Traditionally, investing in art has been something only the wealthiest of us could enjoy. However, with the emerging NFT art market, more and more people are getting in on the action, seeing considerable returns on investments in crypto assets. With some inspiring pieces appearing on marketplaces and a generation comfortable with the technology about to become wage-earners, there’s no longer any reason to ask is NFT art a good investment.
What is NFT art?
Non-fungible token (NFT) based artwork are digital assets that are validated and maintained on the Ethereum blockchain. Using Ethereum’s smart-contract technology, the provenance and ownership of artwork are guaranteed. In addition, artists can continue to receive royalties from their artwork long after being sold, with most platforms offering payments in perpetuity.
These artworks range from jpegs of traditional fine art to animated gifs and memes. Some are beautiful pieces that wouldn’t look out of place in a gallery, such as Archai Nair’s enigmatic Swerve, a piece whose buyer is looking to make a $40,000 profit from.
Having been around for about five years now, the NFT art scene is diverse and spread over multiple marketplaces, including Nifty Gateway, Opensea, SupeRare, Rarible, and KnownOrigin. These platforms help artists “mint” their artwork, creating identifiable, unique editions of their artwork. The upshot of this is that, upon a piece being sold, the buyer is guaranteed they are the one and only holder of the artwork. While people can copy and paste a jpeg as much as they like, the token held on the Ethereum network is proof of authenticity and ownership.
For some, paying thousands for a jpeg or video file may seem an unsound investment. However, with the NFT market tripling in size in 2020 to $250 million and the first quarter of 2021 seeing sales exceed $2 billion, the space is growing at an unprecedented level. This growth leaves plenty of room for more upcoming artists to cash in on the trend, with keen investors able to reap the benefits of spotting an emerging NFT creator.
For the naysayers, the growth is due to hype creating an asset bubble with no intrinsic value behind it. As with all nascent technology, there are risks to getting involved early. Nevertheless, the demand for investment in digital art is obvious, with the millennial generation as happy to own a non-tangible asset as a physical one. The intrinsic value of an NFT artwork is ultimately as tangible as that of a Van Gogh, with collectors and the community excited to see the space evolve.
Are NFTs making people rich?
Investing in traditional art can bring with it big rewards. Just ask Jay-Z:
“I bought some artwork for one million; two years later, that sh*t worth two million; few years later, that sh*t worth eight million.”
Getting to the point where you can invest in traditional art can be difficult. The ability for wealth to beget wealth has meant opportunities for investment and growth have historically only been open to those with the necessary capital.
Fortunately, NFTs are changing this high barrier of entry, with many successful investment stories already out there. For some, speculating on the NFT art scene is proving to be one of the best wealth-building strategies currently available.
While collecting NFTs still requires money, there are plenty of examples where a relatively small investment has the potential for massive returns.
Trevor Jones, for example, is a traditional artist who moved into the NFT space in 2019. His first NFT piece, EthGirl, depicts an animated collage of the Ethereum logo that reveals a face. The piece initially sold for 70 Eth, around $10,000 at the time. Two years on, with the explosion of the NFT scene, the artwork is valued at around 2500 ETH, equating to over $8 million.
While not every NFT artwork will see such vast appreciations in value, the opportunity is unique in its ROI. There are very few investment opportunities out there like NFT art. A good investment always carries some element of risk. For those bold enough to invest, though, the returns can prove huge.
How do I get involved?
One of the reasons for the large returns is that, unlike traditional art, the NFT art scene relishes newcomers, showcasing their work through featured “drops” and the use of social media. Breaking into the new digital art world is not as difficult, with many finding themselves overnight successes thanks to the supportive community.
Of course, there are the massive success stories such as Beeple’s Everdays that sold for the extraordinary sum of $69 million in early 2021. Not all of us have such loose change to invest, but thanks to the explosive nature of the NFT scene, investing in artists who speak to a new generation can still prove lucrative.
Damien Hirst, the British artist famous for pushing the envelope, is one such opportunity. His latest venture saw him stepping into the world of NFTs, where he sold 10,000 individual dots that collectively formed a painting. Each dot was sold for $2,000 and comes with a corresponding NFT existing on the Ethereum ledger. Hirst’s genius is to give investors the ultimatum, after one year, to either destroy the original dot and keep the NFT or burn the token and keep the physical dot.
While no one knows whether the price of Hirst’s NFT dots will appreciate, for many, $2000 is a worthwhile investment to find out. Participating in such a piece of live avant-garde artwork by a renowned artist is only possible through the use of NFTs.
Other opportunities simply involve the scouring of marketplaces for artists who seem to be making waves. Fewocious, for example, is a teenage artist whose first pieces sold for as little as $250. Within the space of a year, his career has skyrocketed, with high-profile collaborations and attention from some of the world’s biggest news outlets. Demonstrating the importance of getting in at the ground floor, one of Fewocious’ pieces recently sold for $345,000, with many of his early investors looking to make a considerable profit in the near future.
With the NFT art scene thriving, the value of these digital creations is set to remain highly valuable. Despite some seeing crypto wallets and terminology as a barrier of entry, an eager generation of investors looking to seize the opportunities that blockchain technology offers means the market is not going anywhere.
Thanks to NFTs, now anyone can be an art collector and see their investments increase in value.
Can be removed without changing the article’s meaning but I thought it was fun to include.