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Crypto Hype in Art: Why do we need NFT?

 

Crypto Hype in Art: Why do we need NFT?

 

Blockchain in 2021 is not only about bitcoin and digital currency, but also an important trend in the world of modern creativity. Enforcing copyrights, making it easier to sell pictures online, and just trying to understand where the world is going.

 

To avoid a long introduction, let's agree that NFT (Non Fungible Token) - as the name implies - is a non-interchangeable token. It is unique, not separable, and cannot be replaced by another NFT. To understand the general point, look at your pet: it is the only one that has all its qualities and properties exactly in this composition and form. This is the main difference between our hero and bitcoin, which has become the basis for the success of the technology.

Let's try not to go deep into subtleties and continue to exercise in abstractions. Imagine that you are an art teacher, who is very fond of his students' work and respects copyrights. Over the years you have saved many drawings, assigned each a unique number, signed the name of the author, the date of creation and indicated the materials with which the work was done. Data was entered into a special table, which eventually became a registry of all the works created in your classes. Then you distribute your archive to everyone who wants to be part of the network and set up automatic synchronization of changes: each new entry immediately appears in a copy of the file. It's done! Now your students can prove their copyright on the drawing without contacting you directly.

 

The example is oversimplified to the point of not including many details, but it emphasizes the main point: the work you drew and published online can be assigned to a specific author, as well as stating what is allowed to be done with it. This information cannot be lost, destroyed or replaced - only added to the details of the sale, since any edits must be approved by the community.

Why go to all this trouble for a picture?

On the Internet, many people ignore the concept of copyright and use found images as they see fit. At the moment artists have very few ways to defend their work and bring unscrupulous users to justice. After creating a legal framework for NFT people will be able to legally prove authorship, illegal use of an object and deservedly use the fruits of fame. What would collectors do to John if he tried to sell them an "original" Van Gogh painting that they had seen in a museum the other day? If you want, you can give the rude seller to law enforcement authorities for fraud: the documents will confirm that the work does not belong to him and, therefore, he has no right to sell it. The fact that digital authors do not always have a big name and a team of lawyers who are ready to fight for his works does not mean that other Internet users can dispose of someone else's work at their own discretion.

 

As for deserved fame, the story with reproductions is exactly the opposite: replicating copies helps increase recognition of the work and the author, as well as increasing the value of the original as the images spread. "Mona Lisa," "The Ninth Column," "The Sistine Madonna," "The Demon" - many people first saw these paintings and only then became familiar with the artists' work. At NFT, the mechanism is the same: the original work can always be identified with a token. All that remains is to find the author and, if you wish, to find out how often his work has been bought and how much it is worth now.

 

It's important to understand that by selling an image, the artist will not lose the copyright. That will happen only in case if he works for hire or if the copyright transfer is a condition of sale, recorded in writing. Moreover, the author can continue to use his work, for example, as self-promotion. The only restriction is that the same or completely identical work cannot be sold as NFT anywhere else.

In this way, we create the same treatment for digital drawings as we do for physical paintings. Congratulations on your new step in respecting other people's work and recognizing the importance of contemporary art. As a bonus, you get a decentralized asset that does not depend on third parties (developer company, platform owner, etc.) and the system in which it resides. At the same time you can sell your NFT on any suitable platform, not limited to Steam or the marketplace of the game creators and specialized platforms, which is useful in the segment of computer games and 3D design.

 

The story of NFT began not so seriously - with a desire to experiment and play. In 2017, the Internet exploded with CryptoKitties - they could be bought and auctioned for ether. Users spent more than $2.5 million on virtual kitties in a week, and then the same story was repeated with CryptoKitties, which are now priced between $10,000 and $16 million. The phenomenon is explained simply: it's much more fun to bid on cute pictures than on a set of numbers like 0001 and 0002. Both contain unique tokens, but in the second case we get emotion and entertainment.

 

The theme with cards and pictures turned into a lot of projects of different cost and popularity, fulfilling its main task - the attention of the market was attracted. The users nodded their heads, scratched their chins and thought about what else could be tokenized. So we got NFT with Jack Dorsey's first tweet, a Beeple collage of five years of his labors, a Nyan Cat hype, and several cryptocurrency hosting platforms, among them: SuperRare, NiftyGateway, Rarible, Mintable, OpenSea and Foundation. Some projects have abstracted away from blockchain, offering purchase directly from bank cards, some have switched to Flow, and some continue to use Ethereum.

