What are Non-Fungible Tokens (NFTs)?
An NFT is a collectible digital asset. Like a physical collectible, digital collectibles are provably unique, authentic, and ownable, giving it inherent value in the eyes of collectors.
In the case of digital art, an NFT is a digital token that is inextricably tied to the artwork using blockchain technology, and includes important details regarding the provenance and authenticity of the artwork in a way that is unforgeable.
Digital artwork in this form has several key benefits:
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Authenticity - The authenticity of the artwork is publicly accessible and verifiable. Because this information can't be changed, the creator or collector can be assured that the authenticity can always be proven.
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Truly limited editions - The artist now has the ability to issue only a finite number of signed and authentic copies of their digital artwork, differentiating those from a copy that someone might obtain through other means.
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Ownership - Since the digital artwork is linked to an NFT, a collector can now take ownership over it and store it in a digital wallet. The token is sellable on any online secondary market.
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Liquidity - The ability to sell, trade or send the artwork to anyone, without any restrictions set by a central authority. The same way that cryptocurrencies are traded, digital art can be sold and traded in a similiar way.
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Provenance - The history of ownership of the artwork is fully tracked on the blockchain. A creation's ownership history will impact its current and future value, which is now always available online.
Artworks in NFT form contain the digital artwork file, signature of the artist, time of creation, and all subsequent transactions related to the artwork (i.e provenance). This identifiable information can be found in the smart contract of an NFT.
NFTs exist on and are authenticated via a "blockchain", which is a publicly accessible online database not owned by any central authority, where the data cannot be altered. Blockchain technology provides the mechanism for which NFTs are authenticated by digitally attaching a permanent signature and established provenance to a digital artwork.
The most popular blockchain that currently enables NFT technology is the Ethereum blockchain. NFT tokens on Ethereum adhere to a standard called: ERC-721, giving the NFTs greater accessibility and liquidity.
There are a number of reason to collect NFT-enabled Digital Art:
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Display online - There are a number of virtual options available for displaying your artworks, such as virtual galleries, exhibitions and events that exist online.
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Enjoying in physical spaces - You can display your NFT artwork in your personal space, using a digital frame like Meural.
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Long term investment - Much like physical art, digital art is an investment vehicle, uncorrelated to other asset classes. Artworks can be resold for a profit on the many public secondary markets, with collectors already realizing returns of 10x+ in only a few months.
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Supporting the arts - Digital art trascends borders, enabling artists to reach a global collector audience. The proceeds from purchasing digital art goes directly towards supporting artists and enabling a future for digital creativity.
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The joy of collecting - The overarching reason to invest in an artwork, physical or digital, is connection and fascination. Let your eye and heart guide you.