The internet and social media have had a tremendous influence on the art market in recent years, but it seems the past Covid year has had the greatest effect yet on online activity, which constitutes 25% of total sales as of today.
Global wealth, which as mentioned above is in the midst of inter-generational transition, Covid state grants, a thriving crypto industry (cryptocurrencies only valued in April at $2 trillion) - all provide some explanation about the art market being disrupted by NFT technology.
What are the risks with NFT
There are still some challenges and obstacles, and a lack of regulatory clarity, which is a natural result of the fast entry of new technologies into global markets. Forgery, reproduction, including copyrighted images in an NFT, and minting a digital artwork without express authorization by its author - may result in litigation, and the infringed will have to argue and prove that their use is “fair” under copyright law.
The court regarding fair use takes into account the similarity between the original work and the alleged infringement’s work, and the uses and applications of the NFT.
There are security issues, issues regarding the low energy efficiency and negative ecological footprint of blockchain mining, and claims that the fees charged by the Ethereum network make the transactions very expensive.
There is also a problem with interoperability between the platforms – automated royalties to the artist only work if the NFT is resold using the same platform.
But these are growing pains of a new technology, which will likely be resolved once regulations are determined for the blockchain industry.
NFT - is it a bubble or a grand technology of the future
According to sceptics, the whole NFT business is a bubble, gimmick, or a Ponzi scheme, which practically sells “air”. The buyer does not even get a file containing an artwork, just a piece of code linking to a URL containing a digital file of the artwork.
Others are amazed with the prices of a small number of NFT works in the traditional art market (graphic artist Beeple sold his work at Christie’s public auction for the unbelievable amount of $69 million, and Twitter founder Jack Dorsey sold his first-ever tweet for $2.5 million).
The current market value of NFT blockchain technology is estimated at $878 million, used mostly for authenticating digital artworks (49%), computer games (11%), collectibles items (31%), virtual real-estate (8%), and online domains (1%).
However, we are now witnessing the initial stages of the NFT revolution. In the near future it is expected to be used for copyrighting songs, videos, memes, articles (like the recently sold times article), sportspeople and celebrities collection cards, real-estate registration, architectural plans, fashion illustrations, and ownership of physical objects like cars, watches, sneakers, and collector’s items.
How blockchain is changing the economic system
This technology is likely to decrease the prevalence of fake news in mainstream and social media by validating items from reliable sources. The many possible uses of the NFT are but the tip of the iceberg when it comes to blockchain applications in various industries: finance, insurance, investment, loans, airlines, agriculture, transportation, medicine, food production, and more.
In addition to applications in the fields of real estate, energy, and tourism, this technology will also assist to define a decentralized digital identity, create smart contracts, autonomous organizations whose employees are also shareholders and owners of the corporation (DAO – Decentralized Autonomous Organization), Internet of Things (IoT), international trade and cybersecurity.
Blockchain technology is breaking into new markets, creating new and innovative business models, and bringing about a paradigm shift, much like the internet did for the business world, media, and society as a whole.
It is hard to predict the scope and depth of change in behaviour patterns and the economic ramifications, and it is yet unclear how substantial a tool will NFT become for the blockchain industry.
Businesses, governments, entrepreneurs, and investors are studying the opportunities and possibilities of this technology, and how to use it under the current (partial) regulation. All in the hope that today’s sceptics, will not be mocked by Banksy in the future.
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Dr. Milly Perry serve as an expert and consultant for innovation, blockchain, and R&D. Former research director at The Open University of Israel and CEO of its TTO Company. Her first Ph.D. is in Information Science, specializing in KM in Higher Education and Technology Transfer and Innovation, second PhD research in Art and Culture Sciences. Served as a board member at EARMA (European Association for Research Administration), an active expert at the EC ERC-PoC.
She is engaged in projects at the Blockchain experts groups in the WEF World Economic Forum, ISO Blockchain Governance experts group and other international organizations as European Blockchain Association and Blockchain Alliance Europe.
Dr. Perry is an established consultant in Blockchain strategy to corporates, startups and investors in the fields of 4th Industrial Revolution Technologies. Dr. Perry is the founder of DAO4DAOs Institute and BUG Blockchain University Global and ABC - Art, Blockchain and Community.
Dr. Perry is the author of a dynamic, digital open e-book: “Blockchain - Turning Ego system to Ecosystem”.
