Gone are the days when you'd be lucky to have your artwork displayed on a wall somewhere. NFTs have changed the way artists are making money because now, anyone can showcase their creations on platforms like OpenSea, where they will find enthusiastic buyers from around the world who are willing to invest in them.
Non-fungible tokens are beginning to solve issues of product exclusivity and scarcity that previously made digital artwork hard to sell. Not only that, but blockchain transactions for NFTs have enabled a higher level of security for buyers and sellers in verifying authenticity. Lastly, artists are now more connected than ever to their supporters through the power of community which has become characteristic of Web3 culture.
Let's review how NFTs have changed the way artists are making money, and what implications they may have on the future of digital creation overall.
NFTs Address the Challenges of Selling Exclusive & Valuable Digital Artwork
Mature Web2 platforms, today, have done a great job at gatekeeping access to premium content; whether it's through paid subscriptions, targeted advertisements, or limited "free" content. However, such implementations have been limited to monetizing digital content -- not necessarily digital art.
In a Web2 world where screenshots and right-clicks are essential behaviors, it's fundamentally impossible to stop users from taking something they find online and reposting it to pass off as their own. This is what has made digital artwork so difficult to monetize until recently. When it's so easily replicable, and there is no distinction between a virtual "original" and a virtual copy, very few people will find any need to own a piece of digital artwork.
This is where NFTs come in. Although NFT artwork can still be easily copy-pasted at the surface level -- such as when NFT naysayers on Twitter repost screenshots of multimillion dollar crypto-art -- each piece is actually a unique "token" that is validated on an underlying blockchain such as Ethereum and completely immutable. That is a mouthful, so let's break things down further.
When a digital artist creates a new piece of artwork and decides to sell it on a Web3 art exchange such as OpenSea, uploading the imagery and listing it for sale also creates a virtual token that represents whatever artwork they list. This token is automatically stored on the Ethereum blockchain (or whichever underlying chain they decide to use) and it can no longer be replicated -- only transferred from one wallet to another. Additionally, the details of that transaction cannot be altered by anyone once it is on the chain. In this way, every single NFT on OpenSea is unique and verifiable, because it is forever linked to the original creator of the token.
This is HUGE for digital artists because it finally allows them to create digital artwork with true rarity. Any online copy can simply be double-checked on a publicly available ledger where anyone can confirm who owns a certain piece of art, and can be certain that the transaction has not been altered since its inception.
As such, digital artwork collectors can be assured that there will never be two identical pieces of their virtual art. This gives collectors the confidence needed to purchase an NFT as an investment, knowing that its value will only go up as the artist they're supporting gains notoriety.
NFT Transactions on the Blockchain Protect Art Buyers & Sellers
Before NFTs, purveyors of fine art had to take pretty radical measures to ensure their pieces were authentic. There has been a longstanding history of art forgery dating back centuries, and so the methods of art provenance have evolved to employ forensic analyses including infrared analysis, carbon dating, and even x-rays. With millions of dollars on the line, it's no wonder that art authentication has become an industry in and of itself.
However, because blockchain transactions for NFTs are cryptographically secure and can be verified by anyone with an internet connection, they have enabled a higher level of security for buyers and sellers in verifying authenticity. In this way, blockchain technology has ushered in a new era of trust between artists and collectors that transcends the traditional fine art market.
In some ways, digital art actually has greater provenance than physical art because with a crypto-token, you can unequivocally prove who originally created a piece, and see a complete chain of custody across its entire existence on the blockchain to confirm exactly who owned it before you did. Major art houses such as Christie's New York have already begun to implement blockchain transactions into their arsenal for art authentication.
In an article on Gemini.com's Cryptopedia, it's stated that Christie's New York was actually among the very first auction houses to implement blockchain for registering sales in 2018. This was done in partnership with Artory a "blockchain-powered art registry, which managed...more than 85 works" for Christie's. The Cryptopedia article also states that the blockchain implementation with Artory was useful for auditing transactions publicly and "can be used to resolve disputes about ownership or damages."
This is a level of transparency and security that the art world has never seen before, and its implications are not only limited to art.
Artists Use NFT Technology to Build Engaging and Valuable Communities
The underlying blockchain technology behind NFTs that enable exclusivity, scarcity, verifiability, and security, is the same technology that enables artists to leverage NFTs as tools to build profitable communities. In fact, community-building is at the forefront of how the most successful Web3 art projects and businesses are going to market.
The most innovative NFT art projects are focused on bringing creators closer than ever to their digital communities of supporters, facilitated by the blockchain. A popular way that artists have started doing this is by leveraging the powerful NFT integrations of Discord.
How Discord Turns NFT Art Projects into Exclusive Clubs
Discord is first and foremost a gaming chat platform, but it has started to see significant adoption as the community platform of choice for popular Web3 art projects. This is because Discord has adopted APIs with the ability to connect with and verify the contents of a user's Web3 wallet, using integration tools such as CollabLand.
CollabLand enables Discord server owners to restrict access to their communities only to those who own a particular NFT, as confirmed when they connect a Web3 wallet for verification. This essentially allows NFT art pieces to double as "club cards," and can afford card owners special privileges in virtual communities such as unique badges, advanced features, and access to private chatrooms.
This is a great way to build in a sense of exclusivity to members of your community, and incentivize users to become more engaged with a project as well as with each other. The ongoing enthusiasm and support of an art project's members is critical to its success, and so exclusivity is one way that projects can provide value back to its supporters.
Community Airdrops Bring Value to Supporters & Generate New Revenue for Artists
Another way that community projects can bring value to its supporters is through digital airdrops of new NFTs. Artists can leverage the verifiability of their art tokens which enables them to send free artwork to an existing community of NFT-holders. It may seem outrageous at first to simply give away artwork, but this is part of the beauty that is Web3 community culture and how it drives price.
An artist that has seen success with an initial art project, potentially reaching thousands of buyers who are now part of their NFT community, can use this group as a captive audience to help promote any new projects for them. Whether it's through a new sale with exclusive pricing for existing holders, or a free community airdrop -- getting your art into the hands of thousands with the click of a button is an effective way to generate exposure and excitement for a new project.
Not only that, but because tokenized artwork keeps a record of all previous owners via the blockchain, this same capability allows for platforms like OpenSea to attribute any secondary sales directly to the original creator. Therefore, users who sell a piece of artwork they either bought or received for free via an airdrop are transferring some royalties to an original creator. In this way, a free airdrop can become a new stream of revenue with almost no marginal cost to the artist, because users who get the piece for free are always able to list the item for sale which will attribute some royalties back to the artist.
NFTs Turn Art into Investments for Creators & Collectors Alike
Art has always been a form self-expression, but the advent of NFTs has now made art a form of investment available to both creators and collectors from around the world. Artists can now create free from the worry of how they'll make money and instead focus on what matters most: creating meaningful pieces.
Not only is digital art now much easier to sell, with NFTs rethinking the dynamics of supply and demand, but buyers and sellers can feel more secure than ever before when transacting from across the globe. More so, NFTs have enabled buyers and sellers to remain connected long after a single transaction as part of an art community through the attached perks of ownership.
By leveraging the unique capabilities of blockchain technology, artists can now create digital artwork that is both expressive and valuable, while collectors reap the benefits of their investments in tandem with the success of projects they support.