NFTs: Everything You Need to Know About The Digital Phenomenon
In 2018, Willem de Kooning’s Woman as Landscape (1954-55) sold for US$69 million on auction—it doesn’t come close to his US$300 million Interchange (1955), but it’s the price you would expect to pay for a masterpiece by an old master. So imagine the art world’s surprise when digital artist Beeple sold an NFT (non-fungible token) at Christie’s for a staggering US$69 million in March. This was quickly followed by the sale of Twitter founder Jack Dorsey’s first tweet for US$2.9 million, triggering a surge of interest in the digital asset.
But what exactly are NFTs, and are they here to stay? Three Singapore-based experts, who operate within the NFT art space, share the very basics as well as the long-term effects of these digital assets.
Khai Hori, the curatorial director and partner of Chan + Hori Contemporary, shares its impact on artists, gallerists and collectors; Hafiiz Karim, aka The Next Most Famous Artist, expounds on his journey as a digital artist; and Zach Burks, the founder and CEO of NFT marketplace Mintable, breaks the process of acquisition down for those who are interested in making their next investment.
What are NFTs?
To put it simply, NFTs are unique digital collectibles you can buy and sell. They can take the form of anything from GIFs to designer sneakers, and cannot be replaced or swapped—almost like a one-of-a-kind trading card, hence the term “non-fungible”. These digital assets run on the Ethereum blockchain, meaning they each have a unique string of code stored on a digital ledger, which allows for every transaction and transfer of ownership to be tracked in a smart contract—making the process of acquisition a transparent one.
Hold on, you lost me at Ethereum.
Ethereum is essentially a decentralised, open-source blockchain platform where transactions occur. Ether is the cryptocurrency of the Ethereum network needed to pay for goods and services, including NFTs. Consumers must have an Ethereum wallet in order to possess ether.
Let’s backtrack, what are smart contracts?
Smart contracts are lines of code that are automatically generated to reflect the agreement between buyers and sellers. Because of their technical and non-biased nature, they eliminate the need for a middleman and along with it, the risk of content manipulation. This saves time, resources, and offers complete autonomy.
Burks explains, “With NFTs, everything is recorded on the blockchain down to the date the artwork was minted, and a list of past owners the artwork had, all on a publicly accessible ledger. Picture a world where NFTs were available back in the 1800s when we had Van Gogh at his peak. Today, we would be able to tell the history of the artist’s entire collection, down to the number of editions a specific artwork has, how many bought it throughout the decades, and how much it sold for every time it exchanged hands.”
The technology sounds useful, but why should artists pay attention?
Good question. First of all, NFTs are primed to become a leading emerging asset class for the virtual economy. For The Next Most Famous Artist, the value that NFTs add to digital art was what attracted him to create them in the first place. He shares: “In the past, I could only sell my artworks as physical prints. But with NFTs, my works can now be animated and sold to a wider audience.”
Moving beyond the medium of digital collage, the artist can also delve into other artistic styles such as animation, 3D art, art collectibles and other forms of digital art. “It allows me to push myself creatively and collaborate with digital creatives of different mediums, both locally and globally,” he enthuses. “The onset of NFTs have combined various creative sectors together to form a new contemporary movement that is driven by collaboration.”
Additionally, the built-in royalties mechanism in NFTs enables him to set fixed royalty rates on resales of the NFTs that have been sold.
So NFTs provide more autonomy for artists?
Absolutely. “NFTs have empowered artists like myself to be more autonomous in showcasing our work,” shares The Next Most Famous Artist. “Artists can control the price of their work as well as the resale profits made by collectors in the secondary market.”
According to Khai, this new asset class is a great alternative for artists interested in diversifying their income source and exploration of new technologies where their practice can sit. It also helps that the community supporting NFTs is an international one, allowing artists to go beyond their local perimeters to engage in elevated conversations to better their practice. “Self-marketing is a big part of being successful in the metaverse. Through this, many artists also better understand the unseen work of gallerists through behind-the-scenes networking and promotion of art and artists.”
Where do galleries fit in then?
“Artists, gallerists, art dealers and collectors could mutually benefit from being in this space,” Khai expounds. He believes that there’s longevity in tokenised art, and contrary to much unfounded fear on NFTs, it’s imperative that everyone gets a better understanding of how smart contracts work first. “There is still so much to explore in terms of the tokenisation and co-ownership of art. For example, if we could imagine a shared ownership or appreciation of art just like how we enjoy, share and ‘acquire’ the rights to music on digital platforms today, then tokenised art will have a future.”
Surely NFTs come with their fair share of risks right?
The extreme volatility of cryptocurrencies impacts the value of each NFT. Burks admits that “given the big explosion of NFTs this year, the market can be a little speculative as more opportunists looking for a financial windfall instead of genuine collectors to purchase these digital assets.”
There is also a common misconception that an artwork’s value increases as long as it’s minted as an NFT—this cannot be further from the truth. Khai sums it up, “Just like any form of art, the investible value of an artist and artwork is dependent on the continuity and commitment of practice by its artists, as well as validation by critics, institutions, respectable curators and demand by collectors and fans.”
I think I’m ready to make my first purchase. How can I get started?
Prior to heading to an NFT marketplace to bid on your desired assets, you’ll first need an Ethereum wallet. All you have to do is install a browser extension on your desktop—MetaMask is a common option—or download the Coinbase Wallet app for mobile use. It only takes under a minute to create a wallet, and doing so enables you to buy and transact ether in no time.
Now that you have access to the Ethereum blockchain, there are several platforms for collectors to acquire NFTs. Mintable, the Singapore-based NFT marketplace, is one of many. It was created to give newcomers an opportunity to enter the blockchain space, and its easy-to-use function was designed on a simple baseline: can my mother use this?
“We designed Mintable to make it extremely easy for folks to get started that even my mother could do it,” says Burks, who founded the company in 2018. The platform also boasts a gasless minting feature, allowing folks to mint an NFT with no cost and no environmental impact at all—the latter poses as a hidden yet major downside to the digital phenomenon due to the overall carbon footprint created.
There is a myriad of NFTs sold on the platform as well, from houses listed for sale to films and documentaries.
“You name it,” enthuses Burks, who goes on to highlight that they’ve had utility‑driven NFTs (which are essentially technical working files that unlock exclusive perks) sell for $2 million in the past. “We’ve done some really cool drops in the past, but the most popular is definitely artwork. If you have amazing works of art or a big fan base, you can end up with hundreds of thousands of views on your NFTs in a very short amount of time.”
Other prominent NFT marketplaces include OpenSea and Rarible, where you can get started on bidding for your desired NFTs.
NFT is a tool at the end of the day, and its value almost entirely depends on the artwork and the artists it is tied to— Zach Burks
Artists to look out for in the NFT space, as chosen by Zach Burks:
- StyleWish | Graphic designer and visual artist | stylewish.org/nft-art
- Illmind | Grammy award-winning music producer and digital sound pack pioneer | mintable.app/u/illmind828
- Shone-zz | Digital artist | mintable.app/u/shone-zz