The Explosive Convergence of Art & Tech
How art world has been slow with tech but now exploding rapidly with NFTs
As early as the 1960s, “Digital Art” existed with digital technologies as a tool for the creation of traditional objects like paintings, photographs, and sculptures. There are also “new media” where computable art is digitally created, stored, and well distributed with the layer of connectivity of the World Wide Web in the 1990s. However, the creators or owners do not have much control of their digital art as copies of it are inevitably being created by users.
In early 2017, John Watkinson and Matt Hall had the first non-fungible token (NFT) released on Ethereum Blockchain which allows the creation of unique blockchain-based assets. What started out as a means to “certify true ownership” of digital art that can be easily and endlessly replicated, became a way for ownership of assets, both digitally and in the real world, to be recorded and certified. The record is stored publicly on a blockchain, which is a digital ledger that is securely maintained by thousands of computers around the world.
What are the key trends of Art + Tech?
With the current pandemic in 2021, augmented, virtual and mixed reality technologies have been increasingly used in art. Virtual space has been replacing traditional art gallery format, incorporating artworks in different digital formats such as artist-run virtual experiment Epoch’s Substrata. Numerous virtual reality and augmented reality outdoor exhibitions were also held, taking the traditional art gallery to a whole new level. In January, the Metropolitan Museum of Art in New York launched “The Met Unframed”, bringing its art in augmented reality smartphone experience.
We have also seen a rapid rise in the popularity of NFTs. Following the historical Christie’s auction on Mar 11 which saw Beeple’s “EVERYDAYS: THE FIRST 5000 DAYS” sold for an eye-popping $69.3 million, more and more brands and artists alike are joining the trend to release their own NFTs.
What are NFTs and why they are creating waves in the art world?
NFTs can be thought of as digital collectibles. These cryptographic tokens allow you to truly own a one-of-a-kind or rare digital asset. Each has a unique digital fingerprint that specifies that it is an original item. It contains details of its creator, attributes, and transaction records; in other words, its provenance. This provenance is easily accessible and verifiable. One NFT is not directly equal or exchangeable with another, thus making it non-fungible with the following key advantages.
Scarcity — The creator (or developing company to which the creator is assigned) of the NFT will be able to decide on the number of replicas. The creator may choose to make each NFT unique thus creating a high scarcity. With the shortage of supply, the price of the NFT might increase in the future if there is more demand for it.
Royalties — NFT can be set where creators receive some percentage cut from each sales transaction of the NFT. This will be very profitable in the long run as more hands are being exchanged.
Indivisible — NFT is normally not able to be broken down into smaller units. NFT must be sold as a whole unit where buyers pay the full amount. This will be less complicated since each NFT will have only one owner which addresses accountability.
Easily Transferable — NFTs can be easily sold and purchased in specific NFT marketplaces with many conveniences as compared to physical assets.
Trustworthy — NFTs are on the blockchain and thus achieving high immutability where the NFT purchases are valid and permanently recorded thus also maintaining ownership rights.
Non-interoperable — NFTs are non-interoperable (e.g. coded as ERC-721 standard in ETH blockchain) and thus the data contained in them cannot be transferred or utilised in other ways.
Indestructible — NFTs are on the blockchain which is highly secured and therefore NFTs cannot be destroyed.
Unique — NFTs can also help evaluate the legitimacy of the item by using blockchain technology since the physical item can be easily replicated.
With these advantages, NFTs can provide a solution for the problem of digital art scarcity, where nothing can stop someone from taking a screenshot or digitally duplicating an image. With NFTs, we can now determine the ownership and authenticity of digital art. While there are fake artworks in the real world, there have always been avenues for authenticating them.
Digital art using NFTs gets most of its value from its secure provenance, the ability to verify its authenticity and ownership digitally. Anyone can look at a CryptoPunk on the Ethereum blockchain and download or save the image, but true ownership can only be verified with data on the blockchain. An example of a digital art NFT minted on the Ethereum blockchain is digital artist Mike Winkelmann’s (aka Beeple) record-setting $69 million “Everydays: The First 5000 Days”. When it comes to NFTs, the value isn’t necessarily about the attached artwork. Sometimes, what is more important is proving ownership of that particular asset.
Image source: Beeple/Christie’sCollectables
What are the opportunities and challenges moving forward
Whether it’s a PancakeSwap Bunny or a Binance Anniversary NFT, there is a massive demand for digital collectibles. A mainstream use case is the popular NBA Top Shot, which allows the purchase of NBA NFT collectible trading cards and videos.
Along with digital NFT art, these NFTs make up a significant proportion of sales on NFT marketplaces like Opensea, BakerySwap, and Rarible. There is a lot of crossover with crypto art, and sometimes an NFT can be both a collectible and an art piece. These two use cases have developed the most traction so far.
Jack Dorsey’s first tweet is also an excellent example of NFT collectibles. While a CryptoPunk is collectible and visually artistic, Dorsey’s NFT has value purely for its collectibility.
