NFT: What is it? Why is it shaking up the Art World?

If you are big fan of art, you must know that famous artist Damien Hirst has just released his first NFT, entitled “The Currency”. When did NFTs become a hot topic? What makes NFTs so valuable? What are NFTs? If you are interested in joining the party, you must read this ultimate guide to NFT.

What is the meaning of NFT?

The term “NFT” stands for “Non-fungible Token”.

To make it clearer, let’s break the term down into two parts.

Firstly, by “non-fungible”, it means NFT cannot be readily interchanged like standard coins such as Bitcoin and Ethereum – the value of one NFT is not equal to another.The concept is similar to when you trade a Pikachu for a Centarumon, they are just completely different.

Secondly, the definition of “token” means NFT shares the same kind of blockchain programming as cryptocurrency – each of them contains built-in authentication that serves as proof of ownership, making NFT significantly unique and scarce.

NFT was first created in 2013 and started to gather media attention in late 2017, thanks to the creation of CryptoPunks and CryptoKitties. After the boom, NFT never lost its vibe as new developments continuously emerged in the NFT marketplace, several activities and projects even reached record-breaking sales.

Source: Forbes, The Verge

Read more:What is Cryptocurrency? All you need to know about Bitcoin and Blockchain TechnologyMore than a game: Everything you need to know about MetaverseHow to be a Digital Nomad in 2022? Here are 5 things you need to know

How does NFT work? Why are NFT always associated with artwork?

NFTs are inseparable from blockchain as it is highly secured by the Ethereum blockchain, thus no one can alter the record of ownership or copy-and-paste the existing NFT.

Artwork has long been undervalued ever since the emergence of the internet since literally anything can be copied and pasted without creator’s consensus. NFTs are therefore helping artists to solve this vital problem by securing the ownership of each digital production – an owner of an NFT owns only the token itself but not the underlying item or any related copyright.

Sensing the opportunities, more and more artists have jumped on the bandwagon. There are now many different types of NFTs on the market, including but not limited to:

• Artwork

• Memes

• Event tickets

• Collectibles

• Music and media

• Virtual items

• Gaming

• Real-world assets

• Identity

• Domain names

Source: BBC News, 99designs

Examples of NFT & NFT Sales

As said, NFTs are not only limited to drawing artworks, they can be divided into various categories, below are some examples:

And what are the most expensive NFTs sold to date you ask? Let’s check out the top 8 highest-selling items:

#1 Beeple, Everydays: The First 5000 Days US$69.3 million

#2 CryptoPunk #7523 US$11.8 million

#3 CryptoPunk #7804 US$7.6 million

#4 CryptoPunk #3100 US$7.51 Million

#5 Beeple, CROSSROAD US$6.66 Million

#6 Beeple, Ocean Front US$6 million

#7 CryptoPunk #5217 US$5.44 Million

#8 Tim Berners-Lee, World Wide Web source code US$5.43 Million

If you are looking for real-time data on NFT trading, you can visit NFTGO to get the latest NFT market news and updates, including market cap, total volume, total transaction, as well as the number of NFTs and their holders, you can even monitor the respective trends in the past 24 hours so as to stay on top of the market trend.

Source: Unstoppable Domains, Domus, Dexerto

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What do NFTs mean?

NFT is obviously a groundbreaking technology for content creators and artists since they can now declare complete, concrete ownership over their artworks, making it easier to monetise their creations. Rather than hoping to get paid, artists can now proactively offer their creativity to the world and keep track of its performance via several mediums that allow each piece to be liquid, tradable and verifiable.

In addition, since the trade record on blockchain is open to the public, artists can always know who owned their work and how much it had been sold for at any given time, bringing an unprecedented level of transparency to the entire art world.

In the traditional art market, fake art is in fact very common, the collection you have spent great money on may or may not be original. Fortunately, the authenticity of NFTs is guaranteed.The blockchain-based feature ensures NFTs are immune to modifications, removal or replacement, allowing them to showcase their authenticity as the most valuable quality.

NFTs are also loved by investors since they are resellable. Once you have listed your NFTs on the marketplace, people from all over the world will see it and make a bid if interested. If you managed to get a CryptoPunk icon a few years ago, you could now be a millionaire – it is clear that investing in NFTs can lead to huge profits.

Source: The Verge, ethereum.org, 99design

Celebrities launched NFTs too!

NFTs are a hot commodity, many celebrities have boarded the hype train and even minted their own non-fungible tokens.

English artist Damien Hirst has launched his latest NFT project called “The Currency”. The artwork comes in two forms – firstly, it is physically composed of 10,000 unique hand-painted A4 sheets covered in colorful dots; secondly, each of these hand-painted papers carries a unique NFT which is worth US$2,000.

As one of the most legendary rappers ever, Eminem has made US$1.78 million from his first collection of ‘Shady Con’ NFT through Nifty Gateway.

Renowned auction company Christie’s has partnered up with The Andy Warhol Foundation to mint 5 NFTs from restored and preserved files of the artist’s 1985 collection, which have been sold for an eye-watering US$3.4 million in total.

