The digital and cryptocurrency world has seen an explosion of non-fungible tokens (NFTs) onto the market. These tokens are generally traded and supported on the Ethereum blockchain.
A non-fungible token is used to represent ownership of unique items and can only have one official owner at a time. The record of ownership cannot be modified, nor can a new NFT be copy/pasted into existence. Items that can be tokenised range from art and collectibles to real estate. There is an excitement surrounding NFTs, which is the ability to sell the digital items using technology and creating scarcity by limiting or having zero replicas. Each Non-Fungible Token effectively has its own barcode and cannot be copied.
The market for non-fungible tokens has reached new highs, with total trading volumes for the first six months of 2021 reaching $2.5 billion, compared to 2020 where the total trading volume was $125 million. In March of this year Christies sold a digital image for $69.3 million while Sotheby’s sold a CryptoPunk image for $11.8 million. Even the world’s largest auction houses are jumping on the bandwagon. Visa have even purchased a NFT for $150,000.
Funds are now being created to invest in digital art. Artcels, an online art investment platform, created the XXI Fund – designed to invest in digital art through Non-Fungible Tokens. Currently a Mayfair London art gallery is exhibiting works of Fabio Vale, an Italian Sculptor along with other artists such as Yoshitomo Nara and Nina Abney.
These artists’ work is now digitised and Artcel offered 320 shares in the fund at £1,000 per share represented by a NFT. This is proving a major attraction to millennials, especially those found in London, China, America and Japan. They believe in the fundamentals of the blockchain, e.g., cannot be destroyed, faked or lost.
During the Pandemic the interest shown in NFT’s and cryptocurrencies exploded. The younger generation now have an “in” to the art market, where before art markets, auctions and exhibitions were the playground of yesteryear investors
NFT’s may well represent the future of art sales. Art NFT’s represent not only digital art with an underlying physical piece, but also represent art that has been digitally created. Instead of a picture hanging on the wall, there will be a screen depicting the digital art owned by the householder or museum.
And guess what? This art cannot be stolen by burglars or destroyed in fires. The gains saved on insurance premiums should be astronomical. Experts have estimated that within the next decade half the world’s artists and their artwork will be digitally recorded as an NFT.