NFTs had a breakthrough year – What’s next for them? | Crypto News

When Canadian artist Trevor Jones graduated 14 years ago from the University of Edinburgh in Scotland, he quickly faced the harsh realities of the art world.

“I had some good exhibitions and gallery shows,” he told Al Jazeera. But it wasn’t a way to pay the bills. I was working three different jobs at the time.”

In the early 2010s, interested in the intersection of technology and art, he began experimenting with QR codes and augmented reality. These themes received a lukewarm response from the established art world, but he persisted. In 2017, he invested in the growing cryptocurrency Bitcoin, and immediately lost his money in the crash of 2018.

“I found out that I’m a much better painter than an investor,” he joked. “But it opened up a whole new world that I can explore through drawing.”

Since then, he’s been creating cryptocurrency-themed works, mixing classic painting and crypto themes, often with associated digital art pieces in the form of non-fungible tokens (NFTs).

NFTs are unique digital files powered by blockchain technology – the same technology that validates Bitcoin – and the blockchain ledger they sit on verifies the rightful owner of this unique digital asset, giving it a provenance.

Demand for NFTs began to emerge late last year, with interest in them growing this year — along with Jones’ fortunes.

His first project at NFT sold in 2019 for $10,000 – a huge amount of money at the time. In October 2020, he sold the NFT of Batman with comic book artist José Delbo for $552,000. Then in February of this year, he sold 4,158 copies of his most famous work, Bitcoin Angel, which mixes Bernini’s Ecstasy of Saint Teresa with crypto images, for $3.2 million.

“When you’re a poor, struggling painter, you just want to sell your work to pay the rent and put some food on the table,” Jones said. “It is a struggle to be creative under these circumstances. I am now in a position to collaborate with the Ice Cube.”

pixel and source

The NFTs supported the most sought-after technical sales of the year.

The opening shot of the gold rush was launched in March, when US-based artist Mike Winkelman, aka Beeple, sold NFT of his digital artwork Every Day: The First 5,000 Days, for $69 million at Christie’s.

Christie also partnered with trading platform NFT OpenSea at the end of November to take advantage of this trend. Celebrities like Paris Hilton, Snoop Dogg, Lindsay Lohan and even the inventor of the World Wide Web Tim Berners-Lee made and sold NFTs this year.

Another major trend has been revealed with avatar-like character graphics sold as NFTs. The most famous project in the space is called CryptoPunks. At the time of writing, the lowest-priced CryptoPunk could be purchased for $242,918, while the most expensive was $7.58 million.

The Bored Ape Yacht Club, which includes famous members including Jimmy Fallon and Steph Curry, saw a package of 101 NFTs resold at auction at Sotheby’s for $24.4 million in September.

Besides bragging rights for being at the forefront of a new cryptocurrency trend, investors also like to bet the idea that attached source pixels will remain desirable collectibles.

“When you create an NFT, there are always a limited number of them,” Jan Ketelers, head of marketing at Venly, a Belgian startup that builds NFT markets, told Al Jazeera. “Whenever you sell it, it is recorded on the blockchain.”

An exhibition assistant at the House of Fine Art (HOFA) Gallery, London, UK holds a smartphone displaying a signed lithograph “Cryptopunk #207” from Larva Labs [File: Chris J Ratcliffe/Bloomberg]

These NFTs, in turn, can be sold by their owners, creating a fertile ground for trade in NFT marketplaces such as OpenSea or Nifty Gateway.

But while NFTs benefit from the equity granted by the blockchain, they also suffer from the technology’s huge carbon footprint.

Most blockchain networks rely on so-called miners whose platforms — often made up of thousands of power-hungry computers — race to solve complex mathematical puzzles, with the winner rewarded with a cryptocurrency.

The Ethereum blockchain, on which most of the NFTs are registered, uses more energy than the entire country of the Philippines. “This digital system has a huge impact in the real world,” said Alex de Vries, owner of Digiconomist, a site that calculates the power usage of blockchain networks like Ethereum.

In his day job, de Vries is also a member of the Financial Crimes Unit of the Dutch Central Bank. “This is not what we want in the era of climate change, where we are supposed to reduce our emissions,” he said.

But for blockchain proponents, this is a temporary problem. According to Ketelers, miners are rapidly transitioning to clean energy sources, and blockchain systems are experimenting with new ways of doing business. For example, it often uses Venly Polygon, a network that is still built on top of Ethereum, but uses a system that would cut up to 99 percent of power usage for the so-called Proof of Work systems described earlier.

“I don’t think environmental criticism still makes much sense,” Ketelers said.

However, according to de Vries, the issue is not yet resolved. More green blockchain networks exist, but larger networks like Ethereum still consume a lot of power. Ethereum has also wanted to stay away from Proof of Work for years, but so far it hasn’t worked out.

And while skeptics may dismiss NFTs as a fad, evangelicals argue that “metaverse” – an ambiguous term used to describe a more immersive, futuristic version of the internet inhabited by avatars – is poised to propel them into the mainstream through applications such as video games, business Venly’s flagship.

“Imagine that everything you build or buy in a game becomes yours,” Ketelers said. “It becomes part of your identity, and you can even sell the assets.”

This is already happening to some extent. The market for game skins, and cosmetic upgrades for in-game items like guns, reached $30 billion in 2018, according to Juniper Research. However, with NFTs, players can truly own these items, regardless of game developers, and even start trading them in third-party markets – potentially allowing thriving virtual economies to thrive.

Venly supports game developers like Atari with ideas like these.

But like previous coding bubbles, the NFT hype may also collapse in the future. “I learned how fast things can break in the crypto world, but also how fast they can break down,” Jones said. “Bitcoin has been described as dead many times in the past few years, but it continues to rise like a phoenix.”

That’s why Jones is willing to volatility. He didn’t buy anything extravagant with his newfound wealth, just a new car (albeit a Tesla). Next year he will be renting out Stirling Castle in Scotland to host a party for collectors who own his art – a luxury in some ways, but he sees it as a good business.

“I need to grow my brand and my community to survive the eventual bear market,” he said. There will be a lot of artists who will disappear, projects that will go to zero. Everyone knows that. But some artists will succeed and come out the other way. I hope to be one of them.”