Ellen has decided to make the clip of her explaining NFTs and holding a hand drawn kitten as her first NFT, after 24 hours, the talk show NFT has earned US$33,495.

As one of the world’s buzziest musical acts, BTS has recently announced its plan to launch the photo cards of BTS members in the NFT version. In addition, a video game co-produced by BTS and original stories starring each member will also be released in web cartoon and web novel format.

Hong Kong actor Shawn Yue has recently hosted an online auction named “No Time Like Present” with Christie’s. Out of all 32 items including 14 NFTs, 6 luxury watches, accessories and a NASA chair, a Cryptopunk NFT was the most expensive, reaching a price of HKD$33.5 million.

Hong Kong filmmaker Wong Kar Wai has turned never-before-seen footage from his critically acclaimed film In The Mood For Love (2000) into an NFT, which was sold at HKD$4.28 million.

Aiming to sooth the serious income gap in the Chinese music industry, Hong Kong based singer and songwriter Hanjin Tan auctioned “Nobody Gets Me” on OpenSea and successfully closed the deal for HKD$132 thousands.

Another Hong Kong’s popular singer-songwriter Hins Cheung joined the NFT craze with a mystery video recorded during his latest concert, which will be auctioned at a starting price of HK$100,000.

Source: Crypto Briefing, South China Morning Post, Kotaku

NFT Law in HK & Global Comparison

There are no uniform legal framework to deal with NFTs at that moment, different regions have their own concerns:

• NFTs with personal information might violate data protection laws

| | The United States | * Whether fractionalized NFTs should be subject to capital gains tax | | United Kingdom | * Whether NFTs issuer has the legal basis for minting digital tokens since distributed ledgers are still not legally recognised as a registry

• Whether creating and trading NFTs are taxable events

|

Source: The Law Society of Hong Kong, Mondaq

NFTs are creating gender problems?

Fun fact – the existence of NFTs is actually worsening gender inequality.

Abundant research indicates the gender disparity in the cryptocurrency market given that women are facing higher investing barriers in general. According to ArtTactic, men are dominating the NFTs market as they have accounted for 84% of all market players over the last 21 months.

This lack of diversity among cryptocurrency investors might be a warning sign that people should pay attention to.

Source: CNBC

Does copyright exist in the NFTs market?

Although NFTs are not regulated by laws, their authenticity and originality are well established.

Since NFTs are tokens with verifiable metadata and transaction log, every internet user can track the history of ownership as well as the authenticity for each digital asset. In addition, blockchain’s unique structure provides extra security to all NFTs, ensuring all art pieces are almost impossible to alter or replicate.

Interesting to know, Photoshop is helping too. Adobe is launching a system called Content Credentials, which is built into Photoshop. By then, NFT sellers will be able to link the Adobe ID with their crypto wallet, allowing compatible NFT marketplaces to show a sort of verified certificate proving the art’s source is authentic.

Source: Forbes, Verge

FAQs

The process of making a NFT is surprisingly straightforward, even if you are not a crypto industry pro, you can still manage to create your own digital arts.

To begin creating your NFT, you will first have to connect your crypto wallet to the NFT marketplace you would like to list your art on. Once set, go straight to the “Create section” on the marketplace to upload your artwork, then your work will be automatically tokenised and ready for sale.

Source: Creative Bloq

Purchasing an NFT is also relatively easy. Once you have set up an account and funded it, you can start browsing through countless collections to find the apple of your eye.Most NFT marketplaces such as OpenSea, objkt.com, Rarible operate in an auction format, meaning you will need to submit a bid for the NFT you want to buy. You can track the status a few days later to see if you have been outbid or successfully won the auction.

Source: CNBC

NFTs are your own assets, of course you can resell these digital art pieces on the secondary market.

To sell NFTs, you have to guarantee your crypto wallets are connected to the chosen marketplace. It’s worth noting that almost all platforms will charge you a certain amount of gas fees for accepting an offer and transferring the asset. Thus, the price you set should at least cover those expenses, or else you could possibly end up losing money.

Source: CNBC

There has always been widespread public debate over the actual value of NFTs – some believe it is an evolutionary investment, while some argue it is just another bubble waiting to burst.Take a look at the transaction volume of OpenSea, the biggest NFT marketplace across globe, on 29th August 2021, there were over $322 million of transactions, whereas on 8th September 2021, the daily trading volume dropped to around $84 million. Although the number is still extremely high compared to 2020, it is as volatile as the cryptocurrency.

To be blunt, there is no absolute answer to this question, you must trust your gut and make the right choice.

Source: NFT Evening

Read more:What is Cryptocurrency? All you need to know about Bitcoin and Blockchain TechnologyMore than a game: Everything you need to know about MetaverseHow to be a Digital Nomad in 2022? Here are 5 things you need to know

Want to keep up with the tech-driven future? Check out Preface Coding Event for our latest Tech Seminars and Coding Workshops to stay relevant! Come enjoy the exquisite beverage selection from Preface Coffee & Wine while updating yourself with the most up-to-date knowledge!