What is an NFT?
The digitization of the art market has popularized the purchase of fine art images. Since their arrival on the front of the international artistic scene, NFTs (Non-Fungible Token) are debated, some praise the advantages while others criticize this technology. The purchase of an art photo in the form of NFT is now possible. In this article, we unpack this new way of producing, presenting and collecting art.
What is an NFT?
An NFT, or "non-fungible token", gives a digital identity to the work of art to which it is attached. Independent, it does not need a blockchain network to exist and can be kept on a computer or in a database. NFTs are issued by issuers who each offer their own tokens, with their own characteristics. This category of blockchain tokens has no value on its own, and cannot be traded on exchanges (like Binance, Bittrex or Coinbase). To be able to be sold and bought, an NFT must be represented by a recognized cryptocurrency, most high-value NFTs are part of the Ethereum blockchain. That's it for the technical part!
For artists, NFTs allow them to become known, and to collect income. An NFT can represent a drawing by a famous artist, a clip like the series developed by the artist Grimes, a short video like that of Lebron James purchased for $99,999, a GIF of a cat or a illustration of a penguin with a sombrero. As you will have understood, an NFT is not limited in format, as long as it has a digital fingerprint. NFTs today bring together communities of online fans who discuss their acquisitions via forums on Discord or Twitter.
NFTs secure the art image
NFTs allow artists or collectors to set up a transaction around an art image in real time and without an intermediary. With the arrival of cryptocurrencies, we are witnessing a convergence between the world of art and that of digital financial mechanisms, in favor of the protection of intellectual property.
Guarantors of authenticity, NFTs are both digital assets and certificates that ensure ownership of a work, for example when buying an art photo. The idea behind the adoption of the blockchain is to provide better tracking of the history of a work to the various market players. Each change of hand is recorded in the blockchain, which makes NFTs harder to resell in the event of theft than a master painting. The blockchain offers increased traceability, essential today in the purchase of speculative art.
How does it work for the collector? The purchase of an art photo in NFT format is made in exchange for bitcoins. In fact, cryptocurrency digitizes paperwork and offers better traceability of its history. Tokens can also be transferred to a third party or serve as a payment pledge by being hosted by a digital wallet.
What happens in the case of a resale? The value of a virtual art image varies depending on the market and the price of bitcoin. A specific algorithm determines the price of the work by taking into account elements such as the rarity of the object, its age, its artistic value and the history of the sale price.
The ecological impact of NFTsNFTs and cryptocurrency share the same environmental issues, because both are power-intensive. Their carbon emissions rise in 3 main phases:
When creating an NFT, using powerful software, on average more than 180 kg of carbon is generated. These emissions are ten times greater than those of a classic Ethereum transaction.
When buying it made in cryptocurrency. According to a study by the University of Cambridge, bitcoin mining consumes 121.36 terawatt hours, consumption higher than that of Facebook, Google, Apple Microsoft combined over one year. According to the latest news, only 39% of the energy consumed by bitcoins comes from renewable energy sources.
During storage in energy-intensive databases.
NFTs have certainly redefined the perception of a work of art, both among artists and collectors. This technology translates a fundamental revolution for the art market. And you, are you thinking about buying an art photo transformed into NFT?