What are NFTs in the art world

Everyone wants to buy NFTs

The latest trend in digital art is called NFT tokens. They act as a proof of ownership for a digital object on a blockchain and have experienced a significant upsurge.

NFTs are blockchain-based tokenisations of non-physical as well as real-world objects verifying that their holders are the genuine owners of the embedded assets they represent. Such items can include digital art, crypto-collectibles and tokenised representations of real-world assets.

Everyone would presumably like to acquire an NFT at some point and then sell it for a considerable profit. Unfortunately, this is not as easy in reality as it sounds in theory.

Just like in the traditional art market, it is possible to buy an NFT and speculate that the value will increase.

Astronaut psychedelic space art
Psychedelic art from deep space

FLY ME TO THE MOON Exclusive 1/1 NFT Artwork by Likewolf now available

By now, there is an abundance of different NFTs. Which one should you buy? After all, most digital "pieces of art" are not suitable as investments.

However, some NFT traders are experts in their field. At least they have repeatedly demonstrated a sensitive instinct for what would actually be a great deal.

How do NFTs function?

A non fungible token [ NFT ] is the digitalised form of an asset. NFTs therefore have a certain value or function. At the same time, real assets such as real estate or copyrights can also be tokenised by transferring the associated privileges and liabilities to the token. This means that the ownership is digitally mapped and is thus tradable.

A token can be both fungible and non-fungible. Basically, "non-fungible" in this sense only means that it is a unique digital asset that cannot be exchanged one-for-one for another.

Theoretically, any asset can be digitised and become an NFT: Drawings, digital artworks, video clips or even real possessions. It is important that the NFTs contain information that proves their uniqueness. This way, the respective owner can always be traced back and can assert his or her claim.

Abstract digital art of a couple engaged in a kiss
The Kiss - NFT Crypto Art by Likewolf

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How is the ownership of an NFT documented?

Like cryptocurrencies, NFTs are based on a blockchain, a decentralised database. Each block contains data as well as its own hash value and the hash value of the previous block. The data stored in a block can include, for example, the transaction details of cryptocurrencies or NFTs: Seller, Buyer and the transaction amount.

The hash value is like an electronic fingerprint. It is always unique and serves to identify the respective block. Since each block also contains the hash value of its predecessor, a chain (blockchain) is created. This is based on a peer-to-peer network, i.e. a network of computers with equal rights that all have a complete copy of the blockchain.

When a new block of information is created, all computers in the network receive this information, match it and then confirm the incorporation. Blockchains represent an extremely secure method of data storage.

Since data is always traceable on a blockchain, individual ownership can be documented very well. Consequently, an NFT stored on the blockchain cannot be copied - at least not within the blockchain.

NFTs driven by speculation

Abstract digital collage
Untitled, Likewolf

Blockchain analytics firm Nansen released its first NFT leaderboard, showing the NFT traders who have made the most profit buying and selling NFTs to date. For this, more than 90 million wallets were tracked on Ethereum and Polygon.

The collector and trader with the anonymous name Pranksy tops this list with a profit of 1,573 ETH. At today's Ethereum price, this corresponds to an equivalent value of 3.64 million US dollars.

According to the data collected, Pranksy has spent 1,860 ETH ($4.3 million) on the coveted pieces to date and has collected a total of more than 9,300 individual NFTs, from 86 different collections. Investors who want to earn money in the long term by trading NFTs need a system and the necessary know-how.

Visa buys a Crypto Punk

Visa now owns the Cryptopunk number 7610. By purchasing the virtual punk, the financial services provider has entered the world of NFT trading.

Payment provider Visa announced on Monday, 23rd 2021 that it has purchased a cryptopunk. Costing around 150,000 US dollars. Cryptopunk 7610 is one of 3,840 female punks in the process. Among the community, Cryptopunks are considered the quintessential NFTs, dating back to 2017 when they were introduced by Larva Labs - well before the massive NFT hype. The pixelated art collection consists of a total of 10,000 individual images of eccentrics and outsiders.

In an interview, Cuy Sheffield, head of Visa's crypto division, reasons the acquisition of Cryptopunk: "We felt that having a Cryptopunk would be a great addition to our collection of artefacts that record and celebrate the past, present and future of commerce".

Girl and Boy having a party
London Diary, Likewolf

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However, the NFT was not purchased purely out of an interest in collecting. Visa believes that NFTs will play an important role in the future of commerce. Sheffield draws a comparison to the beginnings of e-commerce. Online trading gave smaller companies the chance to reach customers worldwide.

However, physical goods were still needed to be produced and shipped. NFTs, by contrast, allow small businesses to use a public blockchain to create digital goods that can be delivered instantly to a crypto wallet.

Brands recognise the opportunity of NFTs

Coca Cola, Gucci, Playboy, these are just a few of the major household names recognising the NFT trend and the opportunities it offers.

Since all the big companies of the 20th century still relied on classic advertising realised with the use of real artists and sophisticated campaigns, extraordinary opportunities are available to realise them in the NFT format. Provided such companies are in possession of the copyrights.

Luxury brands and especially the art market have completely ignored and slept through the first years of e-commerce. Gallery owners who have a sense of the Zeitgeist and who understand the incredible opportunities blockchain technology holds will lead the industry in the years to come.

The Bock-Schroeder Foundation is the first high-profile international photo collection to now bring exclusive images by German master photographer Peter Bock-Schroeder (1913-2001) on the Cardano Blockchain as PhotoNFTs.

A leading e-commerce startup in the wine space that aims to revolutionise the 3-tier system, offering to help wineries to sell their wines through direct sales and simultaneously helping wine lovers to find their perfect bottle of wine, has taken a decisive step forward in the digital domain with the launch of the world's first NFT wine appraisal.

The NFT sector has grown from a $200 million niche in 2019 to a $2.5 billion-plus industry in 2021.

Digital generated NFT art

NFT creation through artificial intelligence (AI) and machine learning are challenging the concept of traditional art and pushing the boundaries of creative visual design and intellectual property. These projects, which already generate sales in the millions, are certainly among the most attractive and original projects on the often stylistically still immature NFT market.

Digital assets randomly generated by trained machine learning and algorithms, and supported by smart contracts, have the potential to develop an entirely new art form.

Conclusion about the NFT Hype

Media coverage of record sales of digital art via NFT platforms, as well as traditional auction houses such as Christies, have been instrumental in the popularity of digital art.

For newcomers to NFTs and the crypto market, it must sound futuristic and like science fiction, but the digital art market is already firmly established. One of the first NFT projects, CryptoPunks, which has gained acceptance in the digital finance sector, was algorithmically generated.

Blockchain technology, smart contracts and NFTs are the future of the art trade and will once again shake up the art market, which is already in a state of flux due to pandemics and lockdowns.

What is an NFT and why you should care

Cyber Chiq® NFT Project


8 bit artwork of a female model from the series cyber chiq by multimedia artist likewolf
Cyber Chiq® No. 3, Likewolf

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