NFTs: An Artist’s Nightmare or Next Big Break?

With a burgeoning market and massive rewards, NFT’s are quickly gaining popularity and monetary value. Artists and investors alike are taking note, but also eying a fundamental change in the way that we view and commodify art.

NFTs have exploded in popularity, leading to enormous gains for savvy investors. The concept is far more simple than the hyper-sensationalized rumors paint it out to be. Put simply, NFT’s are easily reproducible items, typically an image, that someone purchases. That purchase is then verified through blockchain, a decentralized system of recording and tracking information. Once verified, the owner of the NFT can do whatever they want with their ‘Non-Fungible Token’, often buying or selling their NFT’s at an ever-increasing price.

NFTs have been around for about 3-4 years now and the NFT market has shown no signs of slowing down, with 2.5 billion in sales so far in 2021. Though many in the art world thought this frenzy might die down, they have been proven wrong. Its profitability has caused a mass migration from two previously unrelated spaces: investment and art.

Artists typically have two choices when producing NFTs. First, artists can simply digitize physical artwork into an online piece or just take digital work that they previously made and monetize it. The second option is to generate original images, usually of animals or inanimate objects and in batches of eight to ten thousand, that are randomized upon purchase, meaning each buyer receives a unique NFT with specific attributes that determine its worth. Characteristics that are revealed to be rarer have a higher value, ranging anywhere from hundreds to millions of dollars.

Esteban Diacono is a motion designer and has been working in his field for over 25 years. Since first hearing about NFTs in October 2020, he has been creating and selling them. His artwork typically revolves around different variations of the human form, using different textures to emulate the body. He has done work for recognizable brands such as Gucci and Apple.

Though he does not consider NFTs to be his principal source of income, Diacono still invests a lot of his attention and time into their creation. While he found the transition to selling NFTs fairly smooth, thanks to his digital art background, he found the amount of transparency and openness in the crypto and NFT space surprising since the topic of income is typically avoided in traditional industries like his own. For Diacono, it has been a jarring shift from disconnected and often secretive exchanges of wealth to putting income on public display.

(Photo courtesy of Esteban Diacono)

Current listings for Esteban Diacono’s NFT’s fetch up to $80k on exchange websites such as Superrare.com.

A big motivator for more traditional artists to enter the world of NFTs has been the move away from the art world. Though still immensely wealthy, the art market diminished by 22% in 2020 and has been plagued by a myriad of issues, including the problematic power dynamic between art dealers and the artists which has been fueled by the lack of regulations. Although these issues can still present themselves in NFTs, the middle man (the dealer) is removed from the equation, meaning artists are allowed to sell to a free, open market without the worry of being exploited. The main concern, however, is the concern of hyper commodification, treating art as a means of profit instead of as something that has been created and holds artistic value. As NFT’s are diminishing the demand for a traditional art market, there are still serious doubts over how NFT’s can not only commoditize art, but erase the creative spirit that makes art what it is in the process.

The main criticism of NFTs has been that they are a temporary craze that will soon blow over. This is a credible concern for some artists, but Esteban doesn’t seem to be too worried, explaining that he “doesn’t think NFTs will be short-lived” and that “the hype and media attention will eventually fade, but the community is quite strong.” This confidence has allowed Esteban to be successful but he still has many concerns, particularly regarding the shady parts of the NFT world. “I’ve never ever encountered so many scammers, and people willing to harm others.” In an environment that is very volatile and allows individuals to make a quick buck, NFTs attract a lot of people with bad intentions; specifically scammers and art thieves.

On the other side of the spectrum are investors: the people keeping the market alive. Shaun Fischer is one of those individuals who, similar to Diacono, was introduced to NFTs by a friend. He explains, “I was very skeptical for the first few months, but eventually took the dive.” This dive turned out to be the right choice. Fischer has been so successful buying and reselling NFTs that they are now his main source of income.

Fischer credits the appeal of dealing in NFTs over a more traditional job to the opportunistic environment. “It’s still a new concept with constant new experiments and opportunities arising. Most people start on the same playing field, so the time you put into researching will show in your wallet,” Fischer said.

As for his opinion on the longevity of NFTs, he shares Diacono’s perspective, explaining, “[while] the market short term may be very volatile, NFTs [are] still an investment which multitudes of people around the world value. Because of this worldwide interest, I believe they have that longevity.” This shared confidence among investors and creators alike has allowed for a vibrant marketplace that has been around for a short time, but shows no sign of slowing down.

For investors like Fischer, NFTs present some risk due to the fragility of the actual art, combined with the fact that buying an NFT is a monetary gamble. When someone buys an NFT, they are, in fact, purchasing a link to it that could theoretically shut down at any time. Though fundamentally this is no different than someone buying a painting and losing it or having it stolen, these concerns are still paramount in such a volatile and burgeoning market.