NFT's Will Change the Internet
NFT's are changing the art market for good - but what else will they disrupt?
Non Fungible Token’s (NFT’s) are well and truly with us. The latest ‘internet fad’ kicked off in 2012, with the creation of the tongue-twisting Colored Coins cryptocurrency. But NFTs didn't move into the mainstream until a few years later, when the blockchain game CryptoKitties began selling virtual cats in 2017. Most NFTs include some kind of digital artwork such as photos, GIFs, videos, or music.
Theoretically, anything digital can be turned into a NFT. And there’s the rub. NFT’s could finally break the link between free, ad driven media and a new world where any kind of information can get bought and sold - triggering a long overdue micro payments revolution.
After all, NFTs are tokens that we can use to represent ownership of unique items. They let us tokenize things like art and collectibles - even real estate. They can only have one official owner at a time and they're secured by the Ethereum blockchain – so no one can modify the record of ownership or copy and paste a new NFT into existence. NFT’s also support a royalty system so that creators can get a percent of future resales.
Today the hottest sector of NFT trading is the art market. NFTs are most commonly sold in so-called 'drops', which are timed online sales by blockchain-backed marketplaces like Nifty Gateway, Opensea and Rarible. Where artists and galleries can place NFT’s for specific auctions.
Sales volumes recorded on the largest NFT trading platform, OpenSea, hit $3.4 billion in August last year, compared to March's $148 million. In January 2021, the monthly volume recorded on the platform was just over $8 million. By the end of 2021, more than $10 million in NFT transactions were taking place daily, according to the website DappRadar.
Artists like Beeple, Larva Labs, Pak, Michah “Mad Dog Jones” Dowbak, Edward Snowden (??) and XCOPY have become instant millionaires. Two of them have overtaken the likes of Hockney and Koons as the world’s most-expensive living artist - making these grand masters seem strangely passe.
The British Museum is getting in on the game having announced that they will be putting twenty of JMW Turner's paintings up for sale in digital form. Which presumably means that they will photograph the paintings and sell them with a digital signature of the famous artist. The starting price for his rarer paintings are set to start at around €4,999. A snip for a photo of a Turner painting!!
You may be asking yourself why you should pay for something that you can download off the Internet for free. The answer lies in how NFT’s work. Each NFT has a unique digital token encrypted with an artist's signature and which verifies its ownership and authenticity and is permanently attached to the piece.
There are a handful of reasons why someone might want to buy a NFT. For some, it will be emotional value, because NFTs are seen as collectors items. For others, it is an investment opportunity similar to cryptocurrencies, where the value could increase.
Ultimately it will be because we are buying something that can be traded online, implying ease and speed, and because a sizeable industry will develop to help you display your digital art. In fact, it might be that NFT’s will make digital photo/picture/video frame sales go through the roof. Forget NFT ventures, get in on digital framing startups!
Artists will embrace NFT’s because they can sell digital derivatives of their physical art and open up a much needed new income stream. After all, if the British Museum can sell photos of original paintings as NFT’s - so can any other painter. Sculptors will sell videos of their 3D creations while audio, video and performance artists will switch to NFT like ducks to water.
You won’t have to go to the Royal Academy to watch Bill Viola’s video art of his wife giving birth, or his mother dying. You can hang the thing up and play it on a constant loop in your dining room. Guaranteed to liven up any dinner party.
Startups are cashing in. If the crypto marketplaces want to become the ebay of NFT, another startup, jpg, apparently wants to become the “tumblr” of NFT (does anyone still use tumblr?), while LaCollection wants to be the museum shop of NFT’s. Letts Group is developing a new NFT platform called LettsArt that could open the art market right up.
But NFT’s will not stop at art alone. Expect the memorabilia and sporting industry to cash in. So too, the gaming sector, closely followed by the broader media industry and professional services companies. Plus, of course the endless celebrity selfies - check Melania Trump memorabilia.
Gaming will likely change as well. Research has shown that people can spend five times more in a blockchain game than in a conventional game. OMG, how do they find the time? As we know, time is money and playing an NFT enabled game means you can trade the little blobs/widgets/digi-goods you buy outside of the game. If the gamer can exit the game and cash out with a fistful of cryptocurrency, and if they’re free to do whatever the crypto-heck they want with the money, then they’ll spend even more time and money. Play/win/collect/sell/play more. It’s a generation Alpha cycle in the making.
Meanwhile, wearable digital fashion is starting to hit the cat walks. At London Fashion Week, a new brand called Auroboros, unveiled a line of digital apparel that you “wear” using augmented reality. Better known brands are looking at hybrid virtual and physical fashion.
The merchandising industry could change forever. This is more likely given bankers are jumping on the bandwagon, investing in NFT startup’s, trading NFT art and collectibles, and developing DeFi-crypto loan markets that will take your NFT poster as collateral against the next pay day loan. Assuming you’ll be happy to hand over your real live children after the five figure interest rate starts to bite.
But the canniest of all future NFT uses could be virtual land. After all, the best way to rewild the planet will be for people to buy digital land and build virtual houses with virtual gardens that they can trade on Zoopla. Do this enough times and you might be able to afford a one way ticket to Mars with Elon Musk. That, in turn, should burst the real estate bubble back on earth.
Saying that, physical land or property can also be represented on a blockchain as an NFT. This means that the digital token representing a piece of land can have all sorts of attributes such as location, price, and measurements. Thanks to blockchain, it would be impossible for malicious actors to tamper with land ownership and other physical assets associated with the land.
Mostly NFT’s will enable content creators of all kinds to sell their IP directly to their supporters. Journalists, writers, photographers, filmmakers, designers, architects and consultants could soon be selling their original works as NFT’s. Publishers, gallerists and retailers should take note.
Bands will circumvent Spotify and many of us will own a piece of music - with a twist. Musicians will figure out how to combine music with video and memorabilia in one highly tradeable NFT. The virtual gig ticket market might get a boost once we figure out how to buy fractional music, while creating a killer, gig-worthy playlist that is worth way more than the underlying tunes. Why didn’t Steve Jobs spot that one?
Mind you, any event could be affected. NFTs on the blockchain can be used to represent tickets in a sports event or a concert. This ensures that every attendee has original access and any ticket reproduction is tracked and prevented. Tomorrow’s ticket touts will have to train as master hackers!
And why buy a book from Amazon if you could snap it up direct from your favourite author as a signed NFT which you can trade in the secondary book market - making a quick buck in the process. Writers will be able to pump up the value of certain books by selling them as limited editions and get an extra NFT-enabled royalty every time the book is resold.
As we dive into the world of virtual reality and this whole new metaverse, the NFT might finally replace the holiday. Just buy your friend’s NFT of their holiday - available at any virtual reality headset. Who needs airport security and quarantine hotels when you can disappear into someone else’s trip without leaving your living room or having to drop acid.
You could argue that when NFT’s become totally mainstream, which they will, then we will start to digitise everything that is physical. After all, we’re spending an increasing amount of our waking hours online. As a result, it won’t be long before we collect a lot of digital goods.
In the future, when we buy a cool pair of Air Jordans (physical ones that go on your feet), we will want its NFT companion - mostly so we can flaunt it, flex it and use it in a metaverse or a play-to-earn game.
For now, NFT means art. Tomorrow NFT will mean so much more. It looks like web 3.0 really is taking off!
This article first appeared at the Letts Journal.