It should be clear by now that the art of NFT is a significant trend. It should also be obvious that this is not just a passing fad. Simply put, NFT art should stay with us for a long time. However, many people still have questions, many ask: “Why buy NFTs?” and “What are my opportunities in the NFT collections market?”.
First, let’s go over the basics – why buy NFTs at all?
In order to answer this question, we first need to consider what an NFT is.
Non-playable tokens are unique digital assets that cannot be copied or modified. They use blockchain transactions to block certain things that the owner of the NFT gets at their disposal along with the smart contract. It could be a piece of animated art, access to exclusive events and experiences in the real world, a previously unreleased musical composition, or just about anything you can think of.
Why buy NFTs?
The content of the NFT itself is less important than how these tokens work. Using smart contracts, they ensure that a predetermined agreement will always be fulfilled. So, for example, if we wanted to issue a token containing original digital artwork, this could mean that 80% of the sales proceeds would go to the artist, while 20% would be donated to charity.
This is easy enough to establish without the use of a smart contract, but much more difficult – bordering on impossible – to ensure that this will continue with every resale of the work. NFTs offer fixed terms that guarantee the distribution of funds between all parties for the life of the token itself.
Jay-Z came up with this idea while discussing Tidal’s NFT plans. He talked about music, but that applies to anything to do with royalty. When you buy NFTs or mine your own, you guarantee that the royalties will be yours forever. Sites like Rarible even let you easily set your own royalties.
New signature form
You can also be sure that no one else owns the NFT or its contents because, by their very nature, they are completely unique. A fireproof token is like a digital signature, and we all know the meaning of “John Hancock” on physical works of art. And even if the content itself is not disposable, the token is. In this way, you can track exactly where and when it came from, effectively eliminating the risk of fakes.
From the point of view of some in the traditional art world, the idea of buying digital art that can’t be framed and hung on the wall may seem odd. And the idea of being sold a fake digital work of art seems even stranger. But that doesn’t take into account how much value NFT’s art collections have created.
What are my opportunities in the NFT art collections market?
The easiest way to explain this is to look at some of the most successful collections of NFT art and the amount they were sold for. CryptoPunks” is a good place to start as they were the first art tokens to appear on the Ethereum blockchain.
10,000 randomly generated “punks” were created with various character traits. Some of these traits appear frequently throughout the series. Others are less common, and some are extremely rare. Naturally, the rarer the “punk”, the higher the cost of the token. Most of them have a floor price set at around 5 ETH, which is roughly $11,000 at the time of writing.
Not everyone has $300,000 to spare to buy a digital collector’s item. But while “CryptoPunks” may outsell some, we can learn a lot from their history. The collection first appeared in 2017, and, very importantly, all tokens were initially given away for free.
Yes, that’s right, they cost nothing. Now think about the price they sell for today. How do you like this profit? The point is that for most people, the real opportunities in the NFT art collection market are the same as in the real global art market. If you can spot something that will one day be worth a lot, at a time when that value has not yet been realized, then you will win.
CryptoKitties is another success story that started in 2017. In a way, the hype here is more understandable than in “CryptoPunks” thanks to gamification. Again, this is about ownership, in this case cute furry cats in digital art form, each with certain traits, some common and others harder to find.
CryptoKitties” differs from “punks” in that you can “breed” tokens in the hope that certain traits will be passed on to “offspring”.
Bored Ape Yacht Club
Bored Ape Yacht Club, affectionately known as BAYC, operates on the same principle as CryptoPunks and CryptoKitties. Another series of generative artwork based on characters around which personalities with different traits are built, in this case 10,000 monkey avatars.
In addition to the avatar token, buyers get access to The Bathroom (pictured at the top of this article), where community members post or pixelate every 15 minutes to a shared piece of art that is constantly evolving. Ape holders also receive full intellectual property rights to their NFT, so they can turn their token into much more than the original asset. So far this has included comics, beer and t-shirts.
Such aspects are called “usefulness” – possession of the items of the series has some purpose, in addition to simple possession. For BAYC, this means contributing to the overall canvas or building your monkey’s brand with original products.