NFTs: What’s in it for artists

“It is definitely not too late to get started”

“Hot Chip” – one of my 1st NFTs

In this episode, I’m sharing a broad overview of NFTs specifically from an artist’s perspective. I’ve been exploring the space for a few months now, and the learning curve has been both steep and exciting. My aim is to answer some common questions, challenge a few assumptions, and ultimately give you enough information start exploring the space yourself.

Some of the questions I’ll be exploring include:

  • Why engage with art NFT’s in the first place?
  • Isn’t the space only for digital art? How is this relevant to those of us who work with physical materials?
  • And what about the environmental costs, scammers, and flippers?

Personally, I believe that this technology is creating revolutionary opportunities for artists including;

  • Changing how artists get paid, including life-long royalties
  • Fostering a new culture of artists and collectors
  • Building new audiences for art

And a host of other benefits that I’ll dig into as we go. So let’s dive in!

Find the full transcript here.

Links to content mentioned in this episode:

Metamask (Browser Extension Wallets)

Blockchains mentioned:

Etherium

Solana

Tezos

Wax

Open Marketplaces:

Opensea

Curated marketplaces:

Rarible

Known Origin

Nifty Gateway

SuperRare

Foundation

Twitter profiles:

0xDEAFBEEF (artist) @_deafbeef

@DCLblogger 

Elizabeth Tsehai @eliztsehai

Jeremiah Krage (me!) @jeremiahkrage

Damien Hirst’s “The Currency”

Hardware wallets:

Ledger (I use the Ledger Nano X)

Trezor

* A note on hardware wallets: always order directly from the manufacturer (links above). There have been instances of hardware wallets being hacked, then re-sold ‘as new’ – allowing hackers to access everything the unsuspecting buyer transfers to the wallet.

There’s a lot of additional vocabular and jargon in the space. You can find a good glossary of terms here.

Full Transcript:

Hello, and welcome to The Practical Creative Podcast. I’m actor and artist Jeremiah Krage, and I’m exploring creativity in all its facets; practical tools and strategies, interviews with artists about process and mindset, and creative challenges to stimulate new ideas.

In this episode, I’m sharing a broad overview of NFTs specifically from an artist’s perspective. I’ve been exploring the space for a few months now, and the learning curve has been both steep and exciting. My aim is to answer some common questions, challenge a few assumptions, and ultimately give you enough information start exploring the space yourself.

Some of the questions I’ll be exploring include:

  • Why engage with art NFT’s in the first place?
  • Isn’t the space only for digital art? How is this relevant to those of us who work with physical materials?
  • And what about the environmental costs, scammers, and flippers?

Personally, I believe that this technology is creating revolutionary opportunities for artists including;

  • Changing how artists get paid, including life-long royalties
  • Fostering a new culture of artists and collectors
  • Building new audiences for art

And a host of other benefits that I’ll dig into as we go. So let’s dive in!

— 3 Principles

One of the core principles underpinning this new space is that each blockchain is permanent and immutable – meaning anything added to the chain cannot be altered or deleted, so they are permanent records that will exist for all time – or at least for as long as we have computers or access to the data.

And why I believe that this is pivotal for artists is that this allows for 3 core features:

Proof of Provenance

Proof of Ownership

And Automatic Royalties

I’ll break them down quickly;

1st is Proof of Provenance – when you as an artist add a new piece of work to the blockchain as an NFT, it is forever identified as your work. That cannot ever be altered or changed. This becomes increasingly important as we look at how this proof unlocks additional benefits for both the artist and collectors.

The 2nd feature is Proof of Ownership – every time that artwork is bought and sold, the transactions are recorded on the blockchain. Automatically, and immutably. So there will always be a record of who owns which piece and how much they paid for it. This is significant in terms of giving future collectors of the work confidence that they are buying an authentic piece – because they can trace its journey from when the artist 1st ‘minted’ or added that piece to the blockchain, all the way through to it now arriving in their digital wallet. Incidentally, this is exactly how auction houses verify expensive paintings – by piecing together the history of ownership.

