Although Kevin McCoy created his first non-fungible token (NFT) in 2014, this medium became popular in 2021 among artists. In the last year, NFTs have attracted the attention of creators and collectors: we’ve seen artists, new and established, create collections worth millions of dollars.
What is driving this phenomenon? In this article we will talk about the basics of NFTs. We will explain the benefits and risks of getting involved in blockchain technology, also known as blockchain . In addition, we will show some of the most popular works and transactions in recent years.
- What is an NFT?
- Why do NFTs attract artists and collectors?
- Advantages and disadvantages of NFTs
- Examples of NFTs in the market
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Table of Contents
What is an NFT?
An NFT, or literally non-fungible token, can also be translated as “non-exchangeable token” or “non-exchangeable money”.
To better understand this term, let’s take a non-expendable asset as an example: a physical work of art. Unlike money, a consumable good, a painting cannot be exchanged or substituted for another. Since it is unique, its authenticity (and its market value) is determined through careful observation and appraisal.
However, that is not the case with a digital file. For example, a JPG file can be priced and sold, but once it is no longer owned by its creator, there will be no factor that distinguishes the original from a copy. It can be easily re-downloaded, copied and redistributed.
This is where NFTs come into play. NFTs are like non-expendable goods, they cannot be modified or exchanged for another. They are digital assets that have a certain value and can be monetized; They are a special unit of digital data whose location is stored on a blockchain. Therefore, when you have a digital work of art in NFT format, it is identified with a code that validates its location in said chains, and thus, there will be no doubt about its value or who owns it. The copyright of that artwork rests solely with the NFT owner. While anything can become NFTs, today they are most commonly associated with image, audio, and video files.
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Why do NFTs attract artists and collectors?
We have said that both the value of the NFT and its owner are unmistakable. To this we can add that being “non-tradable”, all NFTs are authentic and no one can copy them.
Of course, one can copy any file—even NFTs—but only one person can own its location. Downloading an image without buying the NFT is like buying a copy of the Mona Lisa in a museum shop: you’ll enjoy the imitation, but you won’t be able to claim the work as yours.
NFTs make it possible to determine ownership of an original work of art in digital format and give it discernible value. Thanks to provable ownership and smart computational processes, many collectors turn to the NFT market and hundreds of independent artists work in the format.
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Advantages and disadvantages of NFTs
Being easily accessible, it’s clear that NFTs filled a void in the world of creativity. By fostering an easy, secure, and decentralized marketplace to sell unique collectibles digitally, artists could harness their talents to benefit from this new environment. With that said, let’s find out some advantages and disadvantages of this very unique phenomenon:
Advantages of NFTs
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NFTs are registering a growing value in the market:
in addition to the fact that “NFT” was selected among the words of the year in English in 2021, this market skyrocketed from 100 million dollars in 2020 to more than 40 billion dollars in 2021 ( almost surpasses the traditional art market). Some of the most expensive NFTs exceeded $30 million. As promising as these numbers seem, no one can predict how this immature market will affect future demand. However, it is going through a very good time and even outlets like Instagram plan to introduce NFTs to their platforms .
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Artists have a greater source of inspiration thanks to more creativity and collaboration:
the tremendous wave of innovation is making people devoted to NFTs. There are creators of all kinds: from gamers to artists, celebrities and big brands, all bringing fresh approaches to this digital medium. Artists, and everyone in the creative world, can take advantage of this opportunity to bring endless themes and formats to life. The diversity brought to life in the NFT market presents unique potential – from photos and illustrations to GIFs and tweets (check out this example from Cent , who sold a $3 million tweet in 2021). With so many big brands collaborating with designers, we may see smaller brands follow suit. This also opens the doors for graphic designers, illustrators, and digital artists to look for opportunities to create brand assets that become NFTs.
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Online NFT marketplaces can help reach new audiences:
In both the physical and digital art industries, building a professional network is essential. It takes time for art enthusiasts—critics, gallery owners, collectors, and the public that follows you—to support your work. This is just as important as sales, especially early in your career. Getting your NFTs onto an online marketplace can spark interest from collectors who might not otherwise see your work. Even if you don’t sell, adding NFT collections to your digital portfolio and social media will show that you’re on top of what’s trending in the art world.
Disadvantages of NFTs
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Most platforms have fluctuating gas fees:
From the time an NFT is created to its sale, every transaction on a blockchain like Etherum carries gas fees that fluctuate dramatically. This may come as a surprise to many creators who assume they can enter this market at no cost. Although many platforms allow the buyer to assume the commissions, it is important to be aware of them.
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The NFT market is volatile
Despite what you may have heard, don’t expect collectors to flock to invest in your NFTs. While the market numbers are impressive, it remains volatile and immature. This makes it difficult to rely on NFT trading to turn a profit and has many collectors increasingly wary of their investments.
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Controversy around environmental impact:
Most online NFT markets are powered by the Ethereum blockchain, which leaves a significant carbon footprint on the environment. That being said, there are many platforms and creators that advocate for clean or non-polluting NFTs. There is hope that this problem will be resolved, especially as we talk about the evolution of the Internet into the age of web3 and the metaverse.
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Examples of NFTs in the market
We delve into the NFT market and take a look at some of the most popular plays and transactions from the past year:
Ponderware, MoonCat #21 , 2017
MoonCats are the oldest NFT artwork built on the Ethereum blockchain and were launched in 2017 before the term “NFT” was even coined. This particular work is one of the first MoonCats to be minted. In 2021, the MoonCats collection reached 25,440 minted works and has significant historical and market value for collectors.
Rewind Collective, Double Exposure – Frida #1 , 2021
Another NFT sold in ArtNet’s premier NFT auction in 2021, Double Exposure – Frida #1, reflects artist Frida Kahlo’s identity struggles while working with the photographic concept of “double exposure” and includes a physical component. The creators of Rewind Collective are a group of artists and curators whose mission is to promote women and minority artists within the field of digital art.
Pak, Mass Banner , Merge collection, 2021
Pak’s Merge collection was the most expensive NFT of 2021. On the Nifty Gateway platform , 28,000 buyers purchased 266,445 units worth $91.8 million.
Finestrares (Jason Rosenstein), Salvadorepepe – Series 13- Rare Pepe, 2017
Rosenstein’s Rare Pepe Collection consists of 20 works valued at between $20 million and $40 million. An homage to surreal art, Salvadorpepe – Series 13 was part of ArtNet’s first official NFT auction ( ArtNFT: Beginnings ) in 2021. It is also the first NFT featured in a modern art museum.
Beeple, Everydays, The First 5 000 Days, 2007-2021
The NFT that changed everything—Beeple’s Everydays, The First 5,000 Days—was the first NFT sold by a major auction house . Beeple, also known as Mike Winkelman, created this rare digital montage, combining 5,000 photographs that he created and published, every day, since 2007.
conclusion
Before you decide whether to trade NFT or not, think carefully about the advantages, disadvantages and examples that we have considered in this article. Approach NFTs like you would any other investment: do your research, analyze the risks, and proceed with caution.
Regardless of what you decide, remember that with Wix you can design a digital portfolio that includes your best works. You could even add NFT collections. Our platform is designed to get your work noticed, your visibility to increase, and to start making a profit.
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