by a curator and managed in a certain way.
The third segment includes investors from the art industry itself, who have recently come to realise that the future of investment lies in the NFT market. For example, in 2020, Acquavella Galleries invested 10 million into an NFT marketplace, the Foundation platform.
Nefedkin highlights that the hybrid format is, in part, a kind of transition from the digital to the physical world, and until we completely move to VR and the metaverse, it will exist. Screens as a translator of digital art are and will be a form of interaction between these worlds. We already see projects gaining popularity, where screens are comparable to interior objects, replacing familiar paintings with digital works of art.
For example, for an exhibition organised in partnership between Generative Gallery and Theatre of Digital Art (ToDA) in Dubai, organisers collaborated with the international artists Aizek, Daniel Rossa, AUJIK, László Bordos to create four special NFT collections timed to coincide with the immersive exhibition. Their NFT creations are sold together with small video frames that bring together virtual and real art. Any visitor can take away a part of the exhibition and become the owner of a unique art piece in digital and physical format.
Despite the NFT art scene being flooded with new NFT collectables, those with superior art will always stand out. As part of the exhibition at ToDA, a limited edition of art pieces/NFTs will be available until the end of February 2022 for visitors, enthusiasts and investors to visit, explore and purchase.
According to the art economist and general partner of Fuelarts, Denis Belkevich, the NFT market is gradually building confidence across notable buyers and sellers. In March 2021, many analysts were sceptical about the NFT market – especially after Beeple was sold for $69 million. However, the supply versus the demand indicates that the market has become more centralized, attracting more and more collectors in the NFT market. Today’s market numbers indicate that NFT is finally becoming a typical investment tool, with short-term investments reaping home the large benefits fast.
Daria Prodaevich is the art director at Theatre of Digital Art in Dubai
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