By Jason Rosenstein, Founder of Portion
The dozens of NFT collections blatantly copying the Bored Ape Yacht Club formula in an effort to replicate its astonishing success have come to smear the entire industry with a cheap and fraudulent feel. Pay no attention to them! The majority of these are passing fads, but the underlying technology is already transforming the very way people produce and collect luxury art. Physical auction houses and galleries will need to be upgraded – and with the popularization of the metaverse, some of these galleries won’t even be physical at all.
To understand the transformation of the art industry – the traditional art industry – we need to focus on the technology, not the copy-and-paste collections floating around OpenSea.
The benefits of tech art
High-end art survives on scarcity, and while digital art is technically reproducible, NFTs are designed to give you something that can’t be copied. And because they use a decentralized network of computers, the blockchain serves as the primary authenticator for high-end transactions. To put it in the more familiar realm of physical art collecting: anyone can buy a print of Monet, but only one person can own the original.
The growing number of NFTs minted, sold, resold and resold (secondary markets track an artwork’s sales journey and auction history) continues to be good news for artists and collectors. Artists can choose to add royalties on secondary market resales; all it takes is a few lines of code.
Shake up the art establishment
Traditional auction houses follow traditional rules: dictating who, where and when people have access. These auction houses and platforms act as suppliers for art dealers, as opposed to intermediaries for the general public. Decentralized models, however, are opening up the market to new breadth and a new demographic of buyers, most of whom will be able to explore historic masterpieces from their living room halfway around the world.
For many young investors and tech enthusiasts, NFTs are the perfect gateway into the world of high art, a world that otherwise would seem out of reach. Applying new rules to such an old game will help us reach a modern and truly international art market.
Artists themselves also benefit from the popularization of NFTs. NFTs will allow artists to directly engage with and be supported by their audiences, opening up the possibility of independent career management.
Artists can also use tokens to create innovative business models. For example, they can split an NFT into fractions and sell it as shares. If its value increases, the shares will also increase. Companies that are already doing this are promoting it as a way to democratize art ownership and investment. For example, in early December, during a complex upsale with a strong focus on gamification, more than 28,000 buyers spent a total of $91.8 million to acquire 266,445 “shares” of a digital work called ” The Merger”.
Enter the Metaverse
The deployment of the Metaverse is also breathing new life into the high-end art industry, allowing artists, exhibitions and auction houses to present digital pieces to an artery of potential buyers. Virtual neighborhoods like Decentraland are already proving extremely popular among forward-thinking brands taking their first steps into the future. NFTs, which some are already calling the optimal business model for the burgeoning arena, allow them to put a price on that content with proof of ownership.
NFTs also gained momentum at a favorable time. Traditional patterns of buyers and sellers have been disrupted in recent years. According to Art Basel and UBS Global’s 2021 Art Market Report, models who rely on travel and in-person contact have struggled to cope with the realities of the pandemic.
NFT technology is creating positive conversations around what constitutes ownership, transparency and, as Duchamp did more than a century earlier, even art itself. And many collectors are certainly beginning to learn enough about the technology itself to appreciate its benefits.
There are only a limited number of ways in which high-end private art galleries can be presented and viewed. The Metaverse offers collectors a new avenue through which they can exhibit their collections. Because what is the value of owning high-end pieces if they cannot be appreciated by others? The Metaverse easily fulfills this need by providing private gallery space for collectors and viewing opportunities for fans wherever they are.
Yes, bad actors are something to keep in mind with some NFT initiatives. But high-end art paints on a different canvas. It’s a marketplace community invested in originality, artist fame, and the exclusivity of owning something rare. When you give a space like this the chance to better craft rooms, improve transparency, and then add an emergent and exciting metaverse, it’s only a matter of time before high art end of the line becomes an all-digital business.
About the Author
Jason Rosenstein is an entrepreneur, developer and builder. Attracted by the disruptive potential of blockchain technology in 2011, Jason founded his first company building powerful machines to generate cryptocurrencies. A founder of two companies and a seasoned developer, Jason earned a degree in computer science with a major in cryptography at NYU. Using his expertise in system architecture, financial systems and project management, he co-founded Portion, where he harnesses the power of blockchain technology to reinvent the online auction house.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.