CryptoArt and NFT Explained
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The world of cryptocurrencies has started to gain popularity around digital collectibles. Including unique virtual tokens that represent everything from art to sports memorabilia. Many people spent millions to purchase NFT or non-fungible tokens.
In this article, as an experienced NFT marketplace developers, we will take a closer look at what CryptoArt and NFT are, where they can be used, and how exactly. Also, consider whether designers should pay attention to what is happening in the crypto art market.
What is CryptoArt?
Crypto art is a digital artwork that can be in the format of images, GIFs, 3D simulations, or videos. These files are fully authenticated using Blockchain technology, which guarantees the originality of each work. The buyer is provided with an original copy of the files created by the artist. Thus, millions of dollars have been invested in this art form.
Perception of digital art
Artworks can be authenticated and put up for sale by their authors through the platforms. Authors are responsible for encrypting information and act as intermediaries.
The format in which digital art is encrypted is called NFT. NFTs have become digital assets that, unlike cryptocurrencies, are unique in their existence. That is, there is no equal to another NFT. Each one corresponds to the original digital art file.
What are the crypto art platforms?
CryptoArt provides tools for the artist. In order to be able to own your created art. They are called digital trading cards as they are associated with rare tokens. Which, in turn, exist in a chain of certain blocks. This system is based on the idea of digital scarcity. It allows you to fully conduct all digital transactions. Including buying and selling. CryptoArt works because it exists in limited quantities
Although no CryptoArtist or CryptoArtwork adheres to a single definition. Consider a number of common factors that have shaped aesthetics and community so far.
- Digital: Today, art is created and edited. You can also buy and sell art digitally.
- Geography: Through the Internet, artists from all over the world are involved in various projects. CryptoArt is considered one of the first art movements around the world.
- Equilibrium: Absolutely any participant can participate in competitions, projects. There is no age or skill limit.
- Stealth: Artists can sell their work anonymously. There is a function that completely hides the personality of the artist. It was created in order to free the creative person from public judgment.
How does NFT work?
NFT is a special token that is a unique identifier. This token is associated with a piece of crypto art that cannot be reproduced. It is used to confirm ownership of a particular piece. You can attach it to anything: JPEG, GIF, MP4, even music. This token confirms ownership of the “source file”. It is located in the blockchain, which is a permanent ledger. The registry can be accessed from any computer around the world.
Read Also: How to Build Your Own NFT Marketplace
Securing your NFT with mining
The complexity of mining is due to the fact that it takes a lot of computing power to create new blocks in the chain. It is important to note that blocks are created sequentially, not just when needed. They are created every 10 seconds or so.
This is important for protecting Ethereum from unauthorized access – one of the benefits that make NFT possible. The more blocks, the more reliable the chain. For example, if your NFT was created at block 300 and someone tried to hack your smart contract and NFT. Ethereum security works at a high level. Therefore, you can immediately identify the hacker and prevent hacking.
But, in order for everything to work correctly, it is necessary to constantly use computing power. For example, a block that contains 0 transactions will still have the same effect as it will still consume computing power.
How are Non-Fungible Tokens made?
Non-fungible token (NFT), or unique token – can represent ownership of digital or physical assets. Considered a kind of cryptographic token. The main feature and difference is that each copy is unique and has its own identification. They cannot be exchanged or replaced with another similar token. Although usually, by nature, tokens are fungible.
Experts identify different asset classes for which NFTs are applied:
- on the physical property (real estate, art objects);
- virtual (collectible cards, pictures, memes);
- on other assets (loans, encumbrances, and other liabilities).
There are a fairly large number of popular sites where buyers can take part in auctions, make purchases and sell non-fungible tokens – OpenSea, Makersplace, Nifty Gateway, Yellowheart, NBA Top Shot, SuperRare, Known Origin.
For example, the OpenSea platform uses a rating system, assets are divided into categories: Art, Domain Names, Virtual Worlds, Trading Cards, Collections, Sports, Utility. We already talked about this in more detail in one of our previous articles on how to create an NFT marketplace like OpenSea.
NFTs are purchased through online tenders and then paid in USD or cryptocurrency. Costs range from a few dollars to millions when it comes to art or homes.
How can I create my own NFT?
Four years ago, works from the CryptoPunks collection were handed out for a song. Recently, one of these drawings was sold for almost $8 million. Now everyone can issue their own NFT token and make money on it.
The most popular platforms for working with non-interchangeable tokens provide the ability to create your own collections of tokens. This requires an Ethereum wallet and content that will be tied to the token. Pictures, music, videos, and even 3D models will do. Also, when creating a token, you can add blocked content. Only its owner can see it.
Most tokens are sold in an auction format. But to sell them, you will need to pay a transaction fee on the Ethereum network. For example, the OpenSea platform creates an NFT token after purchasing it and charges a commission from the buyer.
This saves the author from additional costs. Many other platforms work on a different principle and charge a commission from the author. The size of the commission will depend on the load on the Ethereum network. At maximum load, the commission can be over $100.
