By now many have heard of NFT art, aka crypto art. Every day we read about these “Non-Fungible Tokens” in art blogs, which makes us wonder if they are the future of the art market or if they are just being overhyped. Whether it is a soon to burst speculative bubble or not, let’s delve into the world of tokens, their creators and sellers. Crypto art fans have been voraciously buying NFT art in recent months, meanwhile the traditional art market has been scrambling to get a piece of it!
Record-breaking prices on the art market are nothing new, but the huge sums paid for NFT art is certainly not something the average consumer saw coming. This is not art made by pioneers of abstraction nor masters of expressionism. Neither is it art that was painted on canvas or carved in marble. Much of it is work from people who may not even claim to be artists, those who have never had any traditional training, people who have never been represented by a gallery, those who are not to be found in any museum or art-historical treatise. Through their art, these people are suddenly the talk of the town and they sell their NFTs for hundreds of thousands of euros. Is this a market gone mad? In any case, art is rarely talked about on such a large scale, which means that NFT is heralding new collectors to the market, and this new generation could diversify the art market in an exciting way.
What does NFT mean?
The short answer is, NFT stands for a non-fungible token. It’s called non-fungible because it is unique and cannot be replaced. Think of it like a one-of-a-kind artwork, you can’t trade it for an equally valued artwork. NFTs are like the certificate of ownership for things in the digital space like photos, videos, gifs and even tweets. We saw Twitter’s CEO Jack Dorsey sell his first tweet as an NFT for just under $3 million. This is the first time that we have seen the idea of creative ownership take such an intense hold in the world of the once free internet. Get ready for a whole new breed of flexing.
Where do I buy NFT art?
One major digital art auction platform for non-fungible token (NFT) art is Nifty Gateway. It was founded by the Winklevoss brothers. They famously accused Facebook founder Mark Zuckerberg of stealing their idea for the social network. The Winklevoss’ attempted to sue the Silicon Valley cover boy and ended up settling for $65 million in Facebook stock and cash. Before Nifty Gateway, digital artists had limited to no options for selling their creations. These artists were on the periphery of the art market and their work was and is often taken without compensation or even credit. Now, Nifty Gateway is a promising seachange that many are onboard for.
One issue with many NFT marketplaces is that they require users to be familiar with cryptocurrency wallets such as MetaMask or others. Users also need to know how to buy the cryptocurrency Ethereum (ETH) before they can even buy and sell NFTs. Ethereum is stored on a digital ledger, called a blockchain, and is similar to but not the same as Bitcoin. There’s a lot of lingo, we know.
Seeing an opportunity in March 2021, Nifty Gateway began a partnership with the auction house Sotheby’s to attract new collectors from the traditional art market. The growing number of digital art collectors with cryptocurrency wealth led SINGULART to accept cryptocurrency for physical works as well. Today, Sotheby’s is looking at new ways to allow collectors to also pay for physical masterpieces with cryptocurrency, which would be a first for a blue-chip auction house.
Who are the most famous artists and what are the most expensive NFT artworks?
Can you believe that even though the movement just started picking up steam an NFT artist has already jumped to being the third highest valued living artist? His name is Mike Winkelmann, and he goes by Beeple. On March 11th he sold ‘Everydays: The First 5000 Days,’ through Christie’s for a record smashing sale of $69 million. He exceeded all expectations and is now ranked right behind the prolific artists Jeff Koons and David Hockney.
In addition a single pixel artwork sold for $1.7 million at Sotheby’s from an anonymous artist called Pak, which is sure to ruffle some traditional art feathers.. But all joking aside NFT art has had a turnover of billions in the past. To explore more crypto works you should explore the website Cryptoart.io which displays the most expensive NFT works to date. There you’ll find art by Beeple and other famous NFT artists. Brace yourself for some skyrocketing prices!
What is the environmental impact of NFT transactions?
While it is promising to empower artists and diversify the art market during a pandemic, there is a dark side to the NFT hype. They can have disastrous effects on the environment. You don’t have to be an Tech expert to understand NFTs scale of consumption. The cryptocurrency on which most NFT sales are based is called Ethereum, as previously mentioned. The price of Ethereum is linked to supply and demand. This means that energy is consumed every time transactions get processed, this is known as proof of work. In order to carry out a transaction with Ethereum, the system must show proof. In other words, the greater the hype, the more transactions are carried out, and the more energy is consumed.
To put it in perspective, an average Ethereum transaction consumes 35 kWh of energy – that is as much as an EU citizen consumes in 4 days. An NFT sale can consist of hundreds of transactions from start to finish. It is estimated that an average NFT consumes 340 kWh of energy and emits 211 kg of CO2. This is comparable to a two-hour flight or a 620-mile car journey. To add fuel to the fire, many of the transactions that take place don’t actually result in a sale, causing artists to lose money while also harming the planet. The ninth most popular NFT platforms, such as Nifty Gate or Open Sea, conducted a total of 1,606,435 transactions. This consumed 115,811,072 kg of CO2, or 115,811 tonnes. To reach this amount, one would have flown non-stop for 146 years.
The future of NFT art
Only time will tell whether NFTs are in a downward or upward trajectory. Websites like nonfungible,com try to track the evolution of digital assets in real time to better manage NFTs with transparency. More important than the fluctuating price is the high energy consumption and the resulting greenhouse gas emissions. Several solutions can curb this huge consumption. Ethereum 2.0, which has been in development for seven years, as well as Efinity could be the solution. Efinity is a recently launched NFT chain that claims to be cheaper for creators and much cleaner for the environment. Most likely, fine art and digital art will coexist, with both finding their collector’s niche.
One thing is crystal clear, the viewing experience that a real physical work of art offers can never be replaced! Still it remains exciting to see how NFTs will develop!