A Bullish Case for NFTs

Ownership & authenticity

Historically art ownership is proven by provenance and possession. 9/10ths of the law and all that. With NFTs you can definitively prove who owns the piece. This is the part I think the ‘save image as’ fail to understand. Part of the lure of art, for many, is ownership. You can print off all the high-quality images you want of a Mondrian, or perhaps in the future a Beeple, but you do not own it. There are a million and one posters of a Monet or a Rothko, but again you do not own it. Even if we are talking editions, the same holds true. There is scarcity and pride attached to the label. I can buy a Damien Hirst edition of 50 and be proud to own that. You can hang your internet-copied printout and be proud and enjoy the image, but you cannot conflate the two. Some people will not understand this point. I think that is fine, but then this market is not aimed at them.

Credit to www.nonfungible.com & their 2020 NFT Yearly Report.

The opportunities for digital creators

I’m also excited at the prospect of a new livelihood that was not possible before. Yes previously digital artists could make a living, but not in this manner. They are able to accrue a value to their work that was simply not possible before. This creation of an economy is to be applauded. To give creative people the outlet and opportunity to make a living in a way they couldn’t previously is so exciting to me. Look at the $370,000 drop that FEWOCIOUS achieved on their 18th birthday² or the $1m they achieved in a collab with TwoFeet³ (I’m not sure how anyone could begrudge their success, they seem so likeable).

Valuations and market maturation

I think valuations are an interesting part of the market. In traditional art there are a huge number of things that affect valuations. Provenance is always important, depending on who has owned the work previously this can price the work at a premium or a discount. If it’s an original piece from an artist, canvas works may sell for different prices to their paper works, the size of the piece can make a difference, condition reports are important and so on. If it is an edition you look at the print house, the edition size, is it a giclee or a silkscreen print for example. The NFT space appears to be different. You can have ‘attributes’ such as in CryptoPunks or Hashmasks, but equally, there is a price on scarcity and desire. Art is by nature an illiquid market, and pricing can be notoriously difficult.

Credit to www.nonfungible.com & their 2020 NFT Yearly Report.

NFTs as a route to adoption

One quick point I wanted to touch on, I think NFTs are a great way to pull people in using crypto without even realising it. Look at the success of NBA TopShots, with over $106m in sales over the past month. These types of offerings will attract people who otherwise wouldn’t be bothered about the space. Do I think all of these will become DeFi degens and power-users? No, but having another funnel and another ecosystem created on top of these protocols can only be a good thing for adoption. Can you imagine the adoption if KAWS decided to release an NFT drop? The continuing development of games and collectables will be a great thing to watch. I am excited to see the launch of Illuvium from Aaron and Kieran Warwick, the brothers of Synthetix founder Kain. The best is yet to come.

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Kieran Parker-Moroney

Kieran Parker-Moroney

Interested in learning. Art collector, investor, DeFi obsessed, golfer.