TechDigits

Tech news
Saturday, Mar 25, 2023

NFTs had a breakthrough year – What’s next for them?

NFTs had a breakthrough year – What’s next for them?

Non-fungible tokens (NFTs) drove 2021’s most-hyped art sales, but the tech underpinning them raises environmental and long-term value concerns.

When Canadian artist Trevor Jones graduated 14 years ago from the University of Edinburgh, in Scotland, he was quickly confronted by the harsh realities of the art world.

“I had some decent exhibitions and gallery shows,” he told Al Jazeera. “But it was no way to pay the bills. I was working three different jobs at the time.”

In the early 2010s, he got interested in the intersection between technology and art, and started experimenting with QR codes and augmented reality. These themes received a lukewarm response from the established art world, but he pushed on. In 2017 he invested in the rising cryptocurrency Bitcoin, promptly losing his money in the 2018 crash.

“I found out I was a much better painter than an investor,” he joked. “But it opened up a whole new world that I could explore through painting.”

Since then he has been making cryptocurrency-themed works, mixing classical painting and crypto themes, often with digital art pieces attached to them in the form of non-fungible tokens (NFTs).

NFTs are unique digital files underpinned by blockchain technology – the same tech that anchors Bitcoin – and the blockchain ledger they sit on verifies who the rightful owner is of that one-of-a-kind digital asset, giving it a provenance.

Demand for NFTs started taking off late last year, with interest in them exploding this year – along with Jones’s fortunes.

His first NFT project sold in 2019 for $10,000 – a huge amount of money at the time. In October 2020, he sold an NFT of Batman together with comic book artist José Delbo for $552,000. Then this February, he sold 4,158 editions of his most famous work, Bitcoin Angel, which mixes Bernini’s The Ecstasy of Saint Teresa with crypto imagery, for $3.2m.

“When you’re a poor, struggling painter you just want to sell your work to pay rent and put some food on the table,” Jones said. “It’s a struggle to be creative under those conditions. Now I’m in a position to do a collaboration with Ice Cube.”

Pixels and provenance


NFTs have supported this year’s most-hyped art sales.

The opening shot for the gold rush was fired in March, when United States-based artist Mike Winkelmann, also known as Beeple, sold an NFT of his digital artwork Everydays: The First 5000 Days, for a whopping $69m at auction house Christie’s.

Christie’s also partnered with NFT trading platform OpenSea at the end of November to cash in on the trend. Celebrities such as Paris Hilton, Snoop Dogg and Lindsay Lohan and even World Wide Web inventor Tim Berners-Lee made and sold NFTs this year.

Another major trend unfolded with avatar-like portrait drawings sold as NFTs. The most popular project in the space is called CryptoPunks. At the time of this writing, the lowest-priced CryptoPunk could be bought for $242,918, while the most expensive carried a price tag of $7.58m.

The Bored Ape Yacht Club, which boasts celebrity members including Jimmy Fallon and Steph Curry, saw a bundle of 101 NFTs resell at auction at Sotheby’s for $24.4m in September.

Beyond the bragging rights of being on the cutting edge of a new crypto trend, investors are also willing to wager on the idea that pixels with an attached provenance will continue to be desirable collectibles.

“When you make an NFT there’s always a limited number of them,” Yan Ketelers, CMO at Venly, a Belgian startup that builds NFT marketplaces, told Al Jazeera. “Whenever you sell them, it gets registered on a blockchain.”

A gallery assistant at London’s House of Fine Art (HOFA) Gallery in the United Kingdom holds a smartphone displaying a signed lithograph ‘Sealed Cryptopunk #207’ by Larva Labs


These NFTs can in turn be sold by their owners, creating a fertile ground for trade on NFT marketplaces like OpenSea or Nifty Gateway.

But while NFTs benefit from the property rights bestowed by the blockchain, they also suffer from the technology’s hefty carbon footprint.

Most blockchain networks rely on so-called miners whose rigs – often comprised of thousands of energy-guzzling computers – race to solve complex math puzzles, with the winner being rewarded with cryptocurrency.

The Ethereum blockchain, on which most NFTs are registered, currently uses more energy than the entire country of the Philippines. “This digital system has a huge impact in the real world,” said Alex de Vries, owner of Digiconomist, a site that calculates the energy use of blockchain networks like Ethereum.

In his day job, de Vries is also a member of the financial crimes unit of the Dutch central bank. “That’s not what we want in the age of climate change, when we’re supposed to lower our emissions,” he said.

But for blockchain proponents, this is a transitory problem. According to Ketelers, miners are quickly moving to sources of clean energy, and blockchain systems are experimenting with new ways of doing business. Venly for example often uses Polygon, a network that is still built on top of Ethereum, but uses a system that would cut up to 99 percent of the energy use of the so-called proof of work systems described earlier.

“I don’t think the environmental critique still makes a lot of sense,” said Ketelers.

Yet according to de Vries, the problem hasn’t been solved yet. More eco-friendly blockchain networks do exist, but the bigger ones like Ethereum are still energy guzzlers. Ethereum has also been wanting to move away from proof of work for years, but has been unsuccessful so far.

And while sceptics may dismiss NFTs as a fad, evangelists argue that the “metaverse” – a vague term used to describe a more immersive future version of the internet populated by avatars – is poised to push them into the mainstream through applications such as video games, Venly’s main business.

