This article originally appeared on VICE Italy.
You could say I’m fairly obsessed with money. After googling investment advice one too many times, YouTube now targets me almost exclusively with ads featuring middle-aged men who have achieved financial independence through various Ponzi schemes. In spite of this, until recently I’d never heard of NFTs, or Non-Fungible Tokens, a blockchain-based technology used to authenticate and track the history of a digital object.
It took me a while to understand the concept, but essentially each token is a unit of data represented as a line of code in a digital registry, the blockchain. Unlike Bitcoin or money, NFTs are “non-fungible”, which means they are not interchangeable. For instance, you can trade a Bitcoin for another Bitcoin and end up with the same thing, but unique objects like songs, works of art or domain names cannot be perfectly replaced when exchanged.
Lately, NFTs have increasingly been used to trade in digital artworks via online marketplaces like Nifty Gateway and SuperRare. Digital artists often face major copyright issues: unlike a painting or a sculpture, their work can be reproduced endlessly and without permission, diminishing its value. But now, artists can link their digital work to an NFT, which allows for it to be authenticated through the token’s unique code. Since blockchain technology registers every transaction, the owner of the artwork can also prove it is theirs and protect it from thieves. Theft can still happen if the owner’s account is hacked, but it’s more difficult.
According to many artists and collectors, NFTs could revolutionise the digital fine art market. As you might have heard, a collection of NFT artworks by CGI artist Beeple was recently sold through an auction house for €58 million. Just like with any other speculative asset, buyers are hoping the NFT art market will boom, increasing the value of their initial purchase. However, some fear the NFT market could quickly become an unsustainable bubble and crash, leaving inexperienced investors high and dry.
There have also been reports of NFTs mysteriously vanishing after being purchased, pointing to potential vulnerabilities around the new technology. Plus, along with the cryptocurrencies they are bought and sold with, NFTs have been implicated in growing scrutiny around the environmental impact of digital products.
For young digital artists, however, these are exciting times. For years, digital art has proven extremely difficult to monetise, but now there’s a whole new market for it. Even better for the artists, NFTs also have a “royalty” feature, whereby the artist earns a fee every time one of their works changes hands.
I happen to know an artist whose most recent NFT collection did so well that he was able to quit his job. After hustling for years selling merchandise, prints and a few physical copies of his art, my friend (and former colleague) DotPigeon seems to have turned a corner. Jealous and curious in equal measure, I asked him how he did it.
VICE: Hey, DotPigeon. How did you get your start in digital art?
DotPigeon: I started on Deviantart, a famous platform for digital art, when I was 16. Then I stopped for years and only started using it again in 2017, when I set up my Instagram profile. I first heard of NFTs thanks to @slimesunday in September of last year. He’s a big artist on Instagram who did a story about his drop on Nifty Gateway.
I was curious, so I had a look – and quite honestly, I didn’t understand anything at all. I wrote directly to Nifty Gateway’s page, saying something like, “Guys, this is all very cool, but what are you selling?” They talked me through the basics, and eventually said I could drop a collection with them.
How did it go the first time?
The first available date for a drop was on the 6th of January. Even back then, the waiting list was a couple of months long. I worked on my first collection for two months, but it didn’t do very well.
I was totally new to this world – the collectors didn’t know me, so they didn’t want to buy my art. The collection also wasn’t in my usual style – I didn’t even promote it; I still had no idea about the community’s enormous potential. With the second drop, I tried to respect my own style rather than nodding to a trend.
Do you know any of the people who bought your NFTs? What exactly can they do with them?
A couple of them are people I know personally, but I sold 1,300 pieces, so they account for only a small percentage of buyers. I know a few others virtually. Most of the buyers were international.
There’s not a lot you can do with digital works of art – you can display them on screens, and there’s a whole marketplace for devices that allow you to hang your NFTs on a wall or put them on a shelf. You also have virtual galleries and museums.
Is there a difference between Nifty Gateway and other marketplaces?
These sites might all look the same, but they aren’t. The first big general distinction is between curated platforms and open platforms. On a curated platform, there’s a team that decides which applicants get to “mint” [create NFTs] on their spaces. On open platforms, anyone can mint new works. Rarible and Open Sea are examples of open platforms, while SuperRare and Nifty Gateway are curated. Curated platforms don’t have exclusivity over the artist, but they do over specific pieces, meaning an artwork can’t be sold on other platforms.
The second difference is in how items are sold. For example, SuperRare works through an auction process, so you put up your piece [usually not a whole collection], people place bids for a set period of time and the highest bid wins. On platforms like Nifty Gateway, you can decide whether to do an open edition [selling as many pieces as you want], an auction, a silent auction or a limited edition.
What happens if one of your buyers resells your work?
The secondary market is one of the more revolutionary aspects of NFTs, because the artists can earn royalties on their pieces. In Nifty’s case, when you’re filling out the contract, you’re asked to decide what percentage you want to get from a secondary sale.
It’s pretty simple. For example, if a collector couldn’t buy the artworks on the day of the drop, they can contact someone who already bought them. It’s the seller – not the artist – who sets that re-sale price [then the percentage of the sale established in the original contract goes to the artist].
I know Nifty Gateway is pretty big on Discord. What’s the community like?
There’s a bit of everything – people who have just joined, collectors, artists etc. The mood is very friendly and positive. I regularly go to the server, not just to talk about an upcoming drop or to promote my work, but also just to have a chat for half an hour. The reason why my second drop worked is that I had a relationship with the community – I gave them a preview of some of my content before posting it on any other channel.
How do you expect the market to develop?
Of course, the market will change. I’ve already seen a lot of users complain that there are too many open editions. Two or three months ago, an open edition would have had 300 to 400 artworks, now it can be up to 5,000. This is starting to get on people’s nerves, because art needs to be scarce to be valuable.
New players have now joined in and made the market more mainstream. But as more and more brands try to enter the market, galleries will have to adapt. This might mean organising digital shows and exhibitions – something most places wouldn’t have ever considered a couple of months ago – but could also potentially have an impact on the artists’ contracts and the royalty clauses, for example.