Due to the past boom in non-fungible tokens (NFT), the crypto and art communities have worked closely together – perhaps for the first time in history. There is a lot of skepticism and misunderstanding in both industries. What is expected next when we get out of the NFT bubble? This deep dive describes a long-term vision of NFT and art market development that could address both worlds.
Stereotypically, crypto people discuss deals on Twitter and Discord, communicate via memes or abbreviations, and challenge old-school models with agonistic antipathy (Okay, Boomers!). In contrast, the so-called “Art People” are sometimes conservative, stick to their roots and their history, meet for a late lunch in the Ladurée and discuss deals in an Art Basel VIP lounge during the private advance sales. The respective cultures of these communities are on the other side of the spectrum. Because of this, some of the narratives about blockchain-enabled art (you can call it NFTs) are just wrong.
Connected: NFT Art Galleries: Future of Digital Artwork or Another Crypto Fad?
The “eliminating intermediaries” paradigm does not work for art
Kryptonarratives have always emphasized the goal of eliminating all intermediaries and building a more transparent, simpler and optimized communication between buyers and sellers. In the art industry, however, these intermediaries play an important role – they explore the space, reveal the artists, and continue to build their profile and value.
It’s an inevitable and important part of the art world that has proven itself in crypto when major traditional auction houses like Christie’s and Sotheby’s gave the power of their brand names to blow up sales of crypto art. Even if the $ 69 million sale between Beeple and collector “MetaKovan” reminds us of the ICO pump-and-dump schemes, it is undeniable that the involvement of the respectable auction house took precedence. This sale will remain a turning point for the blockchain-enabled art market as it has caught the attention of traditional artists and gallery owners – all now ready to step into the space. Sotheby’s quickly followed its rival and got into the NFT game.
Art mediators do creative work that cannot be automated and replaced by a smart contract. Well-known art connoisseurs, dealers and gallery owners contribute in-depth knowledge and create taste and value in art. Their curation is indeed something that the chaotic crypto art world is currently lacking. These are intermediaries that NFT art should not eradicate.
Connected: Art rethought: NFTs are changing the collector’s market
“NFTs are a collective sham based on air” – executives in the arts industry who overlook the main idea
The goal of the art industry has always been to take a thoughtful approach, offering in-depth knowledge and in-depth criticism in order to demonstrate excellent visual experiences, ideas, or feelings when interacting with a work of art. When analyzing crypto-art, critics focus on the meaning of the piece and react to the superficial and sometimes vulgar nature of crypto-art. Therefore, they miss the value proposition of blockchain technology, which has already proven itself in many other industries. You are overlooking the main idea and misjudging some of the crypto art projects that are fundamental to the community. (Let’s face it: some of us also once thought CryptoPunks were overpriced before jumping down the rabbit hole.)
Education and mutual respect will lead to new relationships and use cases. Below I provide an overview of the trends that are already emerging and show how NFTs can change the art industry.
Modern multimedia and generative art
The printing industry developed in the 19th century as artists began using the latest technology of printing editions on metal plates to monetize their work. Since the development of photography, video, and digital art formats, the use of technology has continued to accelerate. Conversations between art and technology have always been around, and NFTs are just further evidence of the ongoing trend.
Blockchain technology offers artists a medium that opens up a new creative landscape for them – especially through direct communication with their audience. Generative art is another example: projects like Eulerbeats and ArtBlocks give modern multimedia art a whole new format.
Museum in the Metaverse
Should new, digital art hang on the walls of museums? What is a suitable representation for this? Perhaps the virtual worlds and metaverses are exactly the right place to display multimedia art. Digital museums are developing – accessible to everyone and from anywhere and presenting digital art in its original form.
Some critics argue that digital art doesn’t make the feel of an object, but how many times a day do they smile at an emoji they get on their messages? NFTs provide a way to build a verifiable relationship – a unique experience for both the artist and the collector. Virtual experiences are different from real experiences, but they are undeniably powerful.
Connected: Digital becomes physical: Top NFT galleries will be visited in person in 2021
NFTs for provenance
After a work of art is created, it then goes through the validation stages. Who is talking about it? Who collects it? Where is it exhibited? Provenance is a crucial aspect of the art industry; It’s complex storytelling that defines the value of the artwork.
Blockchain enables this history to be reliably tracked through the implementation of certificates of authenticity and ownership – smart contracts that are created when NFTs are issued, sold, or resold. This was made possible thanks to the fundamental quality of the blockchain network – the immutability of the transaction.
