Why are NFTs and Crypto Art a Big Thing?

Cryptocurrency continues to grow but one aspect that is quickly becoming prominent are non-fungible tokens, or NFTs.

They are unique and non-interchangeable units of data that are stored on a blockchain ledger.

The crypto world is now seeing NFTs being used to represent items such as photos, videos, audio and other digital files.

One particularly popular, and potentially profitable area of NFTs is crypto art.

It emerged following the development of blockchain networks such as Bitcoin and Ethereum in the mid to late 2010s.

It is digital artwork that is published directly onto a blockchain in the form of an NFT, which makes the ownership, transfer, and sale of artwork possible in a cryptographically secure and verifiable manner.

Crypto art has rapidly become popular mainly because of the unprecedented ability to buy, sell and collect purely digital artworks.

We explore NFTs as well as crypto art in more detail and why they are such a big deal.

What is an NFT?

NFT stands for non-fungible token and the term means it cannot be replaced with something else.

For example, a bitcoin is fungible as one can be traded for another and you will have exactly the same thing.

But an NFT is one-of-a-kind. For example, if you traded one for another, you will have something completely different.

The majority of NFTs are part of the Ethereum blockchain.

Ethereum is a cryptocurrency like bitcoin but its blockchain also supports these NFTs, which store extra information that makes them work differently from others like an Ether (ETH) coin.

Types of NFTs

NFTs can be anything digital.

This ranges from music and ticketing to games and even memes.

But because they are digital, there is the concern that digital files can be easily and endlessly duplicated.

Thankfully, NFTs are unique with a digital certificate of ownership that can be bought and sold.

Ownership of the NFT is typically associated with a licence to use the underlying digital asset. But generally, it does not confer the copyright to the buyer.

Some agreements only grant a licence for personal, non-commercial use.

Other licences allow commercial use of the underlying digital asset.

While there is a broad variety of NFTs, there is a lot of excitement around crypto art.

The Popularity of Crypto Art

There has been a growing trend around artists creating digital pieces and selling them on an NFT platform.

As a result, this has provided another platform for artists as it gives them another way to sell work that there otherwise might not be much of a market for.

Although digital art is freely available, it has long been undervalued.

As a result, it is a niche area but one which is rapidly growing due to the financial benefits digital art comes with.

For example, digital artist Beeple created a piece that compiled of 5,000 smaller pieces that he had worked on every day for 13 years.

In March 2021, the piece sold for £50 million, making Beeple “among the top three most valuable living artists”, according to Christie’s auction house.

According to some digital-art collectors, they are paying for the artists’ labour in addition to the pixels.

This movement is an effort to economically legitimise an emerging art form.

Shaylin Wallace, a 22-year-old NFT artist and collector said:

“I want you to go on my collection and be like, ‘Oh, these are all unique things that stand out’.

“The artist put so much work into it – and it was sold for the price that it deserved.”

NFT art gained major attraction in 2020 when many people spent more time online due to the Covid-19 pandemic.

Digital artists are creating art with whirling 3-D renderings, street-style oversaturated colour schemes, and hyper-referential (and often crass) cartoons.

These visuals are grabbing the attention of both an Instagram-savvy younger generation and crypto enthusiasts.

NFTs have a feature that can be enabled which will pay digital artists a percentage every time the NFT is sold or changes hands.

This ensures that they will receive some of the benefits if their work becomes popular and increases in value.

The Concerns when Creating NFT Art

However, there are obstacles when it comes to creating NFT art.

Because it costs money and requires creators to be tech-savvy, it could prevent some from joining this particular area of art.

Legal experts are also working to determine how existing copyright laws will interact with this type of technology as some artists reported having their work copied and sold as an NFT without their permission.

Artist Connor Bell said: “It’s providing another platform for people to take advantage of other people’s work.”

Then there are environmental concerns.

Creating crypto art requires a lot of raw computing power and many of the server farms where that work happens are powered by fossil fuels.

Amy Whitaker, an assistant professor of visual arts administration at New York University, says:

“The environmental impact of blockchain is a huge problem.”

However, some cryptocurrency experts argue that these concerns are exaggerated.

Steps when Making & Selling an NFT

When it comes to the NFT process, there are a lot of steps involved and this includes parting with some cash.

And even after selling the digital art, it is likely that the profit margins won’t be that large.

