Let’s face it, the whole NFT thing was just a big marketing campaign for Ethereum. Artists were enticed by the promise of royalty payments on all future sales of their blockchain-minted artwork and buyers were enticed to participate as the first wave of investor-collectors in the new genre of digital art.
As part of this frenzy, relationships were formed, communities were established, and lots of creative experimentation ensued. While the creative results were mixed, the hype was successful and a market blossomed. Until Crypto predictably imploded.
When money is flying around and everyone feels flush, people start to take risks. Spending your new crypto cash on a emerging genre like digital art can be great because it helps the market grow in a new direction. But with lots of cash moving around, people are more likely to push the envelope and break the rules. If it wasn’t Sam Bankman Freid, it would have been someone else. What is left behind is a really clear view of the problems in this market that must be dealt with in order to secure a solid foundation to support future transactions and market growth. Cryptocurrencies are irrelevant to that. Crypto is merely the currency used to pay the cost to write NFTs to blockchain and to purchase the NFT from the artist.
Blockchain provides a secure authentication framework for an object that has highly specific identifiers.
A creator makes an artwork and then pays the Mint to uniquely publish the art (token / block-stamp) to the blockchain. The creator pays the Mint for this process with “money”. Whether this money is Ethereum, Bitcoin, or chickens doesn’t matter, as long as the Mint gets paid with something acceptable to them.
The point being that cryptocurrency was never an essential component of this transaction. Ethereum gets props for establishing such a solid foothold in the market but lots of exciting things are happening in different marketplaces outside of Ethereum. The current issues in the marketplace are less about money and more about the strength of smart contracts and interoperability between marketplaces.
As I have noted before, ( AN ARTIST’S PERSPECTIVE ON NFT’S..) smart contracts are extremely attractive for artists. This allows us to profit from future sales of our work. This encourages us to keep building our brand and growing the interest in, the demand for, and ideally the prices of our art. Every dollar made on a resale of a piece of art is a dollar we don’t have to earn at a “day job”. Alas, we are already seeing some marketplaces making the resale rights “optional” and that is causing people to question what the real enforceability is of these contracts and who enforces them.
