WTF are NFTs?

NFT stands for a non-fungible token.  It is a unit of data that gets traded on the blockchain, where each NFT can represent a unique digital item.  Even if NFTs are made into an edition, each individual NFT is unique and can carry different trade values.  NFTs can represent digital files such as art, audio, video, and other forms of creative work.  Unlike reselling with physical art, artists get a portion of every resale due to the blockchain technology.  This is a great way for artists to continue to make money off of their work past the initial sale.  Like the physical art market, there's a substantial amount of money to be made with NFTs.  Beeple’s digital collage sold for $69 million.    

 

NFTs can take the form of art, music, and video in the form of JPGS, MP3s, videos, GIFs and more.  The value is largely set by the market and by demand and like the art market is hardly regulated.

 

Here is a list of sites that sell NFTs:

  • OpenSea

  • SuperRare

  • Nifty Gateway

  • Foundation

  • VIV3

  • BakerySwap

  • Axie Marketplace

  • Rarible

  • NFT ShowRoom

 

There is a mixture of platforms that artists have to apply to get work shown on and others that allow any creator to post work.  Nifty Gateway has worked with top artists such as DFace, Matt Gondek, Grimes and Halsey to create limited edition NFT drops.    

 

However, there are negatives about NFTs, in particular in relation to their impact on the climate.  NFTs use a monster amount of energy in their creation. So much so that many protesters are worried about the very real impact the craze could have on the environment. According to CryptoArt.wtf, a site set up to calculate the carbon footprint of NFTs, one piece called 'Coronavirus' consumed an incredible 192 kWh in its creation. That's equivalent to one European Union resident's entire energy consumption for two weeks.  A 'simple' GIF can equate to the same consumption. 

 

Another problem is that artists have had their work minted as NFTs and listed for sale without their permission.  Platforms that host stolen art only seem to moderate if the artist finds out and posts about it on social media. Because the NFT system doesn’t require people to actually own the copyright to something to mint it, it’s a market ripe for fraud. 

 

While it’s unclear whether the problem is widespread, many artists have started checking sites like OpenSea and Rarible to see if their work has been minted without their permission.  In addition, the same artists that are at the top of the physical art world are also the first ones to reap the benefits and money in the NFT world.  The hopes of many within the NFT community is that it will democratize the art world and allow for artists to have more autonomy and control over their work.

Since NFTs are so new it is hard to imagine how large their impact will be and if they will still retain their value.  One thing is sure, they are changing the art world and will now be a staple part of the conversation and how art is sold.