NFT art, transforming the physical art sector through fractionalization and tokenization | SOPRG

NFTs must be able to solve broad real-life problems to be massively adopted. They are already doing this by being a certificate of ownership attached to digital artwork, enabling digital artists to make a solid living if they produce valuable work. With NFT art, you are solving two issues: digital artists can claim authorship of their original digital artwork (making a living off it), and collectors can support NFT artists. Still, this is just one side of the potential NFTs have. These issues were, after all, brought about by the digitization of the economy, culture, and interactions. What if NFTs could solve a physical world problem? For example, to allow individuals that don’t have as much money as your typical collector to invest in the art space.

Fractional NFTs, or F-NFTs, are what we are talking about here. Through smart-contract technology, programmers can divide an NFT into several other NFTs. In short, you can program a token to be made up of several other tokens. Now, you can own a percentage of an NFT artwork instead of buying the whole thing.

Now, let’s combine this capability with real-life paintings being represented by NFTs. The tokenization of real-life things and events, and jointly owning some of these things or event passes will most likely be one of the game changers for NFTs.

Think of it: viewing art on a screen is not revolutionary for art. What is revolutionary is that you can now own art digitally. This feat allows businesses such as NFT art galleries to emerge. Still, the sector is mostly dominated by high-net-worth individuals. An NFT art gallery typically has to look for individuals looking to amass large collections. With fractional NFTs, this doesn’t have to be the case. Imagine how much bigger the audience of an NFT art gallery might be if you allow people, who generally don’t participate in the art collection space, to start jointly owning NFTs that represent a physical work of art.

These two things put together promise to forever the art space. Something that artists, curators, and collectors might want to examine. Given how quickly these changes happen, and the increasing rate of innovation in technology, maybe we will not be able to push back even if we want to. The NFT art gallery sector might want to take a few notes to take it all in.

Higher liquidity

A given work of art is unique. This means there is only one artwork, and the market is highly illiquid. However, if you fractionalize the art piece through NFTs, you have an increased supply of —let’s say— units of this artwork. And so even when there is only one piece of art, in an abstract sense there is a larger supply due to the fractions of the NFT. People can buy these fractional NFTs at a lower price.

Having a high-liquidity art market that retains the non-fungibility aspect of artworks could signify a paradigm shift in the arts. NFT art galleries better get acquainted with F-NFTs, educate their user base about them, and see if it leads to a new type of user. One that may not have as much money available, but is part of a more massive audience.

Art commoditized

Once you have higher liquidity of art, you can start thinking of a commodity in the art world. The fractional NFT is indeed a form of a standardized pricing mechanism for something that, for the longest of times, was unique and non-comparable with other assets. Whether those assets are artworks as well or otherwise. This is something that the art sector will have to contend with. Do people in arts —artists, curators, etc.— want a space that functions somewhat similarly to a commodities market?

Because art is an expression of beauty, perhaps it is a good idea to resist such forces that commoditize art. An NFT art gallery should fight an over-commoditization of the sector because art is always concerned with creating beautiful aesthetics and intellectually appealing pieces.

When it comes to F-NFTs, there should be abundant care as to what the consequences are, and this is one example.

Price discovery

As more people are involved in trading and at a lower cost, it will be easier to find the price of the NFT art. You could look at the average trading value and multiply by the number of F-NFTs to get a reference of the value of the NFT art in question.

Once again, NFT art galleries will have to answer whether this is good for art or not. If they want concealed prices that users discover via a bidding process, or if they go for transparency.

When you combine these three consequences of fractional NFTs with the tokenization of physical art, you get, quite possibly, a completely different art experience. For now, if you want an NFT art experience that also encompasses the physical and the traditional, you should head check out SOPRG’s offerings of artists and artwork.

You can also check out the Somnium Metaverse art gallery that SOPRG has set up so that you can have a complete NFT art gallery experience.

Painting by Mrs. Slunéčková – you can buy the NFTs via our shop.