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First Bitcoin, and now the emergence of NFT's. This article is here to help explain what they are, how they work, and how does this affect the art world.
What are NFT's?
This is often the first question and most important one to actually understand how these pieces of art work. So exactly, what are NFT's? Well to begin, NFT stands for Non-Fungible Token. The easiest and best way to understand this is looking at them like concert tickets.
Concert tickets are non-fungible due to the fact that each one has different characteristics that make them unique. Even if they are the same price ticket, it is going to have a different seat assigned to it and may be in a different section. This is what non-fungible means. Fungibility refers to goods or assets that are all the same and can be swapped interchangeably. Such as a dollar bill; a dollar can be swapped with a dollar because they are worth the same amount and are not unique from one another. This is not the case with NFT's.
How Do NFT's Work?
This is the next step to understanding NFT's; how are they sold, how are they purchased, what can you do with them? To start let's begin with how are they purchased? This is the most complicated part of the process because it is a new experience and a brand new way of buying things. You will have to start by looking on websites that currently sell NFT's such as crypto.com and rarible.com.
I find that crypto.com is the easiest to use because you can use American Dollars to purchase the NFT's. Otherwise you must purchase virtual currency called Ether with real money. This will allow you to set up a crypto wallet, where you can store this virtual currency and use it.
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The question that is asked most often next is well how do I sell them and keep my NFT secure? NFT's are sold on those websites mentioned above and countless others. You receive a certificate of authentication, just like regular artwork and sports memorabilia. You can also track your NFT, and when it is re-sold, how much it sold for, and get a royalty on that NFT every time it is resold.
Now that your NFT is yours, what can you do with that NFT? There are many things one can use their NFT for. The simplest way to use them is to put it up for auction again, this time with your royalty making the money for you. You can also use your NFT to purchase other NFT's. This is entirely dependent on what NFT you have and the value associated with it. You can also display them online via virtual galleries where people are displaying vast collections of NFT's. The most complicated way to use your NFT is to buy virtual real estate in a world called Decentraland. For more information on this virtual real estate world, visit their website at https://dao.decentraland.org/en/.
However this is a very new website and must urge you to use the maximum amount of precaution before doing any of these things. Do your research and know what you are investing in before putting your finances at risk.
How are They Affecting the Art World?
Some people may think that NFT's are going to ruin the art world, and run it out of business; however, auctions are beginning to do something interesting. They are auctioning off famous pieces of art along with NFT's in live auctions. This allows for people involved in the art world to get involved with NFT's as well. A famous Picasso piece was sold at an all time high, then after it was sold an NFT was also sold for close to the same price as the Picasso piece. As of right now NFT's look to be adding to the art world, and not taking anything away from it like many initially thought would happen. Of course this can change in an instant, and it could be the exact opposite tomorrow. For now NFT's are here to stay, and it is good to at least become familiar with what they are and how they work.
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