What are NFTs and How they Affect the Art World

Updated: Apr 3




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Unless you have been living under a rock, cryptocurrency and NFTs are rocking the world, from Bitcoin, Ethereum, to Dogecoin. There are more than 5000 digital currencies on the internet.

People are investing and using these currencies how and wherever they can, and art is one of those things people are spending millions.

So how does the NFT craze shape the art world? First, let's explain what NFT's are.

What are NFT's

NFT (Non-Fungible Token), Non-fungible meaning that the token or item is priceless, unique, and can't be replaced. Meaning this thing cannot be duplicated; it is one of a kind. NFTs are certificates of authenticity in digital format.

Bitcoin is considered fungible because you can trade a bitcoin for bitcoin. The dollar is also regarded as fungible because you can exchange coins for dollars, and it has the same value.

It is not the same for NFT's


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How NFT Work

NFTs are of the Ethereum blockchain, which means NFTs can be bought with Ether, but each NFT provider can accept other currencies. Much like Bitcoin and dogecoin, it lies on a blockchain.

Blockchain records information in a way that makes it almost impossible to hack or change the original data. It is encoded with the same software as the other cryptos, but the digital code signature is unique and creates scarcity of the art. Which then makes the item rare because only one can exist and can't be traded for anything similar, in turn making it more valuable and driving up the prices.

Items that are minted(created) as NFT are

Artworks

Collectibles

Digital Card

GIFs

Designer clothes and shoes

Virtual avatars and game skins

And music.

Now that I got that out of the way for my people who do not know. Let's get back to the topic at hand.

NFTs have become big business overnight. Take NBA Top Shot; it generated over $500 million in sales in the last few months, so basically, they are selling NBA highlights and stats as NFT, which seems to me like trading cards, but there is only ever one made.

Marketplaces like Rarible, Foundations and OpenSea.io are where you can find NFTs.

Now how is this affecting the art world?

Artists are selling their works of art for hundreds of thousands of dollars. Some artists have made millions, and they are credited for their work.

The items minted on the blockchain are one of a kind. All of the artist info is linked to the art, so nothing is lost, and the artist receives the credit. If put in the contract, they also can receive a percentage if the buyer of the NFT resales.

Just take Digital Mars House; I wrote about this a few weeks back. The digital House sold for over $500,000.

Do you remember the Fyre Festival scam?


Fyre Festival was one of the biggest scams that happened in 2017. The failed attempt of a music festival founded by Billy McFarland. It was promoted as an epic music festival with Ja Rule in the mix of this catastrophe.