The market capitalization of non-fungible tokens (NFTs) has multiplied ten times their value in two years, according to Statista. However, according to Blockchain, the largest data portal on NFTs in the world, a net profit of US$460 million is recorded during the second quarter of 2022, (US$2.3 billion).
The vast majority of NFTs are developed based on the standards of the Ethereum cryptocurrency, which is quite popular. Thanks to this, buying or selling them is very easy, since many virtual wallets that are compatible with Ethereum also allow you to buy and sell NFT art and other types of NFT. Of course, they are still works that can be copied, and what this type of token allows is to demonstrate that whoever owns it has the original work.
According to the graphic design area of the Barcelona School of Design, “the main advantage of NFT art is that it allows those who create the works to sell them directly, without having to resort to intermediaries or art galleries. In addition, the fact of selling them online allows them to reach a wider audience and they can receive a part of each transaction that is made with them, thanks to the record of movements that they have integrated”.
In addition to their easy commercialization, they are immutable and easily programmable, you only need to upload it to a platform, and through the ‘ blockchain’, the work of art will already be tokenized. However, according to “among the main drawbacks of NFT art is its volatility, since these works can experience large price fluctuations, and even lose practically all of their value at any given time, only to rise in price later.”
Although NFTs represent a new business opportunity for artists and designers, the advantages and disadvantages of this must be taken into account, because, although it seems a very attractive model, it is still an unstable and unexplored terrain.
Digital art monetization
NFTs allow digital artists to sell their works directly to buyers without intermediaries, making it easier for them to earn more money for their work. When a buyer acquires an NFT, he is buying ownership of the unique and unrepeatable digital work. That is, he is buying the token that represents ownership of the digital artwork.
Secondary Market Sales Royalty
Artists can also include terms in the NFT Advantages smart contract that allow them to receive a commission each time the work is sold on the secondary market. In this way, they can continue to earn money every time their work changes ownership. Blockchain technology allows these royalty terms to be executed automatically through the smart contract. When the work is sold on the secondary market, the smart contract automatically calculates the commission and sends the payment to the artist.
Exclusive Ownership of a Digital Artwork
NFTs ensure that the owner owns the original and authentic artwork, giving it unique and exclusive value. Blockchain technology is what guarantees this since each NFT is registered in a chain of blocks that contains unique and immutable information about the digital work of art that it represents. By not being easily duplicated by others, its value increases.
Building communities and fostering fan engagement
NFTs allow digital artists to directly interact with their audience and build online communities around their digital artwork, as each token can include interactive features and gamification elements that encourage fan engagement. This makes them more loyal and committed, allowing them to gain exclusive access to special events or content. Gamification elements and direct interaction with audiences can foster audience engagement and create an active and engaged online community around the artist’s digital artwork. NFT owners can share their experiences with other fans and promote digital artwork through social media and other online platforms.
Profitable Investment Potential: Because they are unique and limited in number, their value can increase significantly over time, meaning buyers can make a substantial profit if they sell at the right time.
Copyright protection: Although NFTs are kept in a public registry and can be copied, thanks to the blockchain it is easy to identify the original. This gives peace of mind to both the artist and the buyers as it reduces the risk of plagiarism.
Accessibility to a Wider Audience
NFTs allow digital artists to reach a global audience through online platforms, reducing geographic barriers and making it easier to distribute their digital artwork. Additionally, they allow digital artists to reach a broader audience by allowing fractional ownership of digital artwork. This means buyers can purchase a fraction of a digital artwork instead of having to purchase the entire work, lowering the cost of entry and increasing accessibility to a broader audience. These tokens can be used to reach new audiences that have no experience in their purchase, since they provide a feeling of security and trust, increasing demand and accessibility to them.
Since 2020, cryptocurrencies have represented a new way of capitalizing their savings for many people, where Bitcoin is the leading investment.
Individuals have decided to start investing in cryptocurrencies and large companies, even betting beyond expectations, managing to introduce this decentralized concept on the New York Stock Exchange.
Acronyms NFT and FT that move the crypto world
When we talk about non-fungible tokens (NFTs), we mean digital assets based on smart contracts, unique and impossible to duplicate.
Each NFT is unique, and there can be no other like it in the Blockchain environment; this feature makes them special; they cannot be changed or replaced.
All Bitcoins are the same, but NFTs have special and unique characteristics that set them apart to make the concept clearer. Therefore, they are not interchangeable.