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The rapid development of Internet technologies and the e-commerce sector have become prerequisites for the formation of a crypto art market. But only since 2017, with the advent of NFT (non-fungible tokens), the process began to gain momentum intensively. Tokenization made it possible to provide virtual objects with a unique signature and then trade them as physical ones. It would seem that creative “digital people” have gained ample opportunities. But along the way, they need to take into account possible underwater reefs.
Now – with a “quality mark”
What exactly makes collectors spend huge amounts of money on Picasso’s paintings, while no one is interested in the works of another artist in the same style? What determines pricing in this segment: is it only because the world’s masterpieces are piece goods?
Uniqueness is only one of the components of the high material value of art objects. Second, and perhaps more important, is the author’s trademark. The opinion of experts can mold a world-class star out of an unknown painter or sculptor, or vice versa – contribute to the oblivion of a quite decent master.
However, the large sums paid for the acquisition of a modern art object do not at all indicate its high artistic or aesthetic significance. Rather, they only confirm the fashionableness of the purchase. Today, a banana attached to the wall or a canvas with paint streaks can cost much more than Aivazovsky’s canvas. And not because the authors are more talented, but simply because of the specific taste of the owner.
Art has long moved to the Internet. The ability to create paintings or write music on the Web has been around for decades. However, until recently, high fees were not available to the creators of digital masterpieces, because the file can be reproduced. And if experts are able to determine the authorship of a real canvas, then everything was different with virtual ones. The problem has existed until recently. Non-fungible tokens helped to resolve it.
NFT is a digital “seal of quality”. It is associated with a specific crypto object (text, music, image, game character, item, etc.) and has the following properties:
- exists in a single copy;
- it cannot be copied;
- all information about the owner is stored in the blockchain, and it cannot be changed or deleted.
It was the uniqueness of the tokens that opened the way to collecting them. The presence of the “title of the owner” unequivocally confirms the authenticity of the work, which is now easy to distinguish from twins. This will allow the creators of virtual masterpieces to receive a worthy reward for their work. Moreover, on the market, you can add the function of automatic deductions for each resale of an art object.
Are the problems exaggerated?
Now the NFT market is experiencing a real boom. In the first quarter of 2021, the monetization of collectibles sold there amounted to more than $500 million. The hype about the Beeple painting, the Nyan Cat Internet meme, cryptopunks attracted the attention of a huge number of authors around the world.
For example, actress Lindsay Lohan recently released a non-fungible asset, and Playboy plans to auction a nude photo album. Time magazine sold three of its provocative covers as digital goods for $700,000. Following Christie’s, the auction house Sotheby’s also announced its own NFT offer. Gucci Fashion House and other luxury brands are preparing to release unique tokens.
However, not everyone likes this popular type of collecting crypto objects. Critics point out the unreliability of existing methods of storing them. So, Twitter user Jonty Waring says that NFT ceases to be valuable immediately after deleting a file containing an art object.
The specifics of owning a digital asset is such that the network node where it is located must be constantly online. Transferring to another medium or address will not make the copy equivalent. However, the sites that provide actions with tokens consider the problem exaggerated and are ready to host them for centuries. The question is whether blockchain and hard drives are as reliable as art gallery showrooms.
Experts call the lack of liquidity another problem of the cryptomarket. Now the ecosystem is at the initial stage of development, and it is difficult to re-sell the previously purchased asset. But this is also true for traditional markets. As the number of users grows, the issue will fade into the background. It causes a negative attitude towards non-fungible assets and the possibility of the so-called wash trading – the manipulation of owners with purchases from themselves. The purpose of such transactions is to generate excitement about the demand for goods.
Many experts consider the current hype around NFT trading to be analogous to the ICO boom and predict a short life for the trend. However, opinions differ on this matter. Despite the obvious disadvantages, tokenization of virtual world objects is the only way to confirm their uniqueness. The development of the segment will allow it not only to become more predictable and reliable, but also to compete with the real market for works of culture and art.
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