“Imagine that everything you build or buy in a game becomes your property,” said Ketelers. “It becomes part of your identity, and you can even sell the assets.”

That is already happening to a degree. The market for game skins, cosmetic upgrades for in-game items such as guns, reached $30bn in 2018, according to Juniper Research. Yet with NFTs, players could really own these items, independent of game developers, and even start trading them on third-party marketplaces – which could allow burgeoning virtual economies to rise up.

Venly supports game developers like Atari with ideas like this.

But like crypto bubbles past, the NFT hype might also collapse in the future. “I learned how fast things can take off in the crypto world, but also how fast they can crash,” said Jones. “Bitcoin has been called dead many times in the past few years, but it just keeps rising up like a phoenix.”

This is why Jones is preparing for volatility. He hasn’t bought anything extravagant with his newfound wealth, just a new car (albeit a Tesla). And next year he is renting out Stirling Castle in Scotland to host a party for the collectors who own his art – a luxury in some ways, but one he sees as good business.

“I need to grow my brand and community to survive the eventual bear market,” he said. “There will be a lot of artists who will disappear, and projects that will go to zero. Everybody knows it. But some artists will succeed and come out the other end. I hope I will be one of them.”

Newsletter

Related Articles

TechDigits
Close
0:00
0:00
Donald Trump arrested – Twitter goes wild with doctored pictures
Credit Suisse's Scandalous History Resulted in an Obvious Collapse - It's time for regulators who fail to do their job to be held accountable and serve as an example by being behind bars.
Russian Hackers Preparing New Cyber Assault Against Ukraine
A brief banking situation report
Elon Musk Is Planning To Build A Town In Texas For His Employees
The Silicon Valley Bank’s collapse effect is spreading around the world, affecting startup companies across the globe
Market Chaos as USDC Loses Peg to USD after $3.3 Billion Reserves Held by Silicon Valley Bank Closed.
Banking regulators close SVB, the largest bank failure since the financial crisis
In a major snub to Downing Street's Silicon Valley dreams, UK chip giant Arm has dealt a serious blow to the government's economic strategy by opting for a US listing
It's the question on everyone's lips: could a four-day workweek be the future of employment?
Corruption and Influence Buying Uncovered in International Mainstream Media: Investigation Reveals Growing Disinformation Mercenaries
Being a Tiktoker might be expensive…
China's top tech firms, including Alibaba, Tencent, Baidu, NetEase, and JD.com, are developing their own versions of Open AI's AI-powered chatbot, ChatGPT
This shocking picture, showing how terrible is the results of the earthquake in Turkey
The desk of King Carlos Alberto of Sardinia has many secret compartments
Charlie Munger, calls for a ban on cryptocurrencies in the US, following China's lead
First generation unopened iPhone set to fetch more than $50,000 at auction.
Almost 30% of professionals say they've tried ChatGPT at work
Interpol seeks woman who ran elaborate exam cheating scam in Singapore
What is ChatGPT?
Tesla reported record profits and record revenues for 2022
Microsoft is finalising plans to become the latest technology giant to reduce its workforce during a global economic slowdown
Tesla slashes prices globally by as much as 20 percent
After Failing To Pay Office Rent, Twitter May Sell User Names
FTX fraud investigators are digging deeper into Sam Bankman-Fried's inner circle – and reportedly have ex-engineer Nishad Singh in their sights
TikTok CEO Plans to Meet European Union Regulators
U.S. Moves to Seize Robinhood Shares, Silvergate Accounts Tied to FTX
Coinbase to Pay $100 Million in Settlement With New York Regulator
FTX assets worth $3.5bn held by Bahamas securities regulator
Former FTX CEO Bankman-Fried finally arrested in Bahamas after U.S. files charges
Corruption works: House Financial Services Chair Waters doesn't plan to subpoena her donor, Sam Bankman-Fried, to testify at hearing on FTX collapse
Yellen hints at ‘national security’ probe into Twitter purchase
Elon Musk reinstates Donald Trump's Twitter account.
George W. Bush and Barack Obama will hold back-to-back disinformation conferences
Solar + Powerwall ensures you never lose power, even if the grid goes down
This man paid for strangers' grocery and it moved them to tears
Meta introduces a new version of Mark Zuckerberg
Virtual Reality on billboards: BMW advertisement on Times Square
Apple CEO Tim Cook says coding should be taught as early as elementary school: 'It's the most important language you can learn'
Apple Executive Resigns After Viral TikTok Shows Him Making Crude Jokes
Huawei is not only better technology, but also protecting users better: Apple Warns Of Security Flaw For Iphones, Ipads And Macs
Mark Zuckerberg warns many teams will ‘shrink’ as Meta revenue drops
Elon Musk reportedly begged for forgiveness after his affair with Google co-founder Sergey Brin's wife
J.P. Morgan’s wealth management guru has some advice for recent college graduates on managing money and building wealth
Pentagon widens scope of UFO-hunting unit
Bezos' girlfriend Lauren Sanchez gives $1M to group focused on migrant kids at US-Mexico border
Hong Kong gets its first metaverse churches with avatars and virtual preachers
The ‘Dirty Quid Pro Quo’ Between Democrats and Big Tech
Elon Musk swore in March not to sell any Bitcoin, but Tesla cashed out 75% of its Bitcoin holdings amid the crypto winter just months later
Crypto winter continues at Gemini as another round of layoffs hits Winklevoss crypto exchange
×