Despite the buzz, how large is the demand for NFT art? How destabilizing will it be? And what part can established market players play in the future growth of the sector?

The rapid growth of the NFT industry, combined with a dearth of research and knowledge, provided us with an opportunity to cover this space from the outset, and to track and control its advancement as it progresses.

WHAT ARE NFTS (NON-FUNGIBLE TOKENS)?

Consider an NFT to be a one-of-a-kind electronic identifier that verifies the ownership of every digital asset a video clip, a tweet, or a digital picture. This ownership certificates are stored on a blockchain, which can be thought of as a protected distributed ledger.

Usually, NFTs are "minted" or produced by an NFT marketplace, and then sold and exchanged between collectors and investors. Since each NFT reflects possession of a unique object, they are not fungible: each NFT is unique. NFTs, including prints or photos, can be minted in "special editions," allowing a single digital asset to be "shared" by five or fifty separate collectors. For instance, there has been a buzz surrounding the trade of NBA TopShots, which are numbered edition basketball video highlights.

HOW VAST IS THE MARKET FOR NFT ART?

Defining what constitutes "NFT art" is a work in progress; it is as complex as defining what constitutes "art" or "is not art,".

There are two main types of NFT art platforms: free, uncurated platforms like OpenSea and curated platforms like Nifty Gateway and SuperRare.

The study concentrated on the NFT art and collectibles room as identified by the largest curated NFT portal, Nifty Gateway, which accounted for 71% of the US$437 million in NFT art sales during the first four months of 2021, according to Cryptoart. results.

Between February 2020 and April 2021, Nifty Gateway made available for purchase 3,009 NFTs with a total of over 145,600 editions, representing the visual artworks of 272 artists. The NFTs collectively raised US$305 million.

Overall, primary market sales have been high, with just over 139,000 editions sold, reflecting a 95.5 percent overall selling rate. The overall price was $1,228 US dollars. While secondary market sales volume is nearly half that of the primary market, the average selling price was higher, at $1,938 per NFT.

Nifty Gateway unveiled 1,958 new NFTs in the first four months of 2021, compared to just 49 in the same timeframe in 2020. The dramatic increase in the supply of new NFTs is directly related to the growing number of artists who exhibit their work online.

WHAT CAUSED THE BIRTH OF NFT ART?

The NFT market's meteoric rise was almost certainly a cosmic alignment a massive spike in crypto capital as a result of rapidly rising Bitcoin rates, widespread celebrity endorsement, and social media chatter.

Crypto wealth has grown exponentially in tandem with a 570 percent increase in the price of Bitcoin, from about US$8,500 in March 2020 to over US$50,000 in March 2021. According to CoinMarketCap, the cryptocurrency market is reportedly worth around US$2.5 trillion.

“With insufficient options for crypto millionaires to diversify their resources into the tangible, modern world, the crypto investment group has sought refuge in the developing world of digital collectibles and non-fungible tokens (NFTs).

The widespread media coverage of NFTs in recent months has also fueled considerable industry speculation. Google searches for "NFT" peaked in March, shortly after a piece by visual artist Beeple fetched a record-breaking US$69 million at Christie's.

HOW DO TRADITIONAL PLAYERS ADJUST?

The convergence of art and technology is here to stay; traditional players in the art industry should welcome the trend and engage in the market's future growth.

“The NFT art market is very thrilling because it provides artists with different audiences and monetization methods, while still providing buyers with a novel and enticing ownership model.

Mike Winkelmann, also known as Beeple, is the most prolific NFT musician, having earned a total of US$142.7 million from his work. Pak comes in second with US$42 million in revenue, followed by Hackatao with US$21.6 million in revenue.

Major auction houses, such as Christie's, Sotheby's, and Phillips, soon recognized the importance of supporting NFTs, both in terms of exposure and as a tool for rejuvenating their aging client base.

“They have established themselves as a link between 'traditional' and 'modern' art value systems. This may be a model for other art industry stakeholders to emulate.

IS THIS THE FUTURE OF ART COLLECTING, OR IS IT ALL AN EXPERIMENT?

Many people, like Beeple, believe that this is a bubble. There are undoubtedly some significant threats or hazards that prospective NFT purchasers should be mindful of. To begin, it is uncertain how much current market action is being motivated by collectors who are genuinely interested in the underlying artwork or object  versus speculators and crypto-fans who are merely looking to move values higher. While some argue that much of NFT trade is a prank, those who buy are complicit. They are well aware so spending that much money on a tweet or a visual picture is insane, but it is amusing. This condition bears some resemblance to that of cryptocurrencies: Dogecoin's popularity has recently skyrocketed, despite the fact that it began as a joke.

Second, there is the probability of surplus supply: although each particular item is rare or constrained in supply, an infinite number of NFTs can be produced with minimal effort. Any visual picture, video, or text may be converted into an NFT, and this is already happening a number of well-known individuals and organisations are attempting to join the NFT movement and establish their own. Not all of these will retain their worth in the long run.

However, it is not uncommon for a modern invention to be accompanied by some exaggerated hopes, hype and experimentation, and almost certainly some scams. However, the NFT platform has a real-world use since it addresses real-world problems. Thus, even though any of the latest hype subsides, NFTs will remain.