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How NFTs Are Shaking Up Arts Trading

Currencies / BlockChain Jul 14, 2021 - 12:36 PM GMT

By: Adam_Walker

Currencies While the argument around the veracity of cryptocurrencies and their real-world value continues to rage unabated, there are offshoots of the blockchain technology that are beginning to have genuine impacts and outcomes on traditional industries and sectors around the world.

One of these offshoots is the NFT, or Non-Fungible Token, which shot to prominence at the beginning of 2021 thanks to an experienced digital artist called Beeple, who sold a collection of his artworks in NFT format for over $60 million.

This was then followed by a whole host of other hugely popular online auctions of NFTs, which took place on NFT auction sites such as Nifty Gateway and Rarible.

The question that is now on everyone’s lips is: will those premium prices be justified in the future or will NFTs ultimately be relegated to the digital trash heap, along with crypto wallets packed with worthless crypto coins?

In this article we scratch the surface of this question as we explore exactly how NFTs are shaking up the realm of art trading.

NFTs made a huge splash at the beginning of 2021 but the jury is still out on whether they will be a passing fad or the revolution that the art world has needed for such a long time

NFTs Make Online Art a Potentially Viable Investment

One of the main criticisms of cryptocurrencies is that their wealth is only derived from speculation rather than them offering finite value, as opposed to buying shares or stocks in a certain company or resource.

NFTs are different in this regard because the customer who buys them can be in no doubt about what they are buying. This means that while NFTs are seen by many as an investment opportunity, there will be other genuine art fans who will simply want to own a piece of art history, created by artists who may be talked about as masters of their craft in later generations. At the end of the day, it is this tangible product offering that makes NFTs valuable and more viable as long-term investments than the acquisition of a crypto coin ever will be.

The way in which art is bought, sold, and consumed will never be the same again thanks to the trailblazing entrepreneurs and artists behind the NFT boom

Are NFTs the Next Investment Safe Haven?

Most of the talk surrounding NFTs tends to revolve around the inherent danger that an investment in online artwork could see its value quickly reduced to zero, but that does not entirely tally up with history where fine art has long been seen as a safe haven for investors.

This is because art maintains cultural capital and often the first adopters of a certain art trend are those who win out when the dust settles and said trend becomes part of the mainstream. That said, no investment is ever truly guaranteed to pay off, especially when all the investor has to show for his or her money is a JPEG file.

Art Theft Made More Difficult

It seems as though every single week there is a new story about a priceless work of art being stolen from a private collection or gallery. Thieves have become adept at taking advantage of lapses in security protocols, meaning many artworks are open to being lifted from where they are mounted or stored.

An NFT is an altogether different beast with a thief only able to steal the artwork if they can get their hands on the codes that lock the NFT onto the blockchain. While not impossible to steal, it is certainly easier to hide a code than it is a framed painting or a giant sculpture, although artists and investors will need to take extra precautions online so that hackers do not get their mitts on their digital assets.

Big Money Buyers Not the Real Story

With all the huge numbers swirling around NFTs, it can be easy to lose sight of what the blockchain-led concept was developed for in the first place: not to generate money for individual investors but to make the art industry more democratic and easier for everyone around the world to access. In this regard NFTs have certainly succeeded, as the value of artworks on its platforms are decided by the public alone, rather than a small elite section of art world bods. The art world has been crying out for such disruption for decades, and hopefully the NFT auction platforms that succeed will be the ones that put the needs of artists at the heart of everything they do.

By Adam Walker

© 2021 Copyright Adam Walker - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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