NFTs turn digital art, tweets and memes into million dollar assets

Artist Ryan Maloney had planned a conventional launch for his latest project, a series of collectible cards called Beastly Ballers that feature cartoon creatures dressed in soccer gear. The New Canaan, Connecticut-based illustrator was going to use a Chinese printer to wrap the cards; then he would market them online and sell them for $ 4.99 for a pack of 10.

Instead, Maloney skipped the physical product all together. He listed the images of cards in the OpenSea online marketplace as NFT, or non-fungible tokens, the digital assets that are turning the art world upside down. Maloney had followed the rise of technology and decided to give it a try.

He started racking up deals after a day or two. A card, with a design of a yeti named Yeta wearing a helmet and ear pads, sold for $ 85. In all, he made over $ 700 in sales on 14 cards. For a working artist, this is a significant journey, and more than he would have taken the traditional route.

“Artists are always looking for ways to profit from their work,” says Maloney. “Once the word got out on crypto art, the gold rush really started.”

The gold rush for NFTs – essentially cryptological certificates of authenticity – is well underway. On Thursday, Christie’s, the 255-year-old British auction house, will close the sale of its first-ever digital-only work of art, a composite of 5,000 pieces created in as many days by artist Beeple. The final price is sure to be eye-catching: at the time of writing, the auction is over $ 13 million. As Maloney’s story points out, however, the implications of NFTs reverberate far beyond the multi-million dollar auction prices set at luxury auction houses.

NFTs bring a unique or limited-edition quality to digital art that has been lost in the world of Internet copy-paste and post-republish. Each work of art is associated with proof of ownership recorded on a blockchain, the distributed ledgers most commonly associated with Bitcoin and other cryptocurrencies. Authentications, which can be applied to images, videos, music, and other digital files, point to the original. Copies and copies of copies can abound on the web. But only one person can claim the NFT behind it.

Technology is starting to touch every corner of art, entertainment and media. In sports, a clip of Lebron James ruining a quick break sold for $ 100,000 on Top Shot, the NBA’s marketplace for best rolls. In music, Kings of Leon last week became the first group to announce the release of an NFT album, with three types of tokens that include illustrations and special benefits. Pop star Shawn Mendez announced a line of digital products in the form of NFT last month. In the media world, the Associated Press is auctioning an NFT electoral map from the 2020 US Presidential Contest, which uses data published on the blockchain. Twitter CEO Jack Dorsey even sells the first tweet on the platform as NFT.

Supporters say NFTs have the potential to revolutionize the way artists at all levels can sell and distribute their work. In turn, NFTs could change the way people interact and consume art in the digital age.

The potential is huge, says Joe Saavedra, CEO of Infinite Objects, a company that makes frames for looping videos and other digital artwork so the works can be displayed in homes and museums. His company worked with Beeple on an earlier version of NFT, offering what he calls a “dual physical” frame to display the NFT, with a QR code on the frame that connects the token.

“Overall, everyone will have to ask themselves how to navigate this space,” he says. “Art is the tip of the iceberg.”

‘A connection’

NFTs are powerful because they tackle deeply rooted issues in the digital realm: ownership and compensation.

The internet became the place we know it now because data could be easily replicated and user-generated content proliferated on the web. YouTubers and TikTok users have amassed huge following by distributing content, sometimes professionally produced and expensive to make. Napster brought the music industry to its knees because it smashed the business model when artists and labels weren’t expecting it. Facebook rants are free whether you like them or not.

Of course, you can support creators online by donating to their Patreon accounts. But NFTs offer another avenue of connection between creator and fan. “NFTs allow digital artists to sell their work with the assurance of authenticity and rarity,” explains Meghan Doyle, post-war and contemporary department specialist at Christie’s. “They are creating a new way forward.”

In a way, NFTs are restoring a dynamic that has sustained the art world for centuries. An art collector might covet an original Basquiat – instead of a copy of a Basquiat – so they can have the version the artist stood on when creating it. An NFT buyer may feel closer to what the artist considered to be the “authentic” version, even though it may be reproduced identically. NFTs can also function as rare reprints, with only a limited number of certified copies. You can listen to The Beatles’ white album on Spotify, but owning an original pressing could bring you back to the recording session.

“Humans give the original real meaning,” says Coye Cheshire, a social psychologist at UC Berkeley School of Information. “There is a connection. It connects them to a time and a place.”

NFTs are getting a lot of attention right now, but they’re nothing new. The technology really took off in 2017, after the Ethereum blockchain introduced a new standard that supported single tokens. That year, a Canadian studio called Dapper Labs created a game called CryptoKitties that allowed people to buy, sell, and collect virtual cats. The game was successful and popularized NFT. In 2020, the market for NFT was estimated at $ 315 million, according to a report from Cointelegraph.

Out of gas

There are downsides to NFTs. Artists complain about the sometimes high costs associated with the use of technology.

The most popular blockchain for NFTs today is Ethereum, and there is a “gas” fee charged every time a transaction is made on the network. The name comes from the computational cost required to process transactions on the blockchain – similar to the gas that powers a car to run it. Because the blockchain is decentralized, the price of gas fees is determined by several factors, including the supply, demand, and value of Ethereum.

Gas charges come at different times in the process. When artists join a market, they sometimes charge a one-time gasoline fee on their first ad. Buyers must also pay a fee when they purchase an artwork.

“It suddenly becomes very difficult for new artists to come and list a piece,” says Mateen Soudagar, an Australian investor who writes a blog on NFTs. It can also hurt the market. He says fees have skyrocketed in the past to $ 200 or $ 300. “I’m not going to pay $ 200 for a $ 50 piece of art.” To lighten the burden on artists, some marketplaces have introduced the creation of NFT without gas.

Soudagar has been involved in NFTs for years, first investing in virtual fields in games. He believes video games will be the next frontier for NFTs. The technology will give people the ability to purchase unique items, he says, like rare early skins, armor, or weapons for avatars.

Maloney, the Connecticut illustrator, says he’s willing to shoulder high gas costs if that means doing more work and helping NFTs become more mainstream. He works with toy companies through the creative agency he founded, MediaLuv. He said he had had conversations with clients interested in experimenting with NFTs.

“I think that’s the way trade in all goods and services will work in the future,” says Maloney. “It’s almost too good to be true.”