I went down an NFT rabbit hole this past week – learning as much as I could about the space.
If you’ve never heard of NFTs or only have a vague sense of what they are, no worries, you are in good company with probably 95% of the population. Here’s a good primer if you’re interested: https://ethereum.org/en/nft/
At first I (Peter) was skeptical of NFT art. Why would people spend thousands or millions of dollars on a jpeg file?
But as I’ve learned more about the space, my skepticism has transformed into bullishness. I think that NFT art is here to stay.
Here are a few key reasons why I think this:
- Status and Prestige. People live a good chunk of their lives online, and owning culturally relevant digital assets connotes status and prestige. If you have a picasso on your wall, then you can signal something about yourself to the handful of peers who come to your house each year. But if your Twitter profile pic is a CryptoPunk you can send that signal to thousands or millions of peers across the internet (and in the future, throughout the metaverse). Art has always been a story. The medium has evolved over time, but it’s the story that matters most.
- Creator Friendly. Digital artists have existed for years, with no real way to make a living. Now that has completely changed. Finally creators can sell their digital art (or their digital photos, or really anything) and instead of just attaching a jpeg to an email to the buyer, they can actually transmit verifiable proof of ownership to buyer. This has opened up a whole new world, and many creators can finally make a great living at their craft.
- Programmable. One thing many beginners misunderstand about NFTs is that they are built on top of so-called “smart contracts” that live on the blockchain. You can program the contract to do whatever you want. Here’s one common example: A creator could build in clause in the contract that entitles them to a 5% royalty on all secondary market sales, in perpituity. So in addition to making money on their initial sale, they also get a cut everytime their piece is sold between others. This is just one example. There are many others.
- Community. NFT projects are more than just digital files that people buy. They are entire communities built around these files. Many of these communities have their own community space (usually on Discord), and they overlap with real life. A good example is the recent World of Women Project. Owners of WoW NFTs all hang out and talk on Discord (you can lurk and check it out here if you want), they are entitled to commercial royalties, there are drawings for free IRL prints, and there are clubs based around the qualities of the WoW piece you own.
- Investment and Speculation. Art has always served as a container for investment and speculation. That is definitely the case so far with NFTs as certain projects go from nothing to worth hundreds of thousands or millions of dollars in a matter of weeks or months. Humans have always have an appetite for investment and speculation. Over time, many projects will become worthless, but some will become blue chip collections that will become incredible stores of value, which will lead to NFTs becoming an asset class alongside traditional art, crypto, and all the usual stuff (equities, real estate, debt, etc)
- Fun, Accessible, and Non-Snobby. Have you ever been to an art gallery? Most of them have certain vibes: Formal, serious, snobbish, quiet. In short: They are spaces that are not welcoming or appealing to everyone. NFTs and the spaces they inhabit turn that on its head. The culture is fun, fast, accessible, funny, etc. Moreover, there are many different cultures – so people can find projects and communities that resonate most closely with their sensibilities. For some that will be the contemplative generative art on Art Blocks and for some that will be the memeified playland of Cryptokitties.
p.s. All of the pieces in the image above sold over this past weekend. Clockwise from top right: Woman #2471 from the World of Women collection, sold for 12 ETH ($37,436.04) // Fragments of an Infinite Field by Monica Rizzolli #900, sold for 22.5 Ether ($70,137.45) // Mutant Ape Yacht Club #2199, sold for 4.75 Ether ($14,813.64) // Gravity 16 #693 by Jimmy Herdberg, sold for 0.348 Ether ($1,086.81)