What do NFTs have to do with art?

Last year, 2021, was the year when cryptocurrencies and blockchain technology witnessed massive growth, both in market capital and infrastructure development. Non-fungible tokens or NFTs are based on blockchain technology and can be anything digital, like drawings, music, illustrations, photos, movies or games. However a lot of the current excitement around NFTs comes from using the technology to sell digital art.

What are NFTs? 

NFTs create a unique digital signature and in this way define an object as your property. This can be bought and sold with cryptocurrency, real money or NFTs. Non-fungible token means that the access that you buy are not interchangeable, each and one of them represents unique assets owned by a specific person. NFTs can only have one owner at a time as there is only one specific number of originals existing. A bitcoin on the other hand is fungible. You can trade one for another bitcoin and you will have the same thing. 

Art and NFTs

Buying digital art has become very popular and that has led to a larger market platform for digital collectibles. Art by NFT artist Beeple and NFT project CryptoPunks dominates the list of the most expensive NFTs sold in 2021 with multiple pieces selling for millions of US dollars. Among the more expensive NFTs, the majority are part of the Ethereum blockchain. 

The Merge is the digital artist Pak’s latest creation and has fetched US$91.8 million on Nifty Gateway (which is an online auction platform for digital art for non-fungible token art) with 28,983 collectors snapping up 312,686 total units of mass (NFTs) in December 2021. The price was a record for an artwork sold publicly by a living artist. The sales method that was used was “open edition” and it means that the sale of NFTs based on images is not limited by volume sold but by the amount of time they are available. 

Previously, before the new auction record was set by the digital work The Merge, the highest price for a digital artwork was achieved by Mike Winkelmann’s (also known as Beeple) Everydays: The First 5000 Days. It fetched US$69.3 million at a Christie’s online auction in March 2021. 

This is clearly a growing investment opportunity that represents the next art development in our history. However, if you are considering investing in NFTs, you should be aware of the extremely high energy consumption and the accompanying high carbon footprint. For this reason several artists have even decided to avoid NFTs, even if it means losing a lot of income. There are perhaps better ways to invest your money if you want to minimize your impact on the environment.   

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