The potential of NFTs in digital art preservation
The rise of Non-Fungible tokens has revolutionized the entire art industry. More than ever, brands are joining the space to explore the potential of NFTs, especially in the preservation of art. Here is how it can happen.
The future of art
Non-Fungible Tokens have seen increased exposure in online social gatherings, virtual events, blockchain gaming, virtual identities, and symbols of wealth. Over the years, art has continually outperformed stock indices such as the S&P 500 and NASDAQ, as well as government-issued bonds.
Its inception has provided high-net-worth investors with a new asset class offering better returns than average investing opportunities. On standard investment accounts, the stock market remains the most common regulated investment vehicle, averaging 10% returns on investment on an annual basis.
Art is an asset class that requires patience. In fact, experts suggest that investors venturing into the world of art should give their investment a minimum breathing window of ten years with assets such as paintings and sculptures. At the time of this publication, The Mona Lisa holds the record as the world’s most expensive painting. The painting is worth over 830 million dollars, and its value has increased significantly over time.
NFTs have huge potential. First conceived in 2014, they have grown and expanded quickly to a level of disrupting the entire art arena. In 2021, ‘The Merge‘ became the most expensive digital art piece embedded on the blockchain network. The sleek state of art acquisition sold for $91.8 million during an online auction event. Comparing this NFT with The Mona Lisa, the latter is more valuable, with a margin of more than 8X. However, considering NFTs are less than two decades old, the world could witness a technological shift in art.
‘Phygital’ NFTs could reinforce tangible art
Technology is constantly evolving. With new advancements in the NFT ecology, a new class of hybrid collectibles has surfaced in popularity among art lovers and NFT enthusiasts. Hybrid collectibles comprise digital and physical art that exists simultaneously as one unit in the universe and the Metaverse.
These collectibles are commonly known as ‘phygital’ items, signifying their attributes of concurrently existing in tactile and online forms. These items have performed significantly according to past accounts and real-time transactions recorded by the ledger network.
Human One is an excellent example of the niche’s top-performing ‘phygital’ collectible. The phygital item has displayed the real potential of blockchain technology in the world of creativity to the entire planet. The human One is a hybrid digital and physical piece of art developed by an NFT artist named Mike Winkelmann, popularly known as Beeple. The art’s physical piece comprises a humanoid sculpture with dystopian cartoon hallucinations reinforced with slowly rotating LED screens. The corresponding NFT is a replica of the tangible art piece in video format of the humanoid astronaut walking in a different environment.
The hybrid collection sold for 29 million dollars during the Christie 21st Century Evening auction on November 9th, 2021.
Decentralization of art is imminent
Art has continuously been known as a lucrative investment vehicle. However, the field is usually characterized by expensive art pieces available to everyday investors. Very few people on the planet can afford to even place a bid on the Mona Lisa, let alone purchase it. To solve this challenge, platforms like MasterWorx offers centralized crowdfunding services, pulling investors’ funds together to purchase multi-million dollar art collections. Owners can later sell the collections for a profit, and the turnover is distributed as dividends to the retail investors who contributed towards purchasing the art piece.
The concept is relatively unique, promising retailers a slice of some of the world’s most highly coveted art pieces. Blockchain has the potential to safeguard this concept. An ecosystem can exist, pulling NFT enthusiasts, art lovers, and investors into one place. Through a token-vesting platform powered by blockchain technology, retailers can get access to these features.
A deflationary token may exist in an ecosystem backed by physical art to maintain its floor value, bringing stability to the crypto world. Due to its asset-backed token mechanism, investors will safely hold the token regardless of the intense market volatility in digital assets, much like stable coins exist.
MasterWorks currently has 250,000 investors signed up, according to CNBC. With the token vesting platform in hand, investors can easily hop into the space by purchasing and holding the platform’s token for the long run.
Reinforcement of blockchain security in tangible art
The Federal Bureau of Investigation (FBI) has published a database of stolen art and cultural artifacts that have significant value in the art market. The published database is endless, with hundreds of paintings and sculptures declared missing. In August, Brazilian law enforcement officers recovered a stolen painting worth over 50 million Euros in Rio de Janeiro. That was just a fraction of the few art pieces recovered after being reported missing or stolen.
Blockchain technology is widely known for its transparency and security. It might not be possible to store tactile art pieces on the blockchain network. However, these pieces can be tokenized and the digital replica minted on the open ledger. Owners may preserve the corresponding tangible art in private vaults. When the two are reinforced and can be traded as one, the security of art will be difficult to compromise.
With the Non-Fungible Tokens, tangible art pieces should be valuable. To purchase or sell, one must have their information loaded transparently on the blockchain network, with the corresponding digital replica of the art showing ownership information.
Conclusion
Art has been an asset class only available to wealthy individuals in society. With blockchain technology, this has the potential to change, especially with the introduction of a token vesting platform that pulls retailers’ funds to purchase blue-chip art pieces.
Moreover, blockchain technology has the potential to introduce transparency to tactile art pieces once they are tokenized on the blockchain network. Although the NFT market is down almost 90%, the future is bright.
