“NFT” (non-fungible token) has been named word of the year by Collins Dictionary. Collins describes an NFT as “a unique digital certificate, registered in a blockchain, that is used to record ownership of an asset such as an artwork or a collectible.” The past few months have seen new emerging creatives take the spotlight with their NFT successes, but household names, like Ozzy Osbourne and Reese Witherspoon, are also going all in. Below our founder Carolyn Dailey weighs in on the impact of NFTs on the creative world.
It’s hard to remember when a phenomenon has taken the creative world – and the whole world – by storm so quickly and radically as NFTs have. It was only seemingly 5 minutes ago – in March 2021 – that Beeple sold his art NFT for $69 million and single-handedly thrust NFTs into mainstream global conversation.
Since then there’s been a race to understand everything there is to know about NFTs. One thing is for sure – they transform the ways in which creatives can monetise their work. As our mission at CE is to empower creativity through financial sustainability, we’re all in. Below is a round up of what we’ve learned so far about the key aspects of NFTs for creatives.
How creatives are embracing blockchain technology and NFTs
Creatives are embracing blockchain technology at a dizzying pace to maximise the commercial potential of their creative works. They’re primarily using non-fungible tokens (NFTs), which are built on blockchain and bought and sold online. In action this means that, when a creator sells their work, instead of a physical product, the buyer gets a digital file and unique identifying code proving their ownership.
This unique code – in effect, a digital signature – makes it impossible for NFTs to be equal to – or exchanged for – one another. This is in contrast to cryptocurrencies, such as bitcoin or ethereum. They’re also built on blockchain, but, as currencies, their raison d’etre is, like any currency, to be of equal value and fully exchangeable, i.e. fungible.
NFTs are helping artists and creatives by empowering them to take ownership of the monetisation of their works in these key ways:
Cutting out the middleman
NFTs let creators sell directly to their communities, without going through their traditional ‘routes to market’ – who also take a cut of their profits. For example, artists no longer have to use galleries, music producers no longer have to use record labels. In sum, creators can own their relationship with their fans.
Creating new revenue streams
NFTs also allow creators to code in royalties, so they can receive a percentage of future sales. This is standard in some creative sectors, such as music or film, but not in others, such as fine art.
Creating digital scarcity
Most digital creations are of infinite supply – they can be copied and shared without limit. The identifying code of NFTs make each work completely unique, therefore greatly restricting supply, which in turn drives up demand and prices.
Ensuring guaranteed exclusive ownership
The identifying code also guarantees that a buyer owns a unique, original item, whose ownership can be proven beyond dispute. This not only appeals to that human desire to own things, but also means works can be re-sold.
Eliminating risk of piracy
With only one unique code, copying a work with a view to ‘owning’ it becomes meaningless.
The barriers for creatives entering the NFT world
Creator awareness & cost
Most creatives are not aware of how to create – or ‘mint’ – an NFT, or the huge opportunities they present. And access to straightforward, trusted information on the topic is still sparse. Also, minting an NFT can be expensive, anywhere from $50-$250. f you want to monitor gas prices, so you can send your ETH for less, you can use many different tools such as Etherscan Gas Tracker.
In order to buy an NFT, a buyer needs to have a digital wallet, like Metamask, and access to cryptocurrencies, which are used to buy NFTs. Many buyers are not yet up to speed with these tools.
Along with all blockchain platforms, the future of NFTs is still uncertain. So buyers hesitate to invest in these products.
Unclear tax treatment
As just one example, the US Internal Revenue Service – the tax authority of the world’s biggest economy – has still not ruled on the tax treatment of NFTs.
How blockchain solution providers can cater better to the needs of creatives
By taking user experience to the next level. As a starting point, there’s huge room for improvement in basic communication and education around blockchain solutions.
And most NFT platforms are still pretty clunky to access, for example requiring an ethereum wallet. This means buyers have to purchase ETH and send it to a non-custodial address, a long string of numbers and letters. Fortunately some platforms, like NBA Top Shot, are starting to allow just a credit card to make purchases.
Ways that creatives can harness blockchain beyond selling now-ubiquitous art NFTs
The next big trend is “social tokens.” These are a type of cryptocurrency made by creators themselves and based around their brand or community, enabling an array of transactions directly with fans. Leading examples include special access to private content, communities and digital merchandise, votes to influence the creator’s work and direct conversations with the creator. Tokens also allow creators to bypass middlemen such as Spotify or YouTube.
For example, Grammy award-winning musician and producer RAC awards tranches of his tokens – $RAC – each month to his top Patreon subscribers. The tokens give them access to exclusive content and merchandise, as well as private discussions with RAC.
Blockchain-based tools that are proving popular with creative business owners
As noted above, a key advantage to NFTs is reaching an audience directly without the traditional middlemen. That’s where NFT marketplaces come in, key tools where creators can showcase their works. Below are some of the most popular platforms.
Known as the eBay of NFT marketplaces, they curate and sell digital art from almost all other platforms. It allows creators to mint their NFTs directly on the platform and lets buyers to search artists by sales volumes.
Similar to OpenSea, except it requires creators to pay fees upfront. It also has its own tokens – RARI – which let holders give direct feedback on the platform.
An exclusive platform requiring invitations from peers plus an entry fee in order to post. The result is higher quality creative work and higher prices, which is great for creators who can join.
An NFT utility platform for creators. Infinifty is launching with the promise to mint 1,000 original artworks by truly amazing creators, for free.
We will be hosting a Zoom Dive on the 27tth of January with the founder of Infinity and CE Member, Tim Jarvis, to demystify NFTs and get tips and insights on how to leverage them to your advantage. Towards the end of the session, you’ll get the chance to ask Tim any burning questions you have about NFTs. Sign up for the event today!