NFTs bring big opportunities for investors in this novel field.
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Opinions expressed by Entrepreneur contributors are their own.
A century ago, French artist Marcel Duchamp changed the art world forever. In 1917, he submitted an upside-down urinal to the Society of Independent Artists’s salon in New York, signed and dated with the appellation “R. Mutt, 1917.” He titled it Fountain. The members of the society disassociated it from art, but Duchamp left with way more than a knock-back; he earned a superb spot in art history and unbeknownst to him, recognition as the inventor of conceptual art.
The craze of NFT art is similar in that it’s changing people’s ideas about art. NFTs started catching people’s attention last year and reached its first climax nearly a month ago when artist Mike Winkelmann, known as Beeple, sold his “Everydays” NFT creation at auction for $69 million at Christie’s.
As an experienced art advisor, I think Nonfungible Tokens (or NFTs) should be watched closely. There is a large group of artists who are comfortable working with digital media and there is a growing group of enthusiasts — mostly comprised of Gen Z and millennials — who are comfortable using cryptocurrencies and playing around with the Ethereum blockchain. I see four big opportunities for investors in these areas, where there is a lot of untapped territory or problems to fix.
1. Environmental impact
The network of computers that runs the blockchain infrastructure consumes an immense amount of power, which makes the process greatly expensive and requires that artists pay a special fee upfront to “mint” their art before they can have their artworks encrypted on Ethereum. Some defenders say that the energy consumed is at the edges of power grids and therefore not the best type of electricity. However, if there’s a common denominator among every artist that I’ve heard talking about the subject, it’s that the carbon footprint of NFTs has to move toward carbon negative, or at least carbon neutral. This is definitely an area where investors should be looking at companies, systems and other procedures needed to offset the carbon footprint.
2. Gaming and AR
Since NFTs are unique, it makes them limited in supply and verifiable only in the blockchain. What about artists creating unique digital assets that can be collected and stored as NFTs on the Ethereum blockchain for gamers? If Fortnite sells a skin that everyone can have for $15, what would be the upside on making those creations a unique one?
3. Platforms that invest in curation and education
We know of the pioneers like NiftyGateway, SuperRare and Opensea, but every time I go to those websites, I encounter hundreds and hundreds of pages with has dozens of NFTs for sale. There’s no curation — it’s the good, the bad and the ugly clumped together. Instead of helping a collector appreciate what’s in there, the disorganization promotes “death by choice”. Editorial content that could help people understand what they are buying, introduce these new artists, show who they are and what they do would attract more collectors.
4. Showcasing galleries
Where do people showcase their NFT art collections? There are places to mint, buy and sell the digital NFTs, but not many to showcase. Mark Cuban revealed that he is building his own gallery called Lazy.com. According to Cuban, he wanted an easy way to show his NFTs and a way to put them in his social bios, email signature, and any place he can stick a URL. The amount of sophistication in these platforms, and how many other features they can offer, is up to the investors who can spot the trend.
While the world of digital art has existed since the 1960s, there hasn’t been anything as revolutionary in that field until the advent of NFTs. It is understandably an area that makes collectors doubtful and artists excited and skeptical at the same time. Like everything, the world of NFTs requires commitment, investment and a learning curve. Early adopters have seen an outstanding return, and as always, there’s room for more.