What is an NFT and where is the world of “Crypto Art” heading?

 

If you have kept up with recent news, you have likely heard about cryptocurrencies and NFTs. The newest market trend and million-dollar industry is something called “Crypto Art,” but what does that mean and how does that affect you?

Non-fungible tokens or NFTs are:

“unique, digital items with blockchain-managed ownership. Examples include collectibles, game items, digital art, event tickets, domain names, and even ownership records for physical assets.”

The first NFT standard emerged in 2017, and has been on the rise slowly but steadily, especially for digitally unique art. Let’s start by explaining what “fungible” means: able to be replaced or replicated. In this context, a currency like the U.S. dollar is an example of a fungible asset because it is easily replaced and there is nothing unique about it; because you can replace a dollar with another one so easily, that’s what makes it fungible.

But what is a blockchain-based NFT? Even before cryptocurrencies emerged, we have had non-fungible digital assets since the dawn of the internet with things such as domain names and social media handles. But these digital assets are owned in specific contexts only, which affects how easily they can be moved around. Where this difficulty emerges, blockchains enter!

Blockchains provide the ability for users to have both ownership and management permission of digital assets and uniquely change the user and developer relationships with them. Blockchains enhance the standardization, interoperability, tradeability, liquidity, immutability and programmability of digital assets.

Such digital assets are standardized because “By representing non-fungible tokens on public blockchains, developers can build common, reusable, inheritable standards relevant to all non-fungible tokens.”

Interoperability means that “Non-fungible token standards allow non-fungible tokens to move easily across multiple ecosystems. When a developer launches a new NFT project, these NFTs are immediately viewable inside dozens of different wallet providers, tradeable on marketplaces, and, most recently, displayable inside of virtual worlds.”

Tradeability allows for users, for the first time, to move items outside of original environments and into a marketplace to use multiple trading capabilities. Higher liquidity of assets comes from the ability to instantly trade NFTs. And of course, like traditional digital assets, NFTs are fully programmable.

 

Here is where the concept applies to artists and creatives: digitally unique and tradeable art.

“A core piece of what makes physical art valuable is the ability to reliably prove the ownership of a piece and display it somewhere, something that’s never been as true in the digital world.”

There’s even a wide variety of digital art platforms such as Rarible, SuperRare, Known Origin, and MakersPlace (let’s make these links), built to publish and discover digital art. In 2018 Digital Art Chain launched which allowed users to mint NFTs from any digital image and Marble Cards allowed users to create unique digital cards from any URL.

Eventually in 2020 evolutions of platforms emerged and brought new features such as bulk art creation, unlockable content, and rich media.

Overall, the market for NFTs is still small, growing, and hard to measure compared to the crypto market. Because this market is still so new, the easiest way to measure the growth of it is to look at developer interest. By this metric, contracts have grown exponentially as more developers enter the space.

Still want to learn more about the specifics of NFTs and how crypto art is actually sold and traded? Visit https://opensea.io/blog/guides/non-fungible-tokens/ and read their in-depth explanation.

Keep up to date with ruef for possible projects to come as we too navigate this new market!