The popularity of NFTs is growing, which means that they are also coming under increasing scrutiny, especially regarding their carbon footprint.
To clarify a few things:
- NFTs do not directly increase Ethereum’s carbon footprint.
- How Ethereum protects your funds and assets is currently energy-intensive, but will improve soon.
- Once improved, Ethereum’s carbon footprint will be 99.98% better, making it more energy-efficient than many existing industries.
Why are NFTs important?
Over the past several months, NFTs have been widely used for this purpose. Many people create digital art or various digital materials, often for more than useless nonsense, tokenize them with NFT to create value.
However, there are more productive uses of NFT that are becoming popular. It is the tokenization of physical assets as well as valuable virtual assets such as real works of art, memorabilia and converting them into tokenized securities. This creates a new investment opportunity. In simple terms, by tokenizing tangible assets, investors can have more liquidity.
Why an NFT investor? The investor receives the original rights to the digital asset he buys – a non-fungible token acts as a kind of certificate. The purchase records of any NFT, in addition to reflecting the ownership, track its history: each NFT has metadata that certifies when it was made, who created it, and other parameters.
Currently, when a person acquires an NFT, the asset is owned but not copyrighted. In theory, the copyright holder can separately transfer copyright, but under a separate contract, respecting intellectual property rights.
You also need to understand that NFT is a new technology, but with a huge number of applications. Most people have yet to learn and accept this technology.
CryptoArt advantages and disadvantages
So what exactly is CryptoArt? Is this the future of art? or something different? Let’s take a look at the advantages of CryptoArt:
1. CryptoArt is democratic
CryptoArt has given anyone who wants to create art, regardless of education, race, gender, or religion, the opportunity to tell their story and make their mark on the art world.
2. CryptoArt is virtual
CryptoArt is considered a rare, one-of-a-kind digital art. Artworks are commonly referred to as “rare” and are posted on internet curation sites for auction or instant purchase using the Ethereum cryptocurrency.
CryptoArt artist – digital art. Artists create designs in 3D, beautiful paintings, and animations. The details range from stunningly detailed to charmingly simple.
Various artists create incredible paintings on traditional canvas. They also found ways to leverage the new digital landscape.
Artists use the Near Field Communication tag, or NFC tag, to link the digital version of their physical work of art to the Internet. NFC tags allow a physical work of art to be scanned with a smartphone and sent to a digital list.
Artists often sweeten the purchase of their digital art by sending the buyer the original physical work as well.
Sites such as SuperRare, Nifty Gateway, and Known Origin are the most prominent CryptoArt platforms. They boast a large community of creators and buyers, but an app is required to submit your art. Sites like Opensea, on the other hand, allow artists to publish their work without submitting an application.
3. Payment is based on cryptocurrency.
As mentioned above in the article, most CryptoArt sites use the Ethereum cryptocurrency.
What does this mean for artists? Well, this means that the initial payment you receive for your art can grow exponentially over time.
If you received 1 Ethereum a year ago for a work of art, this payment would be equivalent to approximately $ 140. If you choose to withhold this payment rather than cash it out in dollars, your 1 Ethereum will be worth $ 1,600 today.
This not only allows you to become a paid artist, but also a crypto investor. The potential upside in the value of your art is incredible and very lucrative.
The setup is relatively simple. All it takes is a crypto wallet to hold your currency like Exodus, which is free to use and newbie-friendly, and an account on a site like Coinbase where you can trade your newly acquired cryptocurrency.
As for the disadvantages:
1. Little trust.
This system has not yet fully revealed itself, so there is very little trust in it on the part of people. It takes more time to understand if CryptoArt is worth investing in.
2. Environmental costs of NFT.
Unfortunately, this type of digital art has one significant drawback that makes it unsustainable in the long run. The environmental impact of crypto art is amazing. Similar to Bitcoin mining, the process of verifying the legality of an NFT transaction requires a tremendous amount of energy.
Ethereum and its blockchain security system are estimated to consume over 55 kWh of electricity per transaction. Every time someone places a bet cancels, buys, or trades a piece of art, it generates the equivalent carbon footprint of over 60,000 Visa transactions.
The reason these numbers are so incredibly high is because of the Ethereum Proof-of-Work (POW) verification. The very system that makes Ethereum secure – verifying transactions by programming computers to solve incredibly complex math problems – also consumes a tremendous amount of energy. Using a benchmark of 60 kWh per transaction, each can be converted to between 15 and 40 kg CO2.
The energy consumption required to verify these transactions will become more egregious as the computations become more complex. Ethereum developers have pledged to address many resilience issues, along with other security and scalability concerns, with the release of Ethereum 2, although these plans have no deadlines.
Cryptoart and NFT are part of an exciting new landscape that opens up the potential for a digital art revolution. However, in its current form, the environmental impact is too great for many artists to join, and has even prompted some NFT creators to abandon their plans due to negative comments about the negative impact of NFT. Let’s hope that over time, as the technology matures, crypto art will find a stable place in digital spaces.