If you haven’t heard about NFTs, then maybe you should check your internet connection because it has become one of the top buzzwords in the last 6 months.
In 2021, NFTs went beyond the crypto market, and a lot of entrepreneurs, politicians, artists, and musicians started showing active interest in this technology. For example, Grimes sold over $6 million worth of digital art as NFTs, Nyan Cat meme author sold his creation for 300 ETH, Twitter CEO Jack Dorsey sold his first tweet as NFT as well. And all this is only a small part of the recent major events in the NFT world.
The NFT hype exploded after the Beeple’s artwork sale for $69 million at Christie’s auction. Many lots on NFT platforms from both famous personalities and novice authors were sold for tens of thousands of dollars, or even several million. Some popular crypto artworks, such as CryptoPunks, were sold for 90-400 ETH, and the rarest — for 4200 ETH that at that time was equivalent to $7.5 million.
But in the summer of 2021, the hype around NFT subsided, causing questions about the longevity of this initiative. But still, a lot of people and companies think that it’s only the beginning and NFTs can revolutionize the digital art industry. Here’s how digital artists and designers can take advantage of NFT.
NFT stands for Non-Fungible Token.
If it doesn’t make it any clearer, then first you need to figure out what “non-fungible” is. Let’s say you have a $100 bill, it can be exchanged for another $100 bill or ten $10 bills, but the value remains the same. This means that the $100 bill is fungible. Now let’s imagine a $100 bill autographed by painter Jackson Pollock. The autograph makes the bill unique and more difficult to determine its value as it no longer costs the usual ten $10 bills. This makes this unique bill non-fungible. Its value may increase or decrease in the future, depending on the circumstances.
The “token” part here talks about NFT’s crypto nature. NFT allows storing a digital file (JPEG, GIF, or MP4) on the blockchain. Information about the owner, author, and the file itself is recorded on a smart contract that comes with it. It means NFT only exists in digital form.
The features of non-fungible tokens are quite close to the art world and it is one of the reasons why it has become so popular among artists. For example, there are a lot of copies of the Mona Lisa but everyone knows that the original is exhibited in the Louvre. The same applies to NFT. There may be many copies of a particular digital file all over the Internet, but everyone will know that the original from the author and information about its owner are stored on a specific blockchain, making it valuable.
Why Should Designers Care About NFT?
One of the biggest challenges for digital artists and designers is the identity of their works. Digital files can be easily copied, modified, and altered, making it difficult to identify the original. In turn, this reduces the value of this art type for potential buyers.
NFT, on the other hand, allows highlighting the original from a million copies and consolidating information about the author and owner of a piece of crypto art. This not only increases the value of the artwork but also allows it to be sold, rented, and displayed in a digital space almost on a par with traditional fine art. It means digital artwork can turn into a collectible. And it leads to the next important aspect.
NFT can be used as a way to monetize digital art. There is no need to chase clients for payment, no need to prepare files for printing or publication, no need to wait for the client’s feedback or edit your work to suit somebody’s wishes. Instead, designers can simply sell their artwork to anyone as NFT. Thus, NFT makes the process of creativity rewarding easier and more accessible.
Besides, the author can earn passive income from an already sold NFT. When creating an NFT, you can put a condition in a smart contract that, for example, 5-10% of all future NFT resales will be credited to the author. NFT is a speculative asset like fine art, so it is primarily bought either as a store of value or for later resale. Therefore, the opportunity to get a kind of royalty can also attract digital artists.
Since NFT is bought for cryptocurrency and stored on the blockchain, NFT value also depends on the crypto prices.
How to Create NFT: Where to Buy and Sell Them
Most NFTs are issued in the Ethereum network using several major standards. Standardization of the NFT guarantees a higher level of interoperability, simplifying their transfer process between users.
So, the first thing designers need to create their own NFT is a crypto wallet. This is going to store ETH cryptocurrency. If you don’t have any crypto, then you can use crypto exchanges like CEX.IO to buy ETH using fiat currencies or other cryptocurrencies.
Then you need to connect your crypto wallet to one of the NFT marketplaces. At these websites, you can upload your digital file, turn it into NFT, and put it up for sale. The NFT creation implies the smart contract deployment in the Ethereum network that can be paid using ETH in the wallet. Although most authors turn a single piece of crypto art into NFT, no one bothers to create NFT from a collection of artworks. The NFT price may also depend on this.
The most popular NFT marketplaces are OpenSea, Rarible, Mintable, SuperRare, and Nifty Gateway. However, some traditional platforms also permit the sale of NFTs such as eBay.
What are the Shortcomings of Using NFT for Designers?
One of the most controversial issues surrounding NFT is its impact on the environment. Since Ethereum is the most popular network for creating NFTs, most of these claims are addressed precisely to the Proof-of-Work algorithm. Proof-of-Work means using mining for network maintenance and it requires a fairly large amount of computing power, meaning a huge electricity consumption.
However, this narrative against NFT most likely will be abandoned soon, as the Ethereum network is in the process of switching to the Proof-of-Stake algorithm. This algorithm does not require so much electricity consumption and is more environmentally friendly. Besides, NFTs can also be minted in networks that do not use mining in their work.
Another problem is the lack of legal recognition of NFT as the original digital artwork. The NFT industry is at an early stage of development, so this type of art hasn’t received worldwide recognition yet, making it less immune to misconduct. Quite often, digital artists face scammers who use their work to create NFTs and sell them on behalf of the author. Without relevant legal protection for authors, it is unlikely that designers will soon be able to get rid of such fraudulent actions.
Even though the NFT industry is nascent, it has already made a significant impact on the digital art industry. The longevity and reliability of using NFT for digital art are still in question but this technology has a large potential that should not be discounted. More and more companies and creators are joining the NFT world and this should help the industry reach a new level. As the NFT industry matures and is recognized globally, many designers will be able to get a great option to support their creativity.