The art market and NFTs: Opposing threats or a joint opportunity?
Non-Fungible Tokens (NFTs) have risen to popular awareness, with legacy artists, brands, celebrities, and even sports engaging with this new art trend.
NFTs go even beyond art to reshape the way we interact between the physical and digital world, with more income streams, creations, tools, and ultimately, a different experience.
The recent enthusiasm in NFTs is leading to record trading volumes, with Q3 of 2021 registering $10.67B in sales across platforms, a 700% growth over the last quarter. Yearly, the growth of the NFT market is outstanding, going from $63M in sales during 2020 to more than $2.5B during the first half of 2021.
We were able to obtain some comments from Richard Dixon, a crypto artist that comes from a traditional Californian street art background but has innovatively bridged into the cryptoart metaverse having built 12 metaverse art galleries in CryptoVoxels.
What is the current traditional market landscape?
The legacy art market has many of the same challenges and barriers that traditional industries face today amid the digital revolution. However, those challenges don’t mean these industries will vanish. Who could imagine a world without beauty or art? However, as we’ve seen in recent years, each industry has to transform itself and adapt to current trends.
The art market suffers from some issues that decentralized technologies came to solve. The lack of new artists, the dominance of a small group of people over the art trends, the difficulties in accessing fair compensation from their endeavors, or the decrease of physical stores to sell creations are some reasons behind traditional markets’ demise.
As a result, the traditional art market suffered a loss of $14B in 2020 compared to 2019, in line with other industries. However, its online segment grew, representing almost a quarter of the total art sales ($12B).
The predominance of digital avenues in the art market is growing, with tokenization, NFTs, and collectibles at the forefront. NFTs and the digital sector represent a full shift from a closed ecosystem to an open opportunity.
How crypto and NFTs can solve the art market conundrum.
The digital emergence breaks some of the long-standing barriers, commonly at the center of traditional industries. With the rise of the NFT market, new artists can emerge from anywhere, start building close communities on large platforms (e.g., crypto Twitter), and reach a mainstream status within the crypto space rather quickly. Establishing a community is key in the crypto space, whether in trading, collectibles, or NFTs. New artists no longer face the decision of a few playmakers to direct their careers.
At the same time, there is more ease in the creation and distribution of digital pieces than in the traditional market. The proliferation of NFT marketplaces to list new creations and reach millions of people differs quite substantially from the long process of being accepted to traditional art galleries or auction houses.
Moreover, the path to reaching a higher status among digital artists is more direct than in traditional markets because of the novelty of the NFT space, leading those who experience success to rank among the biggest sales and expand their influence.
An opportunity to merge both worlds
Recent cases show that the traditional market and NFTs can overlap. As NFTs gain mainstream recognition, leading auction houses such as Christie’s are selling digital pieces from Beeple and other renowned players, while Sotheby’s is accepting crypto native payments (e.g., Bitcoin) even for auctions of physical assets.
With the success of those first experiments with NFT auctions, Sotheby’s is launching a fully digital NFT marketplace while mainstream and luxury brands issue, buy, and sell digital assets and collections.
As NFT artists gain predominance, it is natural that traditional art players incorporate these new art trends into their creations and collaborate with NFT artists to leverage the importance of digital channels in the industry.
Moreover, the NFT market is not only made of artistic pieces, influencing many sectors with the power of tokenization while reshaping royalties, digital rights, collectibles, and more. An industry showing over 700% growth, with several billion dollars worth of sales in 2021, slowly approaching considerable percentages of the entire only market size, cannot be ignored at the expense of every party involved with art.
A future of collaboration built on each one’s strengths
The power dynamics within the art industry are changing, as we’ve seen across many other sectors (e.g., finance), enabling the influence of digital artists, marketplaces, and other players to define how the crossover of the sectors will play out in the future.
Both sectors offer a unique view of something that unites people: art. In the future, the discussion around its meaning, the spotlight on its creators, and the pride of collectors won’t change but will materialize in different forms.
Traditional art and the NFT markets are poised for seamless integrations where players from both segments will leverage their strengths while crossing both arenas to make the most of each sale, collection, and art trend.
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CoinBurp is the cryptocurrency platform partner for the $BURP ecosystem that includes Cede Fields Ltd for token issuance and CB Defined Ltd for DeFi products. CoinBurp is the design partner of the MealDrops NFT series. The tokens are not issued or controlled by CoinBurp.
$BURP is the official token of the $BURP ecosystem of products including but not limited to non-custodial token management, staking mechanisms, NFT raffles.
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