For the last 30 years, we have undergone a digitization arc, and we’ve recently begone a tokenization arc that could last for the next 30 years or so. Kevin McCoy, the artist credited with creating the first NFT (Quantum, on the Namecoin blockchain), predicted this in NYC.NFT 2021. Before information technology, everything was analog, with all the inefficiencies and inconveniences. Everything was hand-written and had to be stored physically. Now that digitization is almost complete, business records and information are stored on servers or the cloud.
The tokenization of everything (or almost everything) digitized is just as significant. It means that almost everything is susceptible to becoming an asset, which has already changed the art scene and should continue to. NFTs (remember, Non-Fungible Tokens) are crucial to everything that is going to take place in the future, and art will have to take note.
Some of the things that most likely people will have to take into consideration in NFT art as we move forward with Web3 are storage, safekeeping, and management. Another thing that will be required is having correct appraisal mechanisms for taxation and insurance purposes. The ability to tokenize physical, old-fashioned art and transform it into an NFT should not be disregarded, as ephemeral types of art (like street art or installations) could benefit a lot from living inside the blockchain. Decentralization and trustlessness in the art market are fascinating propositions, given how for a long time third parties like curators, consultants, and scholars have been required for taste-making and guiding collectors to acquire artwork, something that at times leaves behind some very talented artists. Finally, we should look at the art forms that stand to gain from NFTs the most. This is how NFTs have affected art since McCoy first presented Quantum in 2014 and the things needed going forward.
Storage, safekeeping, and management
Thanks to blockchain technology, we now have immutable records and trustless transactions. That is all well and good, but the technical requirements for that —a distributed ledger with data that verifies every new transaction, cryptography, and a consensus mechanism— are such that they disallow storing the vast amounts of data that we are used to seeing on the Internet. What this means is that because the transaction of a given previous block data is on the next block, you need high computational power to validate the transaction and create another block. Add to this the cryptographic algorithm to secure the records, and you have a real challenge to store NFTs inside the blockchain (commonly known as “on-chain”). If you add too much data, the transaction times and fees would go through the roof.
This puts a lot of constraints on NFT artists, who have a lot to consider. Does their art have a backup? Is it on-chain? How secure is it? Renowned NFT artist Artnome has been thinking of this for a while and created a startup called ClubNFT that helps artists and collectors secure their wallets and art. The Interplanetary File System (IPFS) is another effort in this direction. It is an open-source protocol that stores all the important data of an NFT and generates a Content Address Identification (CID). This CID is stored on the blockchain and is used to call the NFT’s data.
Just like physical art needs a place to be stored securely and ensure its preservation, NFT art needs adequate storage and management. And so, the creative sector of the NFT art market (the production side) is likely to need technical assistance in alternative ways of storing NFT art. There’s also a need for innovation in the storage capacities of blockchains without compromising their security and trustless protocols.
Appraisal
The adequate valuation of NFT art will allow collectors to insure it, be able to donate it and keep an accounting record of it. This is very important because it can provide tax deductions for collectors that donate an NFT artwork. Also, it gives art institutions transparency, and they will know when they can afford to acquire artwork and when not. This is quite important as these organizations usually have public accountability.
It is already a difficult thing to value NFT art. After all, they are non-fungible. But with the right instruments and techniques in place, you could start gaining more and more trust among the institutions that need art to be appraised correctly.
Tokenization of physical art and offline experiences
Physical art might experience tokenization as well. It is one thing to keep the records and bookkeeping digital. But another thing is to tokenize the actual physical works of art. Through tokenization, people can part-own artworks, making art investment and collecting more accessible to people.
NFTs —thanks to the smart contract capabilities that they have— can carry a wide array of benefits, permissions, and other types of perks for the holder to use. Like in many cases in the tech industry, the technology is already available. It is the actual use cases and the business logic that have to develop. Right now, it seems to be a case of how product developers, UX/UI developers and designers, and marketing teams figure out a way to make these experiences (brand experiences, if you are talking about commercial enterprises) more commonplace. Because art has been the most common use case for NFTs, one can imagine that these experiences will first “explode” in the NFT art sector.
Decentralization and trustlessness
Perhaps one of the things that art will have to get used to about NFTs is the trustless and decentralized ethos of this technology and its proponents. Given how the digital age has reduced technological barriers for people to create media content, the art scene should embrace decentralization (less hoarding of data by platforms and more independence for users). Of course, there will always be a significant space for curation, guidance, and taste-making. Collectors will always want to be well-informed about the best-valued works of art, which artworks are likely to appreciate, or what aesthetics are trending.
But, having a space that is not as academic provides artists the freedom to experiment and create new aesthetics that do not conform to establishment tastes. And so, having decentralization can serve to challenge consistently the status quo.
Art forms enhanced by NFTs
Visual arts, particularly digital art, largely benefit from the NFT disruption. Now it is easier to own a piece of digital art, with all the enhancements that this art can produce (animations, GIFs, realistic textures), which explains the explosion of digital artists.
But it is not only tech-powered arts that will benefit from NFTs. Physical art can profit as well. Ephemeral art forms, such as performance or street art, will find a way to monetize and become collectible. These types of art could then be re-purposed for a metaverse “spinoff”.
NFT art is one of the most promising sides of Web3. Many projects continue to pop up, with many artists collaborating and looking for ways to create meaningful aesthetics that people can enjoy in innovative ways. One of the most common projects is an NFT art gallery because they can be so many different things. Some offer specific aesthetics or trends and offer curated experiences. SOPRG, an NFT art gallery in Czechia, offers its users NFT art created through traditional means. It offers the artists all the legal counsel and protection they might need and the technological capital to transform their artwork into an NFT with the highest fidelity. This a clear example that technology is not at odds with more analogical arts because art will still be art. Whether in a museum or on SOPRG’s metaverse gallery.
Painting by Mr. Houska – you can buy the NFTs via our shop.
