NFTandeconomy,technologyNFTandcreativeindustry

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  After viewing an online forum participated by NFT art researchers, digital artists, art gallery managers, and other related professionals, we would like to have a further discussion about the artistic values and system behind NFT artworks and how NFT art and traditional art intervene with each other. 

(Link:https://www.bilibili.com/video/BV1gK4y1m7vW?from=search&seid=17717960554813054237, Language:Chinese)


    Based on previous posts, we want to answer the two biggest doubts we had so far: 

  • Is NFT a trend or bubble economy? 

  • How NFT is going to change the creative industry?


Is NFT a trend or bubble economy? 


    In our previous posts, we already talked about the art value of NFT that NFT artworks are trying to build a new value of artistic appreciation. Although many people said paying millions of dollars to buy an NFT artwork is crazy, spending millions of dollars to buy a traditional artwork is also crazy. Thus, the point is how we perceive the real value of the whole NFT system. To make it clear, we are going to answer three questions to contribute to the extensive discussion of NFT:

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1.NFT is said to be transparent trade, so does it mean there is no black-box operation any more?

   

   The big event happened in the NFT market that one NFT artwork called The first 5000 days from Beeple is sold at 69 million dollars at Christie’s auction in the last month. However, in December 2020, one of the biggest NFT trade platforms, Nifty Gateway, once sold 20 artworks from Beeple. And among 12 bidders, 11 bidders were from the different signed wallets under the same person. Surprisingly, this man (Metakovan) is the person who bought Beeple’s The first 5000 days this March at the highest price ever, he is a co-partner of NFT investment fund called Metapurse. The below picture shows that how the price of the B20 token (the token used to buy NFT artworks) is changing in the market in recent three months. It is obvious that the highest point occurred on the day when Beelple’s The first 5000 days was sold. 


(B20 chart in recent three months, resource: CoinMarketCap)


   In every trade, what we see is the name of a wallet as it is not real-name authenticated. Thus it is easy for a person to use different wallets to trade NFT artworks back and forth. In Yiyuan Liu’s perspective, she thinks the sale of the first 5000 days is not just a sale but a kind of black-box operation pushing NFT artwork trading markets stepping into another stage, as it influenced the whole trading system of NFT artworks. (Yiyuan Liu, 2021, Will the NFT craze change the art world? An undercover observation by an art practitioner.) 

    Currently, there do exist two apparent vulnerabilities of the NFT market which are wash trading and market manipulation. Like how Metakovan raised the price of The first 5000 days, NFT traders will create lots of wallets to chase the active liquidity of NFT artworks trading. However, when the whole NFT market is going down, lots of NFT artworks will also start fading. When tokens related to blockchain start reversing, the NFT art market may undergo a nobody-cares. The below picture is the trade numbers and sales of NFTs in the last 30 days, and we can see the whole activity of NFTs decreasing.  



(NFT artworks trade activity, resource: NoneFungible)


2.What is the value of the new aesthetic standards and cultural values that NFT art is calling?


    Using the criteria of contemporary art the criticism of artistry to analyze the NFT art market is inappropriate for now. First, the combination of technology and art has made NFT artworks out of the discussion of traditional artworks. However, in Qunqi Huang’s opinion, an NFT art market researcher, the relationship between art and technology is indirect as the significant evolution of art won’t happen until the whole social economy or political structure changes, according to art history. (Qunqi Huang, 2021) So far, the technology of blockchain or NFT hasn’t changed the current economy or politics, so the art value of NFT artworks is still in the process of developing. In Bi Xin’s opinion (an art market investigator), many similar symbols appear in works circulating in the current NFT art market because of the anarchism in NFTs. So watching throughout the whole NFT art market presents a new place for gathering a new culture, new economic system, and new culture system. For now, instead of talking about the boundary between traditional artworks and NFT artworks, maybe we should focus on the symbolization and performance of the behavior of owing NFT artworks, as NFT artworks reflect artists and collector’s consensus in this distributed spirit.


3.Why do we need to focus on the NFT markets’ influence on the Sustainable problem?


     Memo Akten’s in his article The Unreasonable Ecological Cost of #CryptoArt points out that to cast a single version of the NFT carbon footprint is equivalent to driving a car 1,000 kilometers, and the carbon cost of a higher version of the NFTS is equivalent to flying dozens of trans-Atlantic flights. What’s more, Creating an NFT consumes an incredible amount of power. Producing Bitcoin, Ethereum and other tokens on the blockchain requires a lot of electricity to be “mined”; Creating and auctioning NFTs requires high-performance specialized computers to perform calculations and verify the authenticity of transactions. According to the University of Cambridge’s bitcoin electricity consumption index, bitcoin miners are expected to consume roughly 130 Terawatt-hours of energy (TWh), which is roughly 0.6% of global electricity consumption. (https://techcrunch.com)

    After knowing the potentially serious environmental problem, many artists immediately give a sensitive reaction to this. They start to rethink the way of making NFT artworks and establish a global collaboration network to build a conversation to solve the dispute between the future NFT artworks and the sustainable problem.


Here is what they do on their website https://www.carbondrop.art.

    However, are they really the one who needs to be responsible for this question?




How NFT is going to change the creative industry?


    So far we have discussed the economical aspect of the prosperity of NFT, we will now focus on the technical aspects that make NFT artworks and all the online economic transactions possible. 

    This section we will investigate into the blockchain techonolgy, its core concept “digital scarcity” and how blockchain will influence the creative industry through the format of NFT?



1.What is the technology of NFT artworks?


    A blockchain is a growing list of databases that are public, distributed, and secured. By design, a blockchain is open for everyone to access, store millions of computers worldwide, and be resistant to modification of its data. Blockchain technology can be used in many spheres and industries. Similar to google email as an application based on the internet, NFT artworks or bitcoin are applications based on this technology.

(What is the technology logic of NFT, Illustrator: Nancy Du)
    
    As shown in the graphics, blockchain has enabled more mobility and security for people to trade online. However, as discussed in our previous posts, we are wondering what’s the incentive of people to purchase the seemly copiable artwork online? Here we will introduce the concept of digital scarcity and explore how it motivates buyers to own digital art pieces?
 


2.What is digital scarcity?
 
    The audience or collector normally is not interested in collecting digital artworks, nor they appreciated them as closely as the physical artworks in the “real world” because of the nature of digital media: copyable. 
    However, with the secured characteristic of blockchain, it creates a revolutionary concept for digital artworks. The digital scarcity , “makes digital art unique and valuable”.


(What is Digital Scarcity, Illustrator: Nancy Du)

3. How Creative Industry will change under the influence of blockchain?

  •   Authenticity and no copyright or forgy: a valid ownership of artwork peotected by the blockchain

  • Compensation for future sale: the selling profit of NFT artworks directly goes back to the creator

  • Factional ownership: own a percentage in a certain artwork



  (What is the possible influence of blockchain on digital art market, Illustrator: Nancy Du)

Q&A


If it becomes possible for fractionally owning an digital art piece, how will the experience of owinning feel like? will it be similar to owining a company share?


ex: Do you own Mona Lisa if you purchased 0.000000001 percent of its digital edition on blockchain?


(the scenario: when the ownership of Mona Lisa can be tokenized online)








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Designer:Nancy | Bill
Author: Nancy | Lisa | Heng | Bill

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