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How Can NFTs Be Disruptive in the Art Industry?

2021-08-04

In the past several months, art that comes in nonfungible tokens has been at the headlines. Except for a few high-profile artists and some of the major auction houses, the traditional art industry became cautious in approaching the market.

Despite all of the hype, what is the actual size of the art market for NFTs? How will it be able to disrupt it? What could be the role of the traditional players of the industry in developing it for the future?

ArtTactic, an advisory and research company based in London, had a report about it. They explored the NFT art market worldwide to look beyond the current frenzy and answer these queries.

ArcTactic's founder and managing director had an email interview with Penta about their report on the NFT Market this 2021, which is the first analysis of the group about the subject. According to Anders Petterson, the NFT market may have risen rapidly, but information and research were insufficient. It has presented the people with an opportunity to begin having this area covered from the start. Doing this will allow them to monitor and follow every development as it pursues.

What is the size of the NFT Art Market?

To define what is constituted, "NFT art" is continuously evolving. Thus, it can be challenging to define what is or what isn't art.

Art platforms for NFTs come in two major categories. One of them involves curated platforms like SuperRare and Nifty Gateway while the other involves non-curated open platforms similar to the OpenSea.

The analysis by ArtTactic focused on defining the space of NFT collectibles and art as something that the biggest platform for curated NFTs, Nifty Gateway has defined. According to the information from Cryptoart.io, it accounts for $437 million USD or 71% of the NFT art sales from January to April of 2021. 

From February 2020 to April 2021, Nifty Gateway was able to launch more than three thousand nFTs with an excess of 145,600 editions that are minted for people to buy. These represent the digital artworks made by 272 artists. According to that report, NFTs were able to raise a sum of $305 million USD.

The primary market had strong sales with more than 139 thousand editions sold. This represents an overall sale rate of 95.5.%. On average, the price was $1,228 USD. The secondary market has a sales volume that is almost fifty percent of the primary market. However, according to the report, it had a higher average sales price which was $1,938 for every NFT.

In the first months of 2021, Nifty Gateway was able to launch 1,958 new NFTs in comparison to just 49 NFTs that it launched during the same period in the past year. There was a significant increase in the new NFTs availability because of the increased number of artists that present their artworks online.

This March, the platform was able to launch 60 new artists which were 140% higher than what they launched last February. Overall, there was an average of thirty-eight artists launched every month this 2021. It has been significantly higher than the average of 16 artists that they launched in the second half of 2020.

According to the report, in the overall market of NFTs, art comes with a market share of approximately 11% according to the number of sales.

In comparison to the market of traditional art, the market volume of NFT art may still be almost negligible. According to the Annual Report on the Art Market from UBS and Art Basel, the traditional market for art had a total sales of $50.1 billion USD last 2020. Here, online sales had a total of $12.4 billion USD.

What Made the NFT Art Rise?

According to Petterson, the rapid increase of the NFT market may have probably been due to the stars' alignment. So many people have talked about it on social media, and many celebrities endorsed it, making it significantly increase along with the exponential rise in Bitcoin prices and vast expansion in crypto wealth.

Since Bitcoin prices have increased by 570%, crypto wealth was able to rise exponentially. Last March 2020, it was around $8,500. It went up to more than $50,000 this March 2021. Now, the crypto market is worth approximately $2.5 trillion.

Since crypto millionaires face limited opportunities to diversify their wealth into the natural and physical world, the community of crypto investors could find solace in the NFTs and digital collectibles' emerging world.

In recent months, the media has extensively covered NFTs that generated so much hype in the market. Last March, the number of Google searches for the term "NFT" peaked at the same time when Beeple, a digital artist, was able to sell for a record of $69 million at Christie's.

Because of high-end traditional auction houses such as Christie's, the market for NFT art experienced the best 'premium' endorsement.

How Can Traditional Players Adapt To This?

Since the intersection between technology and art would constantly remain, the industry players of traditional art would embrace the trend and become a part of the NFT market's future development.

It is pretty exciting to get into the NFT art market. It can open up so many new opportunities for artists to develop current models for monetization and new markets. For collectors, this can provide a unique and beautiful model for ownership.

Mike Winkelmann is one of the most successful NFT artists. Also known as Beeple, he has created art that sold a total of $142.7 million. Next to him is Pak, who sold $42 million worth of art. Following them is Hackatao, who was able to sell art worth $21.6 million.

Many of the major auction houses that include Philips, Sotheby's, and Christie's, immediately knew the value of having NFTs embraced from the public point of view and as an instrument that can help rejuvenate their client base continuously getting old. They could have their position carved out as a bridge between the 'old' and the 'new' systems for art value. Because of that, it would be best for the other stakeholders in the art market to follow their path.

NFTs in the Philippines

NFTs in the Philippines began because of the desire of people like Dizon. They want to promote great talents in digital art anywhere in the world, especially in the Philippines. With the Narra Art Gallery, they were able to provide support to the careers of so many artists. They eventually bought a property in the 100xArt District that they called the Narra Art Gallery. It aims to celebrate the artists that they are supporting.

According to Colin Goltra, they have nurtured excellent relationships with artists for a long time as most of their lives as adults involved doing business in crypto. Since crypto art is among the extensions of this, people who made it were fresh in the scene. It naturally came out so that the artists would have a space to show their talent.

You can quickly transfer crypto art online for a specific cryptocurrency amount that can eventually make its value increase in time. You may consider this trend to provide a fantastic potential for investing in wealth in the future. For the Narra Art Gallery co-founders, they did not create it for the replacement of traditional art or appear as a more incredible asset that can guarantee a better return on investment. It aims to allow Filipinos to produce great NFT assets that people everywhere in the world would definitely appreciate.

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