Consensus in the art industry
The crypto ecosystem went one step further and developed new community models that allow players to interact online and validate decisions and ideas together. This is known as “consensus”. All of blockchain technology has been built on it, and communities have adopted this logic and rule system to structure themselves. These models find their expression in governance tokens and in decentralized autonomous organizations or DAOs that allow validators to receive rewards for significant contribution recognized by other community members.
Once the art community gains DAO knowledge, the power of trending will go back to the curators, who add value to the art system by sharing their experiences and visions.
“Phygital” art: building bridges
Crypto spawned a new financial system that is now being adopted by leading financial institutions. The reason for this is simple: it just works more efficiently. Traditional financial systems will also start adding NFT-based assets to their portfolio management. This will push governments to enact regulations clarifying how NFT assets are registered and used. The legal framework will create the link between physical art and digital NFTs, creating a “phygital” asset.
Phygital Art closes the gap between physical and digital art, combines the best of both worlds and enables new ownership and financing models in the art world.
Connected: Hybrid smart contracts will replace the legal system
Property rethought and democratized
The immediate benefits that wealth owners will derive from the blockchain ecosystem are transparency and the ability to track and move their investments on the blockchain quickly. Another impressive development in decentralized funding (DeFi), however, is the factioning of NFTs, which can democratize art investments and revolutionize the financial models of private museums and galleries.
Some modern art museums cannot afford to hold permanent collections, while other traditional galleries are forced to sell art to make a living. In emerging countries where art is sold in galleries, works are often taken outside the country despite monument protection laws. Distributed ownership enables museums to attract funds around the world and give more retail investors access to this asset class. If museums leave ownership of a fraction to themselves, they can preserve the property while getting funding from the sale.
Some works of art are just too expensive, even for an institution, and distributed ownership can make this kind of sale easier.
Alternative scholarship model for museums and artists
Art is a capital-hungry industry that has suffered badly from the COVID-19 pandemic. It requires support from governments and large institutions – but this support is not always provided in certain countries, creating unequal conditions for actors in the arts industry. However, NFTs have demonstrated the ability to divert capital based on community values and uncover new opportunities for charities. Vitalik Buterin underscored the charity aspect of NFTs when he recently made a large personal donation to an Indian COVID-19 relief fund (perhaps the largest in history). While institutions invest too late due to their structural complexity, NFTs offer the community the opportunity to finance themselves.
While the crypto community on the surface is fueled by financial incentives (like all of us), the core of the community lives in a paradigm of a new ethic where people are willing to invest in sustainability and culture. The art and artist support foundations and charity programs will emerge because it is simply a natural step for the crypto industry to support community-driven initiatives. The art world is becoming more global and effective thanks to the knowledge and investments of the crypto industry. With the support of crypto investors, the actors of the art market will be given some freedom to quickly invest in capital-intensive directions that they deem important.
Museum NFT E-Commerce
An exciting example of additional revenue for museums is an NFT recently sold by the Uffizi Gallery. The gallery made a digital copy of Michelangelo’s “Doni Tondo” in a single edition signed by museum director Eike Schmidt for $ 170,000 and plans to publish more prints from the collection.
Looking at the current trend in how brands see NFTs as a tool, we can predict the emergence of some kind of museum e-commerce industry in the future. Rare, digital collectibles made by a limited edition museum as NFTs could also be exchanged or redeemed for an actual physical print.
Working together on the art industry of the future
The amalgamation of the art and blockchain communities is a win-win situation. Art curators, museums and creators will do what they do best: bring beauty to the blockchain world, enrich content and narratives, and bring high quality art into the space.
Blockchain communities are looking beyond the hype for NFT art to offer effectiveness, transparency, and new ownership, funding, and grant models. Hence, individuals who actively focus on taking advantage of both ecosystems, rather than criticizing each other for their differences, will shape the future of the NFT and art industries.
This article does not provide investment advice or recommendations. Every step of investing and trading involves risk, and readers should do their own research when making a decision.
The views, thoughts, and opinions expressed herein are those of the author alone and do not necessarily reflect the views and opinions of Cointelegraph.
Sophia Steiner graduated from Lomonosov University in Moscow in journalism and began her career as an art critic for the film industry and urban architecture. She founded her agency Schteiner PR with a focus on luxury brands in the fields of art, French crafts, design and interiors. In 2018 she joined an international communications agency and worked with blockchain startups during the crypto bull market.