A couple of weeks ago I had the opportunity to talk about my experience and knowledge about NFTs in an event organized by Grls.it.
In that occasion me and Maryna Backova, CEO of Artsted.com, were asked questions about cryptos and crypto art, to which we tried to answer in a simple way, even knowing that the topic is complicated and everchanging.
In this article you will find answers to some of the most common and interesting questions we received from our public in the occasion of GrlsFest, considering not only the artists’ point of view but the collectors’ one as well. In the previous episodes on NFTs, I’ve tried to disentangle the main characteristics and relations of cryptos and the art system. To help everyone to be on the same page, I’ll refresh just the very basics before going on:
- Non fungible tokens are data stored in a digital ledger, the blockchain, and they are used in the context of digital art as a certificate of authenticity or authorship, for their ability to distinguish a copy (the one that becomes the original) from the infinite number of copies that exist on the internet of the same digital file, in our case, an image or digital artwork.
- With NFTs the value of digital art was re-establish thanks to the possibility of having scarcity and uniqueness for each work.
- The blockchain is a decentralized system that stores data chronologically and immutably. The term bockchain, which is Bitcoin’s register, also indicates the technology in general; some of the many blockchains existing are environmentally more friendly than others. None of them is 100% un- hackable, but as the popularity and use of this system grows, the more controlled it becomes, even though the fraud risk is high for inexperienced users.
Having clarified that, let’s do some Q&A!
What should I do to start investing in NFTs?
The thing to keep in mind when considering investing in NFTs is that NFTs are not simply cryptos, they are crypto art. There is a huge difference even in the real world between investing in finance and investing in art. If you desire to buy NFTs as an investment in art, the next fundamental element to understand is that despite it started in a wild and uncontrolled way, the art system is adapting to NFTs, and crypto art is adapting to the art system dynamics.
If you’re completely new to the art system, or the crypto world, it is advisable to rely on experts in the sector. Creating an NFT is one of the easiest things ever, you basically only need to pay for a gas fee (the actual production of NFTs produces carbon emissions, so you have to pay for it when you mint a token); but crypto art you can find on Opensea has a volatile value, determined mostly by Twitter trends and popularity of that artist in that precise moment, it is not a stable and secure investment.
If you want to invest in art, the right path is to be curious about the art itself, searching for platforms where NFTs are curated and selected based on their artistic value, and who can guide you into this new universe. This approach is confirmed by an interesting study about trends and dynamics of NFTs in the period 2019/2021, Quantifying NFT-driven networks in crypto art by Barabàsi Lab. The results of the study showed that crypto art dynamics resemble largely what happens in the traditional art world, where popularity and reputation play an important role and mediation is key.
I’ve heard that creating an NFTs is an easy way to make money, how does it really work?
Creating an NFT is easy as changing your Twitter profile picture, becoming a crypto artist is a different story.
To understand this point we need to clarify that there are different types of platforms where NFTs can be created and posted, some of them have a selection on what type of works they allow in, some others allow anyone to mint anything, like Opensea.
Opensea is one of the biggest platforms to sell and buy NFTs, but there is a reason why it’s called the wild west of cryptos. On one hand, Opensea allows anyone to mint their work, and if you’re lucky, you’ll find someone who wants to buy your image for 5$ or something. But this type of platforms is highly subject to hacking, and 80% of what you can find on Opensea is created with plagiarized works, fake collections, and spam.
As a person who loves art and works in the field, saying I would not recommend this to become famous is a euphemism. The path to become an artist is way more complex and way less subject to social media trends and hype.
In Crypto art platforms, the key elements for success are being the first adopters, having popularity on crypto-art platforms rather than on traditional social media, building strong and relevant relationship in the system, and the fact that the first sale determines the price range of all the others. In addition to that, even with the claim to be democratic, crypto art system still is ruled by the rich, and those who have good connections with buyers. This is not that different from what happens and has been happening in the traditional art world since contemporaneity.
What is the best way to understand if an NFT is worth the money?
The best way to understand if an NFT is worth the money is firstly asking yourself if you like it, as a work of art. In the end that is your money, and that digital file will be in your wallet. From a more financial point of view, for those who are not particularly knowledgeable in the sector, the best way to understand if art is valuable is to rely on someone who knows the system.
You can reach out to an advisor, look online what reliable sources are saying is trending, or use one of the many platforms that provide a curated selection of work. From Sotheby’s to smaller realities, like Artsted.com; look to those contexts that are art-system proofed and be curious.
NFTs are still something new, hot, and the art system is adapting to it. Sotheby’s hosting digital art forums in Saudi Arabia with experts in the sector, while in London galleries with NFTs spaces are becoming more and more popular. In Milan, a digital art museum is about to open, and we will probably see NFTs being protagonists of MiArt, the art fair in Milan, which is opening in a few weeks.
Understanding art has never been simple, and new technologies and innovation have made it even more complex, but this is the right space where you can discover about it!
This were the most discussed topics of our panel talk, but there is a lot more to be talked about. The art system is a complex entity and NFTs can be a tool to solve old issues or to emphasize the challenges when it comes to enter art investments. As Artsted.com, we will continue with our work of research to discover and master the dynamics of crypto art system, facilitating artists and collectors in this amazing journey that is collecting art.