NFT paintings and other NFT artworks have been sold for tens of millions of dollars, creating a “fever” among investors and artists. What makes NFT paintings so valuable? Let’s find out with ELCOM in the following article.
Besides the NFT (Game NFT) video games, the wave of NFT games has also attracted attention in many countries around the world. Despite many risks, NFT paintings are still traded at extremely high prices by investors and artists.
1. What is NFT Art?
NFT (Non-Fungible Token) is understood as a non-fungible token – a virtual item authenticated by Blockchain technology. This technology uses a digital signature to identify the original work and its owner. Thanks to this feature, NFT becomes a unique asset class that cannot be copied or copied.
In recent times, many people are willing to spend “huge” money, even tens of millions of dollars, to own NFT items. The wave of NFT paintings has had