These two elements -Proof of Provenance and Proof of Ownership, both being permanently recorded, unlock the 3rd feature which is

Automatic Royalties

Everytime an artwork is sold, that transaction is recorded, and an algorithm identifies what percentage of royalty is due to the artist. This happens every single time that the piece is sold, in perpetuity. So once your work is on the blockchain, there is a very real possibility of receiving royalty payments for the rest of your life.

—- 4 Key Terms

I’m going to take a quick break here to define some vocabulary that I’ve already used and that you’ll come across in the space – here are 4 key terms.

The first is the blockchain itself – in essence, it’s a record of files and transactions. So your artwork would be one of those files, and each time it’s bought or sold, the transaction is recorded and linked back to that file. All the information that is added to the blockchain is stored in blocks – which is basically a whole bunch of files and transactions that have been grouped together. And each new block is then laid on top of all the previous ones to make a chain.  Another way to think of this is to imagine data trapped in layers of amber – each new piece of information is encased in a layer of amber, preserving it forever. When new layers are added, they further bury and secure the underlying layers – so we can still read them, but it’s impossible to change their contents.

An important side-note is that there are a lot of different blockchains including Etherium, Solana, and Tezos to name just a few.

Minting: minting is simply the act of adding an artwork to the blockchain for the 1st time.  

Wallets: everything that you own on the blockchain is held in a digital wallet – this includes cryptocurrencies and NFTs. Wallets have unique addresses, so everything that goes into and out of the wallet can be identified and logged on the blockchain, which helps with Proof of Ownership.

And finally – Gas: it’s the cost of adding any data to the blockchain, including minting and selling art all transactions on blockchains cost money – it’s almost like a toll or tax that helps to maintain the chain. Some blockchains, like Etherium, have become very expensive, whilst others are significantly cheaper, like Solana and Tezos. Gas prices fluctuate on a minute-to-minute basis, so it’s often worth waiting for gas prices to drop before transacting.

—- How it all ties together

Okay, so we covered some of core features that I think are particularly valuable for artists, and some of the terminology.

If you’re still on the fence, I’d like to explain how all of this ties together to create radically new opportunities for all artists – regardless of whether you are just starting out, have existing collectors, if you work in traditional media such as paint or ceramics or even if you have no experience with digital media at all.

— Opportunity 1: Artists & Collectors —

One of the biggest opportunities I see in the space is the deeper connection between artists and collectors.

Because collectors know that re-selling your work means that you will receive a royalty, there is no stigma in buying work and only owning it for a few weeks or months.  This creates an incentive to re-sell your work at a higher price.  The result is that collectors can directly influence the value of your work by both promotion and re-selling.

For example, if I own 3 of your artworks that I bought for 100 dollars apiece, you could value my collection at 300 dollars. And because all transactions are recorded, other buyers will see that your work is valued at about 100 dollars. But if I then sell 1 of those pieces for 500 dollars, it indicates to the market that your work has gone up in value. So now the remaining 2 pieces of yours that I still have my collection are potentially worth more.

Collectors also like to Tweet about new pieces and the artists that they collect, knowing that this not only reflects their taste, but that it also raises the profile of the artist, and by extension potentially increases demand for, and the value of, their work.

I should take a moment to comment on Twitter – it is currently the medium in the crypto-art space. A few others are Instagram, Clubhouse, and Discord. Discord is a community messaging system similar to Facebook groups, but designed for gamers.

Opportunity 2: Interactivity —



Another creative advantage is that NFTs are programmable, meaning that they become interactive and can have uses beyond the aesthetic.

For example, the artist Deafbeef has created music-based NFTs that degrade everytime they are transferred to a new owner – so a collector has to think carefully about either purchasing or selling a piece because they know that by doing so, they are altering the artwork

Another example is the ability to merge artworks – some artists are exploring the possibilities of having each NFT attach to other artworks they’ve created. So if you’re a collector, you can accumulate unique artworks by making your own assemblages of different pieces from the artist.