Dorsey sold the NFT using Valuables, a platform that tokenises tweets. You can place an offer on any tweet. Anyone can swoop in with a counter-offer and outbid you. Then, it is up to the tweet author to accept or reject an offer. If they accept, the tweet will be minted on the blockchain, creating a corresponding NFT with their autograph.
Each NFT is signed by its verified creator’s Twitter @handle, meaning that only the original creator can mint their tweets as NFTs. This process creates a digital, rare collectible to trade or keep. The concept of selling a tweet can be a bit tricky to grasp, but it is a great example of how NFTs create collectibility. It’s essentially the digital version of a signed autograph.
There is a great demand for unique items that can be bought, sold, and exchanged in gaming. Their price is proportional to their rarity, and gamers are mostly familiar with the idea of valuable, digital in-game items. Micro-transactions and in-game purchases have created a multi-billion dollar gaming industry that could tap into NFTs and blockchain technology.
It’s also an exciting area in terms of what an NFT represents. Tokens for video games combine aspects of art, collectibility, and utility for players. However, when it comes to big-budget video games, NFT implementation is a long way off.
The CryptoKitties game craze that choked the Ethereum blockchain a few years ago, banks on cute collectible NFT kittens, where the value is determined not only by their rarity and looks but also their desirable breeding attributes.
In the meantime, other projects have actively built blockchain technology into their games. Axie Infinity and Battle Pets are both Pokémon style games with tradable pets and items. You can also purchase and sell these tokens on external marketplaces (peer-to-peer sales).
Besides their aesthetic values, these Axie pets also possess utility functions, which are abilities that can be used for battling. These abilities also affect the pet’s value when traded. Determining the value of each pet depends on a combination of rare looks, features, and utility.
Similar to image files or videos, audio can be incorporated into an NFT to create a collectible piece of music. Think of it as a digital “first edition” of a record. Attaching a song to an NFT is similar to our art example, but there are other use cases.
A major issue for musicians is getting a fair share of royalties. Using blockchain technology, there are at least two possible ways to achieve a balanced outcome: blockchain-based streaming platforms and blockchain royalty tracking. Competing with Amazon Music or Youtube for streaming services is difficult for small blockchain projects. Even when a giant like Spotify purchased a blockchain royalties solution called MediaChain in 2017, there were no real benefits for artists.
In the meantime, smaller projects have ended up working mainly with independent artists. Rocki on Binance Smart Chain gives independents a platform to sell royalties and stream their music. Their first royalty NFT sale on the platform raised 40 ETH for 50% royalties using the ERC721 token standard.
The popularity of these models depends on their adoption by larger streaming services. Combining music with NFTs is an excellent idea for a use case, but it might struggle to reach success without the support of music labels and artists.
Tokenising real-world assets using NFTs can digitise the way we prove ownership. For example, in real estate, we typically deal with physical property deeds. Creating tokenised digital assets of these deeds can move highly illiquid items (like a house or land) onto the blockchain. Widespread adoption is still some distance away as there has not been significant regulatory support. However, this is a valid use case and certainly one to watch in the future.
In April 2021, Shane Dulgeroff created an NFT representing a property for sale in California. It also has a piece of crypto art attached to the token. Anyone who wins the auction will receive the NFT and ownership of the house. However, the exact legal situation of the sale and the rights of the buyer or seller are uncertain.
When it comes to smaller items, like luxury goods, an NFT can help prove legitimate ownership when reselling. For example, a genuine, ethical diamond usually comes with a certificate of authenticity. This certificate is also a way of proving you have ownership rights. Anyone trying to resell the item without the certificate cannot confirm its authenticity and may have problems convincing buyers they are the rightful owner.
The same concept is possible with NFTs. By having an NFT associated with an item, owning the NFT can become just as important as owning the asset. You can also embed the NFT into an item with a physical cold storage wallet. As we see the Internet of Things develop, we will likely see more NFTs being used to represent real-world assets.
With the popularity of NFTs growing, there’s a good chance we’ll see even more ideas and use cases in the future. Currently, most NFTs have not gone beyond an idea or a small project. It will take some time for the use cases to mature and create a clearer picture of NFTs’ roles in our lives. In the meantime, for straightforward issues such as the scarcity of art and collectibles, NFTs are certainly here to stay.
Mars Panda is in a unique position and will probably be one of the few platforms in the region to offer both virtual and real-world assets NFTs. Join our exciting ecosystem with the upcoming Mars Panda NFT Marketplace. Embark on your NFT adventure with us and be a part of the future.
The future is now, and the future is Mars Panda.
About Mars Panda
Mars Panda is a complete eco-system which consists of:
• Games, Social Media and Ecommerce Aggregation
• Yield farming DeFi
• Mars Panda game with NFT game elements
• NFT Marketplace
We aim to fuse mainstream eCommerce and Gaming to the crypto world of NFTs and DeFi, on one seamless, unified platform.
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Legatus Global Pte Ltd is an entity that has obtained a regulatory exemption under the Payment Services Act (“PSA”) for digital payments token services. Legatus Global is commissioned to handle the issuance of Mars Panda Token (MPT) as well as the KYC/AML during the private sales and distribution of tokens to private investors. Legatus Global is also handling the process for private sales and distribution.