NFTs, or non-fungible tokens, are getting a lot of attention from artists. But what exactly are they and what are the ups and downs for artists and buyers?
NFTs are essentially digital assets that cannot be replicated or replicated. They exist on a blockchain system – a space people typically associate with cryptocurrency. But artists are now working with the concept to create physical pieces that accompany these assets, creating an investment that is also a work of art.
Harvard Business School professor Marco DiMaggio developed the business school’s first-ever fintech course. He suggests considering NFTs as collectibles for the digital generation.
“There’s so much excitement too because there are a lot of artists who want to issue NFTs,” he said.
Among these artists is the famous British artist Damien Hirst, who launched “The Currency”, an NFT collection of 10,000 unique coins. Buyers have six months to choose whether they want the digital NFT or the physical coin. The other gets burned.
“So the NFT records, who owns what. And so every time you go to sell, the NFT is going to record on the blockchain,” DiMaggio explained.
Think of the blockchain as a digital database ledger that records transactions verifiably and permanently.
You’ve probably heard of blockchain in the context of cryptocurrencies like Bitcoin. But did you know that collectors are now dumping hundreds of thousands of dollars on something called crypto art that also lives on a blockchain? NBCLX storyteller Eric Rodriguez dives deep into the world of NFTs, blockchain, and crypto art.
“You could say that for every additional secondary market transaction of that particular work, some part of it will have to go back to the artist,” he added. “It’s really about collecting information. And so, you know, the story of the artwork. And so, you know for sure that you’re not buying a counterfeit or someone who’s stolen the artwork.”
This ability to track sales over time is attractive to new artists hoping to succeed.
“This one is Psychedelic Bloom Blossoms….. it’s like a trippy type animation video,” artist M. Flo Sunday explained.
Sunday said selling NFT versions of his art gives him direct access to clients without having to pay a commission to the gallery. If he ever becomes famous, he may continue to reap resale value royalties.
“It kind of gave the artists more of an edge on what they might like to define by setting their terms.”
But buying NFTs with cryptocurrency is not without risk.
“In the primary market, when art is involved, NFT prices are extremely high. it would be extremely difficult,” DiMaggio said.
Still, real estate brokers like Jorge Sariego and Noah Kollar are interested in selling NFTs at work. At Boston Realty Group, you can purchase both physical artwork and this one-of-a-kind digital version.
“The long-term goal is basically generational wealth,” Sariego said.
DiMaggio said you should expect more regulation.
“You need regulation because there are a lot of people who are on the sidelines watching in this space, but they feel like they’re in the gray area and it’s not really clear what is allowed, which is not, or they are afraid of scammers and fraudsters. And so providing regulation will also provide a stamp of approval,” he said.
DiMaggio suggested a few websites to learn about the basics of crypto, blockchain, and NFTs: coinbase.com/learn and academy.binance.com/en/start-here.