This is because cryptocurrency companies charge numerous fees to the artist, both upfront and after the sale.

That aside, here are the steps to take if you’re willing to take the risk.

Buy Cryptocurrency

The first thing to know is that you will need to pay a platform to generate an NFT.

And most platforms want this paid in Ether, the native cryptocurrency of Ethereum.

Create a Digital Wallet

The next thing is to create a digital wallet.

Set up an account, agree to the terms and work through the security questions. Then you will have a digital wallet set up.

Add Money to the Wallet

This is a simple step but if you’d rather not part with any money yet, you can leave this stage until later.

Click the ‘Buy’ button, then select the option ‘Buy ETH’.

You will then be taken to a screen where you can buy ETH with either Apple Pay or a debit card.

Connect the Wallet to an NFT Platform

Whichever wallet you’ve chosen, once you have some ETH deposited, it is time to go to the NFT platform and spend some of it.

On the NFT platform, click ‘Connect wallet’ and select your wallet provider.

Afterwards, accept the terms of service and you’re ready to go.

Upload your File

Start creating your crypto artwork. You have the options of creating a one-off piece or selling the same item multiple times.

Upload the digital file you wish to turn into an NFT.

Set up an Auction

You need to decide how you want to sell your NFT artwork.

There are three options:

• Fixed Price – Sell to someone instantly
• Unlimited Auction – Buyers continue to make bids until you accept one
• Timed Auction – An auction that takes place for a certain time

The tricky part is setting a minimum price. If it is too low, the fees may result in losing money.

Describe the NFT

Next, add a title and describe your artwork. To maximise the chances of selling your NFT, you need to spend time perfecting this.

You then have to consider what percentage of royalties you wish to claim on any resale of your art in the future.

This is something to think about as a higher percentage will net more money per sale, but it will also deter people from reselling your art because they will be less likely to make a profit for themselves.

Pay the Fees

The final step is paying the fees but be warned.

The listing fee may seem low, but it is only the beginning of the charges.

Before continuing, you have to agree to a further fee to generate your NFT.

If someone buys your NFT, there is a commission fee on the sale and a transaction fee for transferring the money from the buyer’s wallet to your own.

Creating and selling an NFT is a risk but there is a chance you will make a large profit.

A Successful NFT Artwork Story

While the majority of NFT artworks are created by artists, the availability means that anyone can create crypto art and in some cases, they have amassed large profits.

This was the case with Benyamin Ahmed, a 12-year-old boy from North London.

He sold digital artworks of whales online as a series of NFTs, making the equivalent of £290,000.

Benyamin has been coding since the age of five. Both he and his brother Yusuf were taught how to code by their father Imran who has developed software for the London Stock Exchange.

Benyamin became interested in NFTs earlier in 2021 so he decided to create a collection of his own.

Weird Whales features 3,350 pixelated whales, each with distinct traits.

It has made sales worth approximately £116,000 in ETH.

Benyamin had to store his earnings in the Ethereum blockchain due to not having a bank account.

However, his money can go up and down. It is also not protected if his digital wallet becomes compromised.

Benyamin said: “I’m not a natural artist but I watched a few YouTube videos and worked out how to draw whales in pixel form really quickly.

“It took me a few weeks to create the base images and various accessories and then I fed them into my programme that helped me to configure the rarity across the different traits, making some more collectable than others.”

Benyamin’s Weird Whales collection sold out in just nine hours after going up for sale online in July 2021.

It is his second NFT collection.

His first consisted of 40 colourful, pixelated avatars called Minecraft Yee Haa.

Benyamin’s sales have now topped more than £291,000 and he is tipped to become the youngest person to make $1 million in cryptocurrency.

His father Imran said:

“I’m so proud of Benyamin and what he has achieved.

“People are shocked that someone so young can create something like this and we’ve had some people thinking that he must be a Russian hacker impersonating a child and not a 12-year-old schoolboy from London.

“There’s lots of mathematics and computer science especially when configuring the rarities and deploying the assets to the blockchain.”

NFTs and crypto art have become a big deal in the world of cryptocurrency, with professional artists and regular people getting involved.

It has seen instances of high-profit margins, but the reality is that it is a risk as a lot of money is potentially spent even before selling a piece of digital art.

It is then in the hands of the potential customer as they are the difference between a little or a big return.

Therefore, it is important to thoroughly research NFTs before you think about creating digital artwork.