Akinloye Nafiu
The rise of NFTs marks the beginning of a revolutionary order that rewards the faintest of creativity.
“This is a new chapter of art history, simply revolutionary” were the words of Mike Winkelmann upon selling a themed art piece as an NFT for a record $14 million. Few months later, he set a new world record by a similar, perhaps, slightly frivolous look in the surface art that commanded $69 million. In both of these scenarios, NFTs had landed Mike a fortune that the previous order would likely not guarantee. A particularly astonishing factor about this new system is not just the nature of its democratization, but the prospect of converting virtually anything into a monetary value. Added to this is the ability to commodify what is plainly literal into a sizable commercial value.
Technology’s greatest advantage is its capacity to make frivolity a thing of significance. It is astonishing in that they at first look superficial. But with the luxury of hindsight, we have realized that the faintest in the inventions of technology such as that of blockchain is a simplified system that is void of the bureaucracies associated with the traditional order. When Bitcoin first emerged in the public, volatility and the unreliable way of building enormous transaction processes into ‘chains of blocks’ were considered its Achilles’ heel. However, it appeared that the prospect of technology has been grossly underestimated. With the success and global acceptance of Bitcoin, NFT is speedily converting naysayers into loyalists.
WHAT IS NFT?
NFT, an acronym for Non-Fungible Token, is a transactional system founded on the second layer of the Ethereum blockchain. It is a unit of transactions stored in blockchain, an open ledger that stores and record transactions publicly. The Non-fungible in its definition basically means objects traded are not replaceable and does not connote an equal level of value. For instance, unlike Bitcoin which can be taken back or replaced, NFTs are not. One Bitcoin equals one Bitcoin and it is unchanging. NFTs, however, are not. They are auctioned by the creator and once given, they cannot be retaken. This is essentially what separates NFTs from Bitcoins. NFTs could be literally anything. Initially, it has been associated with digital arts but in the last few months, we have seen comical and intellectual collections. These extend from videos to arts, sports, gifs, memes and academic research. Due to its popularity and nature of its methodology, NFT is morphing into a global platform where creatives and intellectuals are looking to monetize their brains.
HOW NFT IS RESHAPING CREATIVITY INTO A BILLION DOLLAR VENTURE
In what could be regarded as the token’s greatest advantage, the system is pulling down the barriers to accessibility. Prior to the rise of NFTs, artists, most notably, often find it extremely burdensome to market their creations to a welcoming market. Even if when they do, they are underpriced. The disadvantage of the previous order is an elitist creed that sees the most popular artists get their access to auctions. However, the new system is democratic. It offers all creatives, regardless of location, socio-economic status and age. Ahmed, a 12-year-old programmer had his art collection — whales — sell for $255,000. On popular social media handles, there has been a litany of testimonials from creatives all over the globe. An exciting story reveals a Nigerian Artist, who secured a mouth-watering deal after years of frustration on marketing his creativity. Even to the seemingly frivolous things like memes, NFT is becoming a huge market. For example, a number of internet memes have been associated with NFTs, which were minted and sold by their creators or by their subjects. Examples include Doge, an image of a Shiba Inu dog whose NFT was sold for $4 million in June 2021.
Additionally, NFT offers an alternative route for revenue generation, giving athletes and musicians a new way to make money through their contents. Blockchain and the technology enabling the network have given the opportunity for musicians to tokenize and publish their work as non-fungible tokens. This has extended the list of options for musicians and artists alike to monetize and profit from their music as well as other content surrounding the themes of the music and the artists public image. NFTs were utilized by artists to increase revenue during the Covid pandemic. In February 2021, NFTs reportedly generated around $25 million within the music industry (in an industry with annual revenue of over $20 billion). On February 28, 2021, electronic dance musician 3LAU sold a collection of 33 NFTs for a total of $11.7 million to commemorate the three-year anniversary of his Ultraviolet album. 2019 NBA player, Spencer Dinwiddie, tokenized his contract so that others can invest in it. A clip from LA Lakers late last year which showed a goal scoring footage was bought for $380,000. Dapper Labs, a blockchain technology-based company, has also collaborated with the NBA to create “N.B.A Top Shot”, a marketplace for digital highlight clips.
Another interesting feature of NFTs is the resell value which is massively inspiring investors all over the globe to join the bandwagon. Given the manipulated financial environment, traditional assets, like bonds, now produce a negative real rate of return, which forces investors to push further out on the risk curve. The only way to drive returns is to do things that were previously thought to be ridiculous — for instance, buying JPEG images on the internet at multimillion prices.
The beauty of NFTs is that they are not organized in a creed of an elitist mindset. It is open to all irrespective of social status or pedigree. The most exciting characteristic is how decentralized it is, offering everyone a say in the cascading revolution and more so under a transparent system. Although NFTs have been subjected to a range of philosophical arguments, most bordering on reasons to get one when we can all view it, the end goal remains similar to the traditional goal of acquiring artworks. We have physical access to an artpiece like “Monalisa”, but this is not the same as unilaterally owning it. Perhaps, the only thing that appears paradoxical is the comical range of collections that NFT bequeathes. But this only shows a revolution of fancying insignificant things with a significant value.
