Cryptocurrency Art Investment: The Next Gold Rush?
The traditional art market is estimated at $3 Trillion and isowned by many of the world’s elite private investors and collectors. If this analog art market was the size of a forest, then the crypto digital art market would be the size of an acorn! Rare crypto art is not just getting started, it’s the dawn of a new age!
In time, there will be a gold rush for this new digital scarcity, which will be fueled by crypto and art investors & collectors all around the world frantically outbidding each other trying to secure this new rare digital art; not only as speculative stores of value, but also for social status so that nobody else can own what they desperately want in their collection.
Why will this happen? Similar to traditional art collecting, the value of cryptocurrency artworks is based on several factors, including scarcity, ownership history, and social dynamics, and Fear Of Missing Out (FOMO). This emerging crypto art market is showing signs of exlosive growth!
Take the below example, this is AI Nude Portrait #1 — a $12k piece of incredibly scarce digital art.
- April 2018 it sold for $80
- September 2018 it sold for $310
- January 1st 2020 it sold for $3,614
- January 18th 2020 it sold for $12,909
- What happens to the price next?
No one has a crystal ball to predict the future. One thing that we do know though, is that human nature is often driven by emotions and the rapid growth of emerging markets are often fueled by the fear of missing out. Significantly, traditional art has throughout history, proven to be incredibly resiliant in times of market turmoil, even the biggest ones!
Rare digital art collectibles, also known as Non Fungible Tokens (NFT) are perfectly positioned for this current climate of economic instability and turmoil. Capital will rush to proven stores of value, like gold & silver, Bitcoin and also rare crypto art, due to their provable scarcity and value.
So what are you waiting for? It’s time to make serious money on crypto art!
So what are Non Fungible Tokens (NFTs)?
NFTs are unique, immutable assets that track ownership and price history on the blockchain, they are a perfect platform to bring about an internet native art market for the first time.
NFTs are exchanged in peer-to-peer marketplaces (like SuperRare, Known Origin and Makers Place), with each token representing the official original collectible version of the artwork as intended by the artist.
The digital artwork file and metadata are stored in InterPlanetary File System (IPFS), the hash of which is written into the token, and the tokens are held and traded directly from users’ Ethereum wallets.
So what are the benefits of using NFTs for digitial art:
- Provable Origin: The original artist and all relevant information is immutably written into the blockchain and cannot be edited
- Transparent Proof of Ownership: The entire history on an NFT (back to its origin at minting) is visible on-chain
- Transparent Price History: The entire price history is visible on-chain (including bids & sales history) for all buyers, sellers and bidders
- Impossible to Forge: NFTs cannot be forged or copied as the data is locked on chain, any copies are rendered fakes with no blockchain data
- Impossible to Tamper with: NFTs cannot be tampered with as the data is immutably stored read-only on the blockchain
- Programmability: because NFTs are fully programmable, the possibilities are endless with huge potential for digital economies and ecosystems
- Interoperable: NFT standards allow non-fungible tokens to move easily across multiple ecosystems frictionlessly, leading to rapid user adoption
- Tradeability: The strongest feature enabled by interoperability is free trade on open marketplaces, leading to huge liquidity
- Liquidity: Instant tradeability of NFTs will lead to higher liquidity due to expanded sizes of marketplaces
- No Greedy Middlemen: NFTs can be traded easily with minimal fees and innovative reward structures for artists and networks of affiliates
- Virtual Galleries: Blockchain art galleries open up the potential for a global audience for crypto art works and also digital versions of analog art
- Ease of Monetisation: NFTs can be rented out by their owners to galleries/collectors for passive income, other models will also emerge
- Auctionable: NFTs can be easily auctioned using smart contracts to execute on specific pre-programmable conditions
This list is not exhaustive. Further benefits and use cases will emerge as the ecosystem & economy around crypto art further develops and matures.
Now you know a lot more about the benefits of NFTs and their application in rare digita art, let’s get into the steps to get set up.
So let’s get started then!
1. Set up a Digital Wallet for NFTs:
Where are you going to be storing these NFTs? Just like you store your cryptocurrency on an exchange, you need to store your NFTs in a Digital Wallet. There are a number of different digital wallets available for NFT collectibles (ERC721 and ERC1155) including Coinbase, Metamask and Trust Wallet. My favourite is the Trust Crypto Wallet (by SIX DAYS LLC), available on Android and the App Store.
Important: write down your 12 words in a safe place; these are your private keys to backup & restore your wallet. Do not let anyone see them! If another person has access to these words, your funds & collectibles can be stolen.
2. Set up on an NFT marketplace:
Now that you’re set up with a digital wallet for your digital art NFTs, you need somewhere to trade them. OpenSea is the largest marketplace for rare digital goods. It’s a great place to start as it’s very user friendly and a great place to buy, sell, collect and discover NFTs.
3. Buy your first NFT:
Step 1: You need to first convert your fiat, (USD, GBP, EUR, or whichever currency you have) to Ethereum. To do that you’ll need to setup an account with you local Cryptocurrency Exchange. In the UK a popular fiat to crypto exchange is Coinbase. Once you have an account setup and linked to your debit card, you can buy Ethereum.
Step 2: After purchasing Ethereum, Transfer the Ethereum to your Trust Wallet Ethereum address, which is a long key, looking something like this:
This is your unique wallet address, quite like your Bank Account Number. People can send you Ethereum to this address and it will show up in your digital wallet.
Important: Before using, send a small test transaction of say 0.1 ETH or something small just to test that the transaction goes through OK! Please be aware that depending on network congestion, this can take some time. You can add more gas to speed the transaction up if you wish for a small additional fee. Now you’re ready to buy your first NFT Art!
Step 3: Using OpenSea, once you’ve browsed the Crypto Art Dapp Marketplaces (like SuperRare, Known Origin, Makers Place, etc.) inside OpenSea and found an NFT you want to purchase, you’ll either be able to ‘Buy Now’ or ‘Make Offer’.
Click the below links to get started…
We really are at the dawn of a new era. The invention of NFTs and the application of this technology for art has hearalded the biggest advancement in the history of art, which will redefine the art world for centuries to come!
This really is a game changer and this exciting new world is currently being explored, shaped and created by a new generation of artists, collectors and investors. The possibilities are not just limited to art either, due to the frictionless operability of this tokenisation technology, there are incredible capabilities beyond art and into the realms of advertising, marketing, investing and more, with these and other areas yet to be fully explored.
The traditional art world is largely unaware of this cutting edge technology and this gives you the perfect opportunity to take full advantage of being early. Investing wisely now by buying NFTs created by some of the most exciting up & coming crypto artists could reward you handsomely with potentially sky high returns over the coming years. Don’t sleep on this!
I hope you enjoyed this article! Stay tuned for the next article in this series, which will dive into how to research the best investment opportunities in the rapidly growing and exciting crypto art world!
Disclaimer: the information in this blog post is my own personal opinion and does not constitute any form of advice or recommendation and is not intended to be relied upon by users in making (or refraining from making) any investment, tax, legal or any other decisions. Appropriate independent advice should be obtained before making any such investment decisions.
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