Will non-fungible tokens (NFT) revolutionise the world of digital art?

World history was made on March 11, 2021 when digital artist Mike Winkelmann aka Beeple, sold a non-fungible token (NFT) artwork for $69m at a Christie’s auction. No painting, print or sculpture exchanged hands; instead, it was a GIF
that was sold via a digital transaction that consisted of getting an NFT digital token, also known as ‘bitcoin for art’.

While digital art has been around for a while, NFTs have suddenly skyrocketed into mainstream attention, as the hottest new tech must-have.

What is an NFT?
If bitcoin is a ‘digital currency’, then NFTs are the equivalent when it comes to ‘digital collectables’, especially art. An NFT allows buyers to purchase ownership of a digital good, for example, an artwork, as a unique digital token living on a blockchain.

One of the main USP’s of NFTs is that once created, it cannot be duplicated, giving it a similar value proposition as an original artwork. But it’s not limited to that – NFTs can encompass pictures, videos, music, or anything else that can be
digitally represented. In a nutshell, they are “one-of- a-kind” assets that only exist in the digital world and have no tangible form of their own.

However, they can be freely bought and sold, like any other piece of property, with the NFT acting as a digital certificate of authenticity.

Can I make an NFT (and get rich overnight)?
In theory, absolutely – anyone can tokenise their work to sell it as an NFT. While NFT technology prevents it from being duplicated, there’s nothing that controls who can make an NFT in the first place.

After the success of Beeple at Christie’s, that particular image has already been copied and shared countless times. Moreover, Beeple isn’t the only one to profit from NFTs – Canadian musician Grimes recently sold $6m worth of NFTs; the ‘Nyan cat meme’ sold for $590,000; and a video of a LeBron James slam dunk sold for $208,000.

While people cannot hang their purchase over the mantle, it does come with huge ‘bragging rights’, touted as one of the main drivers behind investing in NFTs. If a relatively unknown artist called Beeple can become one of the most important and valuable living artists due to blockchain technology (and the aid of a prominent auction house), what’s stopping us from trying our luck too?

Are NFTs the future of art?
At the moment there is the novelty factor coupled with a sense of scarcity that is making NFTs popular and desirable. However, with major auction houses like Christie’s beginning to take notice and setting global records with their inaugural NFT auction, the question is: Will the rest of the art market follow suit, or wait for the proverbial bubble to burst?

Zaib Shadani is the managing director of Shadani Consulting