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Courtesy of Art Basel
What Are NFTs, and Should You Invest in Crypto Art?
The world of Crypto can be confusing to understand, and it seems like everyone’s especially talking about one thing these days: NFTs. Celebrities are getting in on it, and maybe your friends are too. We’re here to break down for you. What on earth are blockchains, NFTs, and this emerging movement of crypto art?
First, what on earth are NFTs?
Non-Fungible Tokens. "Fungible" refers to something that can be replaced or interchanged with something else, such as Bitcoin. In other words, something that isn’t fungible (non-fungible) is something that cannot be interchanged with something else and are one-of-a-kind digital collectibles often in the form of memes, pictures, animations and videos. They can also take the form of cats. CryptoKitties is a popular NFT founded in 2017. It’s a collection of illustrated cats that, according to their website, each has a “unique genome that defines its appearance and traits.” Now, the most valuable CryptoKitties sell for more than $100,000.
Image via https://www.cryptokitties.co/
So, what’s the appeal?
The scarcity and security of NFTs is what drives up their prices. With CryptoKitties, “each CryptoKitty is one-of-a-kind and 100% owned by you. It cannot be replicated, taken away, or destroyed.” Alongside its originality, an NFT grants the ability to craft unique signatures confirming authenticity, proof of ownership for digital artworks – all using blockchain technology, which is a digital ledger (a system of recording information that makes it difficult or impossible to change, hack, or cheat the system). The NFTs are securely stored on digital wallets, so long as you can remember your password… It’s worth noting that some millionaires managed to lose the passwords to their accounts.
That concept – the security and private ownership of NFTs – applies to any kind of digital ANYTHING. Add in the rarity of certain collectibles, and that’s pretty much why you can find headlines of big bucks being dropped on a myriad of things.
NFTs will make you...rich?
As a seller you’ll find that NFTs allow you to earn more after you’ve made a sale, by coding them to collect a percentage of sales each time the token trades hands, usually between 2.5% to 10% of the sale price. This is especially beneficial to artists, who have struggled in the past to gain rewards from their work after it has appreciated in value.
Now, artists and famous people alike can increase their earning potential with NFTs. It is because of this capability that artist Robert Alice told Forbes, “NFTs are the single biggest reorientation of power and control back into the hands of the artist basically since the Renaissance and the printing press.”
$69 million for Crypto art?!
Now, crypto art is creating "the next chapter of art history," claims Beeple (real name Mike Winkelmann), who has just sold his crypto art for record-breaking $69 million at Christie's. This is the third-most expensive auction price of an artwork made by a living artist and also the first time that Christie’s accepted payment in the cryptocurrency Ether (ETH). The work is titled “Everydays — The First 5000 Days”, a composite of drawings Beeple made every single day for the last 13 years.
“Everydays — The First 5000 Days” by Beeple. Image via Christie’s
You might be asking, “Should I be buying NFTs?”
It really depends on whether or not you’re willing to take on some big risks, regardless of if you’re trying to purchase art as investment or simply because you like something and want to support the artist.
The crypto art world is perceived to be more about the commodification of art – money, investment, and ownership – than it is about the actual art. Like in any market, the values of NFTs can suddenly plummet. Additionally, there is a huge environmental impact of NFTs – which may come to a surprise to many who participate in the marketplace, being far removed from the technology’s environmental cost. Ethereum, the popular cryptocurrency for NFTs, requires about 26.5 terawatt-hours of electricity a year for it to be mined, and consumes more energy for every dollar of value generated than extracting gold or copper. There’s some estimates that a single crypto transaction can consume more power than the average U.S. household uses in a single day.
Multiple people have reported thousands of dollars' worth of crypto art stolen on Nifty Gateway, one of the most popular NFT marketplaces. The theft resulted in the loss of their crypto art and to unauthorized purchases using their credit cards. Reports like these indicate that under certain conditions, NFTs may be more vulnerable than it’s made out to be. Smart-contract bugs also pose as a new weakness. At the end of the day, it’s up to you to decide. Before you do, be sure to weigh the benefits and risks.
Courtesy of Town & Country Magazine
Are NFTs the future, or is it just hype?
It’s likely that NFTs are here to stay for the foreseeable future, and will expand beyond art, memes, and video clips. However, art curator Mary Schneider Enriquez raises the question of preservation when it comes to NFT and crypto art. In her interview with The Harvard Gazette discussing Beeple’s “Everydays — The First 5000 Days”, she poses a valid concern about the certainty that we’ll have the necessary technology to access and display NFT and crypto art in the future. She notes that the hope as an art curator is that the object that is acquired can be sustained for hundreds of years.