 

The most active tokenization right now is:

 

  • digital art residency DAO;

  • virtual objects (clothes, interior and site designs, etc.);

  • game objects (skins, characters, weapons, etc.).

 

We will return to virtual objects next time in the context of fashion and real estate, but for now let's talk about art. NFT allows not only to insert information about the author and his work, but also to indicate what rights the future owner will get. Also, with a token, the artist can set up an automatic royalty with which he will receive a percentage of the sale of the image into a cryptocurrency wallet, regardless of the wishes of the intermediary.

 

There is no panacea

You probably have a question by now: wait, what's the problem with downloading someone else's image, turning it into NFT and selling it as your own? Basically, nothing. Despite the fact that many platforms selling tokenized art now allow only verified sellers to drop (create and then put NFTs on the marketplace), some of them do pull off such deals. Except the market doesn't benefit from it. NFT-society is still interested enough in supporting of authors, because respect of copyright and honesty attracts collectors, i.e. the main buyers. Cheaters, meanwhile, are being actively banned, with the result that the percentage of such sales is decreasing every month. In addition, we should not forget that the creation of tokens costs money, the work of famous author simply will not be bought, and an attempt to make money on a minor artist with hardly any recoup the cost, but certainly lead to a blockage on the platform. The cost of creating an NFT depends on the commission, which is determined by the congestion of the Ethereum network due to the increase in the number of transactions. At the moment, its percentage daily ranges from $5-150.

 

Let's note at once: we're not talking about utopia, where everyone gets fame, constant interest in his/her creativity and money for his/her work just because he/she creates a dozen of NFTs a day. Cryptoart doesn't give any guarantees that you'll wake up rich and famous after your first drop. Even though the movement is rapidly gaining popularity right now, there are already quite a lot of artists, but there will always be less unique content that people are willing to pay for. It should be understood and the fact that some sites have strict moderation of the work - or try to stand out in a torrent of random tokens of everything, or show skill, which is really worth some money. Yes, there are good stories, like the one about IAmBunya, who was able to start changing his life with his first sale. Still, NFT is not about charity, but about technology that comprehensively affects the future.

 

New world - new stars

In recent years, the world of crypto-art has shown itself as already known artists, as well as very young guys. Some prefer to exhibit only their own works, while others fit into collaborations (collective creativity), staking not on their name and skills, but on an interesting idea. For example, NFT256 came on the scene with 256 artists. In less than a month, the authors released two works, where each participant was asked to randomly choose a piece with a set of pixels and create a drawing based on it. Then the organizers put the "puzzle" in the right order and presented the final result to the community. Interestingly, all of the artists worked almost blindly, not knowing what would come out of their work. NFT256 is currently considered the largest association of crypto-artists, and their latest work sold for 2.56 ether. In total, the team earned 4.36 ether, some of which went to an exhibition in a digital gallery and advertising for the collaboration.

 

By the way, without the classic art in the NFT did not do without. Gryun Kim presented an incredibly beautiful video work in which he combined two paintings by Van Gogh into a single living work. The lot would have sold for 8.0 ETH ($30,552) and you can admire it here.

 

Gray Zone

So far, the NFT trend is most actively promoted in the West and the CIS, while China, with the exception of a few collectors, prefers to stay on the sidelines. Despite the wave of crypto hype, the legislative side continues to limit the blockchain sphere. The purchase of NFTs remains a "gray area" without clear laws, although many other countries do not define them as cryptocurrency, but as digital content due to the indivisibility and irreplaceability of tokens. It is also interesting that some payment systems, including Visa, apply the same rules to NFT as they do to the sale of photos on photostocks.

 

Another example of loyalty to the technology was ebay, which has decided in the next couple of months to open the sale of NFT on its site. Recall that previously the marketplace only allowed you to buy physical items with rare exceptions.

 

On the financial side, according to the analytical service Nonfungible, 5.35 million tokens were sold during the existence of NFT, and the NonFungible project calculated that the NFT marketplace has tripled since 2019, reaching $250 million in 2020.

 

In conclusion.

 

The proclamation "it's all just another hype!" may be partly true, but the NFT market continues to grow and will not stop developing in the coming years. We should already be getting used to the idea that blockchain ideas will permeate many spheres and the coming reality will connect us to the digital world more strongly. Like the CBDC (digital currency), not everyone has even a vague idea of the need for such technologies, but ignorance of the majority will hardly put an end to the trend. We can only watch and try to understand what the next decades will be "made of".