A common use is a ‘burn mechanic’ where artists will allow collectors to ‘burn’ – or destroy-  2 of their NFTs in exchange for a new artwork – this makes their body of work smaller, which increases scarcity, and can then lead to increased prices. It also engages collectors – encouraging them to really think about the work they’ve collected and their relationship to it.

Opportunity 3: New audiences & collectors —

Another tremendous opportunity for artists is the ability to reach entirely new audiences. The usual art-world gatekeepers haven’t caught up to the space yet meaning that you can reach potential collectors directly via social media, or be discovered on any of the many art marketplaces.

The audience is truly global and the market operates 24/7.

There are a lot of collectors who are new to buying art and whose tastes have not been shaped by institutions or societal expectations.

— Criticisms—

Now, there are some criticisms of the space that I’d like to address – namely the Environmental costs, potential scams, the flipping of NFTs, and the belief that the space is only for digital artists.

Criticism 1: Environmental Costs

*There is a lot of concern about the amount of power needed to mint new NFTs, and to maintain blockchains in general. And yes, some of the chains do consume a lot of power with Etherium being one of the largest. However, there are chains that have been designed specifically to reduce their impact on the environment – for example Tezos, and Wax. Plus, there is concerted effort being mounted to change the way the Etherium blockchain functions to reduce it’s power consumption by 99%.

– A side-note on the environmental impact of blockchains – they are actually creating new uses for renewable energy. The mining of cryptocurrencies, which is an integral part of building and maintaining the blockchain, requires power 24/7 – making it the ideal customer for wind and solar energy. Any excess power produced by these renewables can be used by crypto-miners, meaning none of the energy is wasted, and the currencies generated with that power can then be used to purchase power when energy production is low – the cryptocurrencies essential become virtual batteries to store power.

Criticism 2 – Hackers & Scammers

*Another concern about this space is that it is full of hackers and scammers. And there is some truth to this. At every new frontier, there will always be bad actors seeking to take advantage of those who are new to the space. What makes this particularly challenging in the crypto space is that there a lot of processes to learn and apply, and there is no customer support. If you accidentally send money to the wrong wallet, or even just to a wallet that isn’t configured to accept that specific cryptocurrency, it may be gone forever. There are no authorities to step in to help you.

But, this doesn’t mean that the space is dangerous, it just requires a degree of caution. Most of us have received dubious emails that we immediately know to be scams, largely because we’ve become familiar with clues and patterns to watch out for.  The more time you spend in the space, the more aware of these you’ll become.

Also, the community is extremely vigilant, raising awareness and informing people as soon as they become aware of new scams. In fact, most Discords have a channel dedicated specifically to informing users of new scams and how to avoid them.

A quick side-note on security: If you’re just starting to explore the space, you’ll almost certainly have a MetaMask wallet – a crypto wallet in your browser that allows you hold cryptocurrencies and NFTs. Initially, you may only have a small amount of money in the wallet, but at some point, you may find that either the cryptocurrencies or the NFTs have increased in value to a point where the wallet actually holds a significant amount of value. This is when it is paramount to get a hardware wallet – essentially a physical device (almost like a USB stick) where you can keep the bulk of your currency and NFTs. Hardware wallets are kept disconnected from your computer and the internet until you’re ready to make a transaction, helping to keep your assets safe.

Criticism 3 – Flipping

* Another criticism of the space is Flipping – which is when people buy NFTs just to make a quick buck. They buy newly minted artworks that they know will be popular, then re-sell them a few days later when the price has gone up. This is similar to ticket-touts buying up concert tickets to re-sell them to desperate fans at a significant markup.

The economics of this are fascinating, because Flippers can actually drive up the price of an artists work, leading to more royalties and potentially a higher sale price for future work. But it may also mean that genuine collectors are priced out of the market.

