table of contents
1. Introduction
2. How NFTs have changed the value of "digital art"
3. New possibilities for artists
4. What attracts collectors and investors?
5. Trends and Issues in the NFT Art Market
6. The Future of Contemporary Art and NFTs
1. Introduction
"Non-fungible tokens (NFTs)" are a keyword that has created a huge stir in the contemporary art world in recent years. Until now, digital art has been difficult to recognize as a unique and valuable work of art because it is easy to copy and modify. However, with the emergence of NFT technology, digital art is gradually transforming into an asset with ownership and scarcity. In this article, we will explore the possibilities that NFTs bring to contemporary art, as well as market trends and noteworthy topics.
2. How NFTs have changed the value of "digital art"
NFT is a system that uses blockchain technology to give digital data a "unique certificate." This technology gives digital artworks, which previously could be reproduced infinitely, the scarcity of which is similar to that of physical paintings or sculptures.
This has opened up a way for artists to monetize their works while still presenting them in digital format. For example, the work below is "Everydays: The First 5000 Days" by Beeple, a renowned American digital artist. This work was sold as an NFT for approximately 6.9 billion yen, attracting attention from around the world. This case is remembered as a symbolic event in which NFTs are not just a technological innovation, but have brought fundamental changes to the art market.
Image taken from https://www.artpedia.asia/beeple/
3. New possibilities for artists
NFTs offer a huge opportunity for digital artists and emerging artists who have not been recognized in the traditional art market. While sales have traditionally been conducted through galleries and auction houses, the emergence of NFT marketplaces (such as OpenSea, Foundation, and Rarible) has enabled artists to present and sell their works directly, eliminating the need for middlemen and allowing artists to retain a large portion of the revenue.
Furthermore, NFTs have a feature called a "smart contract" that automatically returns royalty income to artists when their work is resold, allowing artists to continue to benefit from the growing value of their work.
4. What attracts collectors and investors?
NFT art is gaining attention among collectors and investors for the following reasons:
◯ Ensuring scarcity
The number of NFTs issued is clearly controlled on the blockchain, ensuring that a particular piece is "one of a kind" or limited in number. This scarcity increases the piece's value and makes it attractive as an investment.
Transaction transparency: Due to the characteristics of blockchain, ownership and transaction history are made public, and the risk of fraud and counterfeiting is extremely low, providing peace of mind for collectors.
◯ Values unique to the digital age
An increasing number of people, particularly Gen Z and millennials, are placing importance on ownership and status in the digital space. The growing culture of showing off one's NFT collection on social media and the metaverse (virtual space) is also a factor supporting the popularity of NFT art.
5. Trends and Issues in the NFT Art Market
The NFT art market is experiencing rapid growth, but it has both positive and negative aspects. Below we summarize the market trends and challenges.
market trends
Rapid growth and maturity
The NFT market has expanded significantly since 2021. Marketplaces such as OpenSea and Foundation have many users and recorded astonishing transaction volumes, especially during the NFT bubble in 2021. However, after the bubble burst in 2022, trading volume decreased and the market temporarily stagnated. However, the market is now gradually maturing and building a stable foundation for the long term.
Increasing corporate participation Christie's and Sotheby's, the world's two largest traditional auction houses in the art industry, as well as IT companies, are actively entering the NFT market.
assignment
○Environmental issues
The blockchains used by many NFTs require massive computational processing to maintain the security of the network. For example, huge amounts of computing power are used to verify transactions and generate blocks. This consumes large amounts of energy, raising concerns about the environmental impact. Recently, Ethereum has been transitioning to Proof of Stake, a more eco-friendly blockchain, achieving significant energy savings. Many are migrating to eco-friendly blockchains such as Solana and Polygon, but many NFTs have yet to make the full transition.
High speculative nature
The NFT market is home to many investors who trade for speculative purposes rather than for the value of the art itself, and it is not uncommon for prices to rise and fall sharply. For this reason, guidelines and regulations are needed to build a sustainable market.
6. The Future of Contemporary Art and NFTs
NFTs are a revolutionary technology that has established digital art as an asset, offering new possibilities for contemporary art. NFT art is expected to continue to develop in the future.
However, the use of NFTs is still in its infancy, and it will take time to assess their true value. The key to the future will be to develop the value of art in a way that influences culture and society, rather than limiting it to mere "digital possession." Hopes are high for a future in which artists, collectors, and technologists work together to open up new possibilities for art.
7. Summary
NFTs have brought about major innovation in the contemporary art market by granting digital art "ownership" and "scarcity." While the market has grown rapidly and matured, it also faces challenges such as environmental impact and speculative nature. However, NFTs provide artists with a new avenue for monetization, while collectors and investors can enjoy transparency and value. This new digital form of expression will likely be the key to paving the way for the future of art and society.
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Written by: MIKIKO
FROM ARTIST Management staff. I write columns. I provide management support so that we can convey the appeal of artists.
Supervisor: Shoma Toida
CEO of BUSCA LLC. Head of FROM ARTIST. Started his career as a marketer, he worked for a business company and an advertising agency before going independent. He completed marketing-related programs at several graduate schools and business schools, including the University of California, Berkeley and London Business School. He also completed the MBA core curriculum at Macquarie University and studied the importance of art in education at the University of British Columbia.
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