If you landed here, chances are that either you already have a decent knowledge of what Non Fungible Tokens are or you have at least a vague understanding of them.
Yet, as the NFT frenzy continues, there’s a lot of misinformation going on regarding what NFTs actually are, and the purpose they were born for.
So, today we’ll look at NFT fundamentals rather than their “pumpamentals”, to use the crypto jargon.
Non-fungible Tokens, the beginning
First things first. What does non-fungible mean? I mean, you probably have a good grasp of what a token is, but non-fungible? What’s that?
Look in your pocket, maybe you’ve got some coins in there. Let’s say you have a 1 euro coin. Cool, I’ve got one too in my pocket.
Then I ask you “would you be willing to swap your 1 euro coin with my euro coin?”.
And you most probably think that I’m going nuts or something akin to that. Why?
Because two 1 euro coins have the same exact value, they’re fungible tokens, which means we can exchange them over and over and they would still be 1 euro coin.
Now, let’s take another example. Look again in your pocket, you find a colorful glass marble, a very rare one indeed. I do the same and what do I find in my pocket? My certificate of birth, interesting.
Now I ask you the same question, “would you be willing to swap your glass marble with my certificate?”.
You then answer “why? This marble is very rare and is worth a lot of cash, whereas your birth certificate it’s totally useless to me, with no value.”
There you go. This time we’re dealing with two non-fungible tokens, two items that don’t have the same fixed value, they’re not interchangeable, because they bear unique properties.
NFTs and ERC 721
If you need to create a token on the Ethereum blockchain, you’ll have to comply with the ERC standard, which means “Ethereum Request for Comment”. The go-to ERC is usually ERC-20, which is the one that supervises interaction among different tokens on the Ethereum blockchain.
The point is when the non-fungible token mania started to catch on, more and more people realized that ERC-20 is not that great when you need interaction among tokens that are not interchangeable.
Enters ERC 721, a new standard that was specifically built for NFT interactions. The main perk of the ERC 721 standard is simple yet vital for all the NFT owners, it allows people to track the non-fungible token in the blockchain, anywhere and anytime.
Why on earth are NFTs so popular and what purpose do they serve?
All the things I’ve said above have left the 1 million dollar question unanswered. What’s all about this NFT frenzy? Why does everyone seem to have become an NFT artist nowadays?
As of now, the equation “NFTs = digital art ownership” is quite popular. There’s some truth to that, but it misses the main point, NFTs have way more applications. The more blockchains (be that Ethereum’s, Tezos’, Algorand’s, etc.) will provide real-life applications, the more the many perks of non-fungible tokens will be understood, some examples:
- Domain names
- Tokenization of real estate contracts
NFTs are, at a very basic level, a certificate of ownership. Thus, the more people trust blockchains, the more they will use them as a platform onto which they can keep all their certificates, deeds, in alla safety and as a digital, non-physical, asset.
But, I’ve not replied to the main questions, why are NFTs so popular? As of now, nobody cares about other applications, it’s the art thing that’s skyrocketing NFTs’ popularity. So let’s tackle this question once without further ado.
NFTs and art, still a better love story than Twilight
Before becoming the new “big thing” in the art world, NFTs were mainly related to digitalia collectors, dapps players, crypto nerds, and the likes. It started with Crypto Kitties, a dapp (decentralised app) where you basically become a cat breeder. Some cats have unique properties, of which some are rarer than others.
People soon realized that they could sell their super-rare kitties on the game market, and make good money (ETH) out of it. Then came NBA Top Shots, basketball-based collectible cards.
It was only in the last two years that artists started to realize they could use the NFT standard as a certificate of ownership for an artwork, and sell this certificate to other people.
The result has been explosive, beyond any expectation. Marketplaces came out of nowhere, selling AI-generated digital artworks, digital trading cards, and even NFT photos. Many artists jumped on the NFT bandwagon and started to sell traditional artworks that they quickly adapted to the digital art world. The first NFT art agencies started to pop up.
Why do artists love NFTs so much?
Let’s be honest here, aside from a small circle of artists whose works’ have humongous quotations (*cough* *cough* Banksy), the vast majority of creators struggle to get a living out of their creations. And when they actually sell something, they have to give up a sizable chunk of their earnings. That chunk goes to curators, auction houses, agents, etc.
In a way NFTs promise to democratize the art-selling and sharing processes. If you have a Twitter account, you can “shill” (share) your art to other artists, or you can even swap your artworks with those of other artists. There’s no third man needed.
And that’s exactly the pillar on which blockchain and cryptos ideology has been built. When you mint (that is, bring into existence an NFT on a blockchain) an NFT you get the following pros:
- You can prove you’re the creator on an unchangeable, anti-tampering, ledger (i.e. a blockchain)
- You can earn royalties
- You determine the rarity of your work, and you can even make it ephemeral by burning it (i.e. deleting it from a blockchain)
- You can sell it WHEREVER you want
Is the NFT-Artworld honeymoon over already?
For all the upsides of the NFTs, one cannot ignore that the prices of the various artworks you can find on Opensea, Rarible, etc. are inflated, to say the least.
So, what’s happening? Is there a bubble on the verge of bursting?
As I said above, NFTs have a ton of interesting applications and, along with Decentralised Finance, they can really bring something fresh to the table.
So, the short answer is no, NFTs are probably here to stay, and the same goes for the NFT art market.
From the artist’s standpoint, there’s too much to gain from the NFT world compared to going back to the old art world.
But something will have to change. Even though our concept of ownership is fuzzy and changing in unpredictable ways, we still want to hold the thing we buy, or at least to be the one and only owner of that.
Right now, you can buy an NFT, but what do you get by doing it? A certificate of ownership that everyone can see on a blockchain. Aside from that? A digital file that anyone can copy. Also, the artist keeps all the rights on the file, so he can decide to allow a website to use his creation.
The pro-NFTs narrative here would say something like: “well, you can buy a copy of a Van Gogh painting, but nobody would think you have something as valuable as the original”.
And that’s the whole point, the original Van Gogh has (supposedly) been painted by Van Gogh himself, so it has a different story from its copy, even from a material composition point of view.
But a digital artwork and its JPG copy are exactly the same, except for the NFT that says that you are its owner. Is that enough to make you feel as if you actually hold something unique? Maybe, or maybe not.
A possible solution
Beeple, the top-selling NFT artist at the moment, has already started sending non-digital artworks to his buyers, along with the NFT and the digital piece of art. Steve Aoki has sold a musical NFT as part of a “package”, comprising music, a comic, and other collectibles. All these perks are only available to the buyer, a way to tackle the “copy-paste” problem for NFTs.
On top of that, many artists are native NFTs creators, that is, their art is solely created within the NFT art space, and we’re seeing a lot of interesting and unique artworks, which clearly shows that, aside from price speculations, NFTs and Digital art are creating their own space within the art world.
To sum it up, NFTs offer a great deal of autonomy to artists, we can even consider NFTart as a wave of democracy that has taken the art world by storm. Yet, the storm will come to an end, leaving behind a new, mutated, landscape, most likely for the better.
Hey there, are you an artist?
You create great art but don’t know how to translate your creations into the NFT world? Then get in touch with our visionary NFT art agency!