Non-fungible tokens, or NFTs, started gaining popularity as far back as 2014, but it wasn’t until 2021 that NFT art exploded onto the crypto scene. In 2020, the market was worth about $20 million, which isn’t chump change, but 2021 saw more than $2.5 billion dollars in sales of NFT art.
NFTs are available in a variety of fields: real estate, online gaming, sports, trading cards and supply chain operations. That said, most of the more popular NFTs you may have heard of — like Bored Apes Yacht Club and the earlier Cryptokitties collection — are based on art.
NFTs and many cryptocurrencies have taken a financial hit lately, which makes this both a good and a not-so-good time to think about buying NFT art: good because you may be able to scoop up a bargain; not-aso-good because nobody knows what the future will bring for NFTs. Then again, that’s part of the thrill.
Knowing what to look for when buying NFT art will help you make smart decisions once you get to the marketplace. If you’re new to the world of NFTs, read up on the basics of NFTs and how they work before you head out to shop.
Why Do People Buy NFT Art?
In some ways, NFT art isn’t so different from art you might see in a museum or gallery. Art is collectible, just as exotic cars, stamps and coins are. Whether an artwork exists in physical or virtual space doesn’t make much difference, now that everyone’s online.
As long as personal computers have been around, people have been making digital art. The advent of artificial intelligence and other machine-learning tools now allows people to use algorithms to create art. NFTs are an obvious way to collect digital art, but they can also represent physical works.
The reasons people collect NFT art are as varied as the reasons they buy physical creations. But advances in online technologies have introduced some novel benefits for digital art.
- Status. Although NFT art exploded last year, it’s still new to many people, and owners of these works are on the bleeding edge of technology. As a unique digital asset, an NFT artwork gives its owner the verifiable status of a pioneer of the metaverse.
- Long-term value. Since each NFT is one-of-a-kind, scarcity, which drives up value, is built into the asset. Digital tokens are too new for anyone to know for sure whether they’ll appreciate over time as some physical artworks do. Nevertheless, such appreciation is entirely possible, and if it occurs, your NFT could be the basis of a valuable digital collection.
- Web3 and the metaverse. With technology evolving at lightning speed, the difference between the metaverse, or the virtual world, and our three-dimensional reality is becoming ever smaller. NFTs are valuable as digital assets in the online environment.
Where to Buy NFT Art
Plenty of digital marketplaces have NFT art for sale. Some of these allow any artist to mint NFTs on the blockchain, while others issue invitations to those whose work fits their ethos. Following are a few of the marketplaces that sell NFT art:
- Rarible is community owned, with its own token, so members vote on any proposed changes to it. It partners with a variety of brands to create unique NFT collections.
- SuperRare invites artists to collaborate and has more of an art-gallery feel than other marketplaces.
- Mintable, which is backed by billionaire Mark Cuban, makes it easy for creators to mint and sell NFT art and other types of content.
- OpenSea, the best-known and biggest NFT marketplace, sells huge art collections in addition to almost all other types of NFTs. It’s intuitive to use and easy to get started on.
- 1stDibs takes a more curated approach and is a great place to buy a diverse range of NFTs from established and up-and-coming artists located all over the world.
How to Choose the Right NFT Art
Your reason for buying NFT art — whether collecting, flipping, aesthetics or something else — should inform your purchase. If you’re starting a collection because you love art in all its glorious forms, select works that keep calling you back for another look.
If you’re intending to flip for profit, choose pieces by creators with a solid history of sales and increases in value. Even then, only buy NFTs that you personally enjoy. It’ll make the search and eventual purchase much more fun — and it will soften the blow if the art loses value.
Expect to drop some coin on your NFT, but go in with limits. Know what you can afford to spend, and pass on anything that eats up your budget.
The Pros and Cons of Buying NFT Art
Most purchasing decisions have upsides and downsides, and NFTs are no different. The pros of buying an NFT are easy: It’s art, and you get to own it.
Here are a few of the cons to consider before you place your bid.
Unknown Future Technologies
These present both potential advantages and possible perils. In the year 2000, no one could have envisioned NFTs or how they could be used. New technologies could be in the offing that would render the blockchain — and NFTs — either more or less valuable.
For example, quantum computing, like the blockchain and the metaverse, is still an emerging technology. It’s impossible to say whether quantum computers might be able to find a way around the blockchain’s safeguards, making it about as secure for storing ownership as the U.S. Postal Service is for sending cash.
However, the flip side might also be true — quantum computers could make current safeguards even more powerful and further protect the blockchain.
A Lost Password Equals Lost Assets
Many digital assets, like cryptocurrencies and NFTs, are secured with a cryptographic key, or password, which unlocks your wallet to give you access to your assets. If you forget or lose your password, there’s no retrieving it or the potentially valuable items in your wallet. The decentralized nature of the blockchain means there’s no help desk or central authority who can assist you in regaining access.
Your NFT Could Break
The NFT you own is a protected link that points to the item it represents on the blockchain. Unfortunately, that link can be broken. If the company storing the item goes out of business or the website URL changes, your NFT will no longer point to anything. Broken links are a real problem, but steps are being taken to create a permanent digital archive in which to store the items.
Illegal Activity Is Difficult to Track
The decentralization of the blockchain provides a high level of privacy, confidentiality and anonymity, and that makes it appealing to criminals. It’s far more difficult to track illegal blockchain transactions than it is to uncover illegal bank transactions, which are tied to discoverable identifiers. Cyber-hackers have stolen collections worth millions through scams or outright theft, and no fail-safe way currently exists to crack down on them or find them easily.
How Much Does NFT Art Cost?
Surprisingly, this isn’t an easy question to answer. The graph for NFT art prices is barbell-shaped, with lots of small-dollar sales at one end and huge sales — such as the $69 million paid for Beeple’s The First 5000 Days — at the other.
Artist Kimberly Parker looked at 10 days of NFT art sales on the OpenSea marketplace in 2021 to figure out how much money artists could really expect to make selling NFT art. She discovered that more than a third of the sales were for $100 or less. Another 20 percent were for between $100 and $200.
If you have your eye on an NFT artwork with a sky-high price, you can opt for fractional ownership. Sharing the cost of an NFT with other interested parties helps bring down the expense for each.
What Gives NFT Art Value and What Increases It?
NFTs can sell for tens of millions of dollars or tens of dollars. The value can skyrocket overnight, tank over the course of a year or stagnate until the end of days. The initial value of an NFT depends on a slew of factors, and the same is true of increases in its value.
What you don’t want is to buy an NFT at an inflated price. Online crypto forums are rife with pump-and-dump schemes, in which a creator or a team opens numerous sock-puppet accounts talking up the excellence of the project in the hopes of driving up the price. When a buyer bites, the seller takes the profits and runs. You’ll have to do a little homework to protect yourself.
Here’s what to look for:
The Artist’s Pedigree
Visual artists, musicians and other creators who already have a following are more likely to sell an NFT for a tidy sum than someone who is completely unknown. It’s the age-old collector’s dilemma: Stick with artists whose work has time-tested value, and therefore costs more, or buy a piece by an unknown for less and hope it appreciates.
If you do decide to take a chance on a fresh new talent, check out the forums. If it looks like a bunch of bots — not humans — are chatting up the art, take a pass and keep looking.
Influencer and Celebrity Endorsements
Well-known people in the world of digital art and the metaverse have a lot of sway in driving up the value of an NFT. If a cryptoceleb buys, invests in or even shows interest in an artist’s collection, its value is almost sure to go up.
The Story behind the Work
There’s more to an NFT than a mere image or sound. Collections that have a purpose — and works whose creators provide their corpus with context and articulate the why behind it — are more likely to attract buyers than those devoid of story or context.
The Roadmap
An NFT’s roadmap is a description of its purpose or goal and the value it creates for the buyer, such as perks built into the smart contract. These extras can include everything from access to exclusive in-person or virtual events or an invitation to join a private Discord community to a physical version of the digital asset the NFT represents.
DAOs: Added Perks of NFTs
Also known as a token community, a Decentralized Autonomous Organization, or DAO, is a virtual club or company governed democratically by all the members of the organization. Since the rules are embedded in the blockchain via smart contracts, there’s no hierarchy of management and no bureaucracy to navigate.
For example, Jenny DAO offers fractional ownership of NFTs. Its members vote on the NFTs it purchases, and the tokens are stored in a vault controlled by smart contracts. Jenny DAO acquired its first NFT, an original song by Steve Aoki and 3LAU, in May 2021.
How to Buy NFT Art on 1stDibs
Buying NFTs on the 1stDibs marketplace is easy. You can get started in four easy steps:
Step 1: Set Up a Crypto Wallet
Download a crypto wallet, which is a digital space that stores your cryptocurrency, NFT art and any blockchain-related transactions you make. A popular choice is MetaMask, which most users find pretty simple to set up. Make sure you get it from the original MetaMask site and not from a reseller. There’s more security with an original wallet, because resellers might create a back door through which they can steal your crypto (it has happened).
Step 2: Buy Crypto
1stDibs, like most NFT marketplaces, is on the Ethereum blockchain, so you’ll need to buy some ETH for your digital wallet on a platform like OpenSea, PayPal or Coinbase. As with any currency exchange, you can expect to pay fees when you purchase your crypto.
Step 3: Find the NFT You Want to Buy
Once you’re connected and have some ETH to spend, search the 1stDibs marketplace. When you find an NFT you’re interested in, click the heart icon to favorite it and check out the social links to learn more about the artist and the art.
Step 4: Place a Bid
Each item has a reserve price. As soon as the reserve price has been met, a 24-hour window for bidding opens. If a bid is placed in the last 15 minutes of the auction, the window will remain open another 15 minutes after the last bid is placed. Your bid is binding, so if you win, your payment will be immediately processed, and the art will be yours.
What to Do with Your NFT Art
Even though it’s digital, you can physically display your NFT art if you like. Go old-school, and print out the artwork — or use a third-party site to enlarge it and print it as a poster on paper or canvas.
You can also find digital frames, similar to those used to display digital photographs. Many have features like an antiglare coating, stereo speakers or a function enabling you to share your art with your friends. Some smart TVs allow you to exhibit digital artwork, and you can show off your latest NFT art online through display websites and metaverse gallery spaces.
Buying NFT art isn’t complicated, but it’s new. Proceed with awareness and an open mind, and see where purchasing NFTs leads you.