If the idea of having your work ‘flipped’ is off-putting, there are ways to prevent this. Many artists are using Proof of Ownership to encourage collectors to keep their work for the long-term by a variety of creative mechanics. For example, some artists will only allow you to buy their work if you already own another of their pieces, and others will ‘airdrop’ or – give away – additional artwork to collectors who have owned their work for more than, say, 6 months or a year.

Criticism 4 – Not for Traditional art

* The final critique that I’d like to address is that the space is only for digital artists, and that there is no room for traditional art or even craft. This is definitely not true. While the space was initially filled with digitally-native artists and collectors, the ecosystem is rapidly expanding as existing collectors start to look for new forms of art, and they are joined by artists and collectors from the traditional art world.

A particularly interesting development is that a lot of collectors are looking for ways to display their NFTs in the real world. And this is where I see tremendous opportunities for those of us who work in more traditional media. Digital artists are now working to find ways to re-create their artworks as physical prints, 3D printed models, or even neon signs. The point here is that there is a very real hunger for physical objects that represent NFTs. As an artist working in physical media, it’s possible to reverse-engineer this trend by adding ‘unlockable content’ – where you create a digital version of your work to sell as an NFT (for example a photograph or 3D scan), and the owner of the NFT then has the right to ‘unlock’ or claim the physical version.

It’s worth noting that there is a fascinating tension between how the emerging crypto-art culture values digital vs physical art. While I mentioned that many collectors now want physical versions of the work they collect, there are still those who only value the digital.

The artist Damien Hirst has created a fascinating project called “The Currency” to explore this specific tension. He created 10,000 unique dot paintings on paper, took high-resolution images of each, and sold them as NFTs. Owners of the NFTs have 1 year to decide which version they want to keep. By June of 2022, each owner will have to decide whether they want to keep their NFT, in which case the paper version of their painting will be burned, or to return the NFT in exchange for the physical painting. They can’t keep both.

I know which I’d chose. What would you do?

— Where to start

Okay, we’ve covered a lot. I hope that by now you’re seeing the potential of this space, and how there is space for you and your art within it.

If you are interested in diving in, here a few places to start:

Have a look at the marketplaces for art NFTs. Most blockchains have open markets as well as curated platforms that require artists to apply. Arguably the largest open marketplace is Opensea on the Etherium blockchain, and you can find it at opensea.io. (and that’s sea as in sea salt)

Bear in mind that Opensea is an open platform, meaning that anyone can put their art on the site – so the range of styles and quality is extremely broad. So it’s also worth checking out some of the curated platforms like Foundation and SuperRare.

If you’re interested in learning more about the emerging culture of the space, I highly recommend spending some time on Twitter – @DCLblogger  Elizabeth Tsehai @eliztsehai

Another great place to learn more is on Discords – virtually every marketplace has a dedicated Discord that you can join to receive the latest news and updates, as well as meet other artists and collectors. A few to consider are Rarible and Known Origin. You can usually find a link to their Discords in either their Twitter bios or on their websites.

I’ll also be putting links in the shownotes for this episode on the website at thepracticalcreative.life

Wrap-up

As I wrap-up this very broad overview of the space, I’d like to leave you with a few thoughts:

NFTs and blockchains are enabling an entirely new culture by bringing together technologists, artists, and ideologists into a space where the rules are still being written. This means that there is incredible scope for experimentation, collaboration, and re-invention.

Broadly speaking, the community is extremely generous and supportive. And it is still early days, so it is definitely not too late to get started. In fact, in the next week I’ll be minting my very first collection of NFTs inspired by my work on TV as a creature performer. And I’ll be back with another episode to let you know all about what I learn in the process.

Personally, I’m very excited about the possibilities the space has to offer all artists, regardless of medium – and I hope that you will consider engaging in the space as both a creator and a collector.

Let me know how you get on – you can find me on twitter @jeremiahkrage

Until next time…