NFTs, Are They The Best Way To Buy Art In 2022 : For many years, it looked like the world of fine art was one of the few industries that wouldn’t be affected by the invention of the internet.
Physical paintings, sculptures, and other pieces of art were still going for millions of dollars at auction and none of them seemed to be decreasing in price. Meanwhile, we had seen very little digital art being sold for big sums of money – the art that was getting paid for tended to be graphic design work.
When you bought art online, you bought it for the sake of having something beautiful to hang on your wall or so that your company could have a cool logo. It was never an investment like buying a Rothko painting is.
However, in the last year, NFTs have started to change that. Many people are selling NFTs as a long-term investment with the bonus of a piece of exclusive art on the side.
Today, we are going to be looking at what NFTs are, if they are a good idea for long-term investing, and if they are a safe way to buy art online.
What Are NFTs?
NFTs (Non-fungible tokens) are, according to Investopedia:
“Non-fungible tokens (NFTs) are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other.”
What does this mean?
Well, NFT are pieces of digital art that come with a unique and viewable code that is stored in a blockchain. This code allows you to prove that you own the art and the blockchain keeps it safe. Blockchains also allow other people to trace the ownership of the art to you.
NFTs share some similarities to Cryptocurrency. Where the two forms of online investment differ is in the exclusivity of NFTs and their values.
Cryptocurrency can be created (known as mined), so most Cryptocurrencies are not limited. NFTs, on the other hand, are unique and produced (or minted) in limited quantities.
The more a Cryptocurrency is sold, stored, and traded – the more it is worth. Most Cryptocurrencies are backed up by a series of stable coins. They typically maintain or increase their value over long periods of time. Even if more of the coin is created.
NFTs are only worth what someone is willing to pay for them. There is no guarantee that you will be able to resell your digital art for a profit. Which makes them similar to real pieces of art.
The more NFTs that a company mints, the less all of its tokens are worth on the market. For example, the company Bored Bunny minted 4999 Bunny NFTs – they were sold at a mint price of roughly $2000 each.
The company then minted another set of 4999 coins at the same price. They did this two more times and then completely disappeared. It is believed that around $20.9 million was made by the investors. Bored Bunny NFTs are now worth less than $100 each.
Is NFTs Safe To Invest In?
NFTs can be safe to buy and invest in if you buy them from the correct people.
In the art world, there is a worry that you might be sold a fake, this is why people typically buy from auction houses that check provenance.
The worry of buying NFTs is when you buy them new. Buying an NFT new is theoretically the cheapest way to do it, however, some NFTs are sold at an unrealistically high mint price and will never be worth as much as you paid for them originally.
When a company sells NFTs at the mint for much more than they are worth, this is called a rug pull scam.
The NFT market is not regulated at all, so, if you lose money or are scammed there is nothing you or the police can do about it.
How To Buy Art Safely Online
If NFTs aren’t always safe to buy online, how can you make sure you are not wasting your money when you are buying money online?
There are a few things you should be aware of when you are shopping for art online.
Here are 3 tips for buying art safely online:
Tip 1 – Remember Digital Versions Of Real Art Can’t Be Sold As An NFT
If an image is in the public domain, as most digital versions of famous paintings are, then you will not be able to buy them as an NFT.
If someone is trying to sell you a pre-established work of art as an NFT then it is most likely a scam.
To sell art as an NFT, you must have the permission of the artist to do so. Unless the artist or their estate comes out and announces the launch of the NFT then it is most likely not real. Most of these images are public domain images – thanks to some of the world’s biggest museums putting them online for free.
If you want to own a digital copy of a painting like The Scream then your best option is to use one of these sites for buying cheap art. But you will not exclusively buy the art you own.
Tip 2 – Buy The NFT For Art That You Love, Not For The Profit
Until there is a more established NFT market and that market is more regulated – you do not want to buy NFTs as a form of investing.
Currently, there is little to no secondary market for NFTs that have not been sold by big-name artists – ones who have a pre-established audience outside of the world of NFTs.
The market is not stable or well-established enough to make investing in NFTs a stable investment opportunity. For this reason, you shouldn’t be buying NFT artwork unless you love the art and want to own it.
If you see an artwork NFT that you like and want to support the artist then go ahead and buy it. But don’t hold your breath that you will be able to flip it for a profit in the future.
Tip 3 – Only Buy From Well-Established Artists And Companies
As we mentioned in the section above, the only NFTs that seem to have any kind of value are tokens created by established artists or companies that would be able to make money from selling physical art or other collectible items.
Some NFTs are very expensive, and so is some art. So, how do you tell what is worth the money and what is just a scam?
Well, if the company is brand new, has no history, and is being advertised by celebrities or influencers then we recommend staying well away from them.
If the artist or company is well-known then think about whether you would pay that amount for an exclusive piece of physical art by them? If the answer is yes, then it might be worth your money.
List NFTs Maintain Their Value In The Long-Term?
NFTs haven’t been around for long enough to get a true answer to this question.
However, the current trends show that if the NFT has been produced by someone with an established audience then it should maintain, if not grow, in value.
For example, artist Tyler Hobbs has produced NFTs that seem to be growing in value. He had a pre-established career in art before he started making NFTs.
Will NFTs Replace Physical Art When It Comes To Art Investment?
It is unlikely that physical art will ever lose its value.
However, some questions have been asked about whether physical art made after 2020 will be sold for similar figures to art that was made before then. We might see that the valuable art from this time period does become NFTs and digital art.