Two weeks ago, after Daft Punk, the French music duo, announced their split, Nigerian artist Niyi Okeowo created a digital painting of the group and posted it on his Twitter page.
That painting has now been sold for 1 ETH (~$1,900) – on Rarible.
According to data from Cryptoart.io, over 100,000 digital artworks have been sold since April 2018 for a combined art value of 133,143.699 ETH (~$219 million).
Okeowo’s sale happened while I was on a call with him and Jibola Lawal, Senior Strategist at Lisabi Technologies.
The call was to talk about how digital creators can take advantage of Non-Fungible Tokens (NFTs) on the blockchain.
While our conversation centred on digital art, NFTs can be used to sell any kind of digital content.
Over the weekend, Twitter’s founder Jack Dorsey put the world’s first tweet up for auction and the bid is currently at 1,519 ETH (~$2.5 million).
It’s one thing to pay that amount of money for say a mansion or a yacht. It’s a whole other thing to pay that for a tweet. And while it may seem ridiculous, the world of digital art collection is anything but.
So NFTs… What are those?
It’s virtually impossible to talk about NFTs without first talking about Blockchain. We’ve heard the word thrown around a lot in the past few years and at first glance, most people associate it with bitcoin – and they are not wrong.
Cryptocurrency is built on Blockchain. A blockchain is essentially a type of database that isn’t controlled by one entity or organisation.
When used for crypto transactions, it stores information about these transactions in blocks that cannot be changed, making crypto transactions secure and trusted. This is as far as I’ll go into the labyrinth that is blockchain.
The meaning of NFTs lies in the name itself. Non-fungible tokens are a type of cryptocurrency that cannot be changed or replaced by something identical.
Quite simply, when an item is fungible, it can be replaced by something identical.
If you paid for an item with a dollar note and you sold that item again for one dollar, you wouldn’t get the same exact dollar note you gave when you bought it but it wouldn’t matter because the dollar note is fungible.
NFTs are unique certificates for intellectual property and they are stored on the blockchain. A person who owns an NFT owns whatever media has been tied to it and has proof that they own it.
NFTs can be used to represent any kind of digital media – from gifs to music. However, one of the most popular use cases of NFTs today is digital art.
The origins of NFTs can be traced back to 2017 on the Ethereum blockchain – where they are currently still most popular – when a group of people created a game called Cryptokitties where they could trade virtual images of cats.
With these cat images, human beings were replicating on the blockchain something we already had a long history of doing; collecting.
A world of collectors
From the ancient Benin bronzes that now reside in museums outside of Benin, to the various paintings by Monet that live in mansions across the world, the human race has always been obsessed with keeping beautiful art.
But I don’t want to create the perception that the collection of art has been entirely altruistic or merely for aesthetics. Art collection is also big business.
Between 2005 and 2012, the 1982 painting ‘Warrior’ by Jean-Michel Basquiat was auctioned three times and during that period the price soared 450%. The painting is set to sell for between $31 million to $41 million at an upcoming auction by Christie’s.
Today, people count the art they own as assets because, in the end, that is what it is for them. Something that can be sold later for much, much more.
The growing world of NFTs does not shy away from this. It is already something people are fairly familiar with when it comes to cryptocurrency. We are aware of the concept of ‘buying the dip’ – waiting for a coin’s value to drop and then buying at that low price – only to sell for more later.
NFTs can be viewed through the same lens. If I had the money to collect art today, I could buy a painting by Nigerian artist Bruce Onobrapeya because I like his work but also because I know he is a well-respected artist and the work could go for much more in a few years.
I would have this same approach if I bought a newly minted NFT from Nigerian digital artists Niyi Okeowo and Justin Irabor. I like their work and believe they will become even more popular and their art, more valuable.
Ok. But how do they work really?
While on the call with the artist Okeowo and Lawal of Lisabi Technologies, Lawal referred to NFTs as “sticking a barcode on everything.” And this is what NFTs are and even more.
Digital content like music already have unique UPC barcodes that are used to track when units of a single or album are sold. NFTs go beyond uniquely identifying digital media. They are also built with additional functionality in the form of a computer program called a smart contract.
A smart contract does something very simple – ensure that both parties to a contract fulfil their obligations and no one gets cheated. So an NFT is designed in such a way that you won’t be sending all your hard-earned crypto to someone who will take ownership away from you.
The process of creating an NFT is called minting. Minting can be done on several platforms including Rarible, Super Rare, Foundation, among others.
When minting an NFT, a creator is making it possible for anyone in the world to buy and own that piece of media. And beyond getting what amounts to a digital title deed, NFTs also store information including the NFT creator, the current owner, all previous owners, the NFT’s many prices, and even what percentage of future sales will go to the creator.
With all this information available and a very secure royalty system in place, digital artists are looking at a platform that will allow them to earn money on their work for life – something musicians already enjoy in the form of music publishing.
But NFTs are not limited to digital paintings. You can mint anything.
“Imagine wearing a dress made of water. Or an invisibility cloak.”
That was Delz Erinle, Product Lead at Thrill Digital, a startup that created a solution to allow people to walk through and shop at their favourite Shopify stores by creating a virtual storefront for them. They are also doing work in the area of digital fashion.
The conversation around NFTs is slowly permeating all forms of art and media. Musicians can mint their albums – this could create an avenue for streaming platforms that cater strictly to NFT music.
Physical paintings can be minted and buyers can receive them at later dates. All these things are happening and as you can imagine, the world of fashion isn’t being left behind.
In November 2019, a US-based businessman bought his wife a digital dress worth $9,500.
The fashion line Carlings sold out their digital streetwear collection in November 2018.
For years, people have talked about fast fashion and the dangers it poses to the environment due to how wasteful people have become.
Now people who just want to wear outfits once can have these outfits photoshopped on them, post pictures and be done – no carbon footprint.
These wearable NFTs are an avenue for a celebrity to post a picture of themselves in a Gucci dress they own made of flowing water – something that, for the time being, cannot exist in real life.
This all reminds me of the game Sims. In the game, players live life as avatars they have created in this virtual world. These avatars can wear clothes, buy land and own cars.
But the twist is that the game is no longer just a game. Virtual property can be sold and traded.
There are many use cases for NFTs and as more people find new interesting ways to use this technology we will find that the virtual world will become more real than it’s ever been.
There is a digital world taking shape and while we can live and spend our money on it, we can’t touch it.
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