Until now, artists who had dedicated themselves to digital art were ignored by the market. Their works can be reproduced endlessly and free of charge, and as a rule no one has to pay a single euro for them. It is quite possible that this will change in the future! The so-called NFTs (non-fungible tokens) are responsible for this, the new “hot shit” in the art scene.

Thanks to blockchain technology, NFTs make a virtual work of art unique. Auction houses are now also getting in on the act. Christie's recently sold an NFT for almost 70 million euros. Optimists see NFTs as a unique opportunity for digital artists to generate an income that has been denied to them until now!

  1. 1. What are NFTs?
  2. 2. How do NFTs work?
  3. 3. The purpose of NFTs in the art world
  4. 4. NFT artworks are paid for with Ether
  5. 5. Trading platforms for NFTs
  6. 6. The critical side of NFTs

What are NFTs?

Analog artworks are unique and irreplaceable. That's why art collectors are willing to pay millions for works by Rembrandt, Picasso or da Vinci. Creators of digital art can only dream of that. Their works are easy to copy and can be shared countless times. That's why modern digital art, which can only be admired on a screen, has had a difficult time on the art market so far.

NFTs appear to be ushering in a profound change in the art world. With the help of these “immutable digital ownership certificates”, it is possible to secure ownership of something that only exists virtually. Anything that has value, including works of art, can be converted into such tradable tokens.

How do NFTs work?

Until now, tokens were mainly known in the world of cryptocurrencies. They are the basic building blocks in the trade of Bitcoin & Co. Only those who are in possession of a valid token can carry out a trade on the associated blockchain. The blockchain is a kind of virtual accounting system in which transactions are summarized in an endless chain of digital data blocks. A blockchain is considered to be absolutely forgery-proof.

However, when cryptocurrencies are used, the tokens are fungible. A Bitcoin is a Bitcoin and can be exchanged at any time. In contrast, non-exchangeable tokens are unique assets. They cannot be replaced by an equivalent, but rather confirm the uniqueness of the goods. In this respect, NFTs can represent almost anything, from music to images and videos to domain names. In this case, the blockchain is the medium that shows who owns the rights to a work.

The purpose of NFTs in the art world

According to experts, NFTs are a promising way for artists to finally see money for their work. Likes on social media channels are encouraging and refreshing, but they don't fill the fridge or pay the bills.

With NFTs, on the other hand, the artist not only receives a sales price, but also a percentage of any subsequent sales. In addition to an increase in value, buyers of digital art see an opportunity to appreciate and pay tribute to virtual art. In much the same way as a museum gives recognition to an analog work of art.

NFT artworks are paid for with Ether

Currently, most NFTs are distributed via the Ethereum blockchain. This means that anyone interested in virtual works of art must own the corresponding cryptocurrency, Ether. The currency can be purchased on various crypto exchanges or from online brokers. Examples include BSDEX (Börse Stuttgart Digital Index) and eToro.

Trading platforms for NFTs

NFTs are usually traded on online marketplaces such as OpenSea, Rarible or Binance. OpenSea is the largest marketplace for digital assets.

The US crypto exchange Coinbase is currently preparing its own marketplace for NFTs. In addition, famous auction houses such as Sotheby's and Christie's have also gained experience with NFTs.

The critical side of NFTs

NFTs are certainly welcome in terms of artists finally receiving monetary value for their digital works of art. However, not all artists are euphoric about this. After all, the crypto market is characterized by extremely high energy consumption.

That is why those who do not want to drive their ecological footprint to unimaginable heights in times of climate change are cautious. In this regard, an announcement by Ethereum gives hope, in which it is announced that energy-saving mechanisms will be used in the future to mine ether. It would be desirable if these words were followed by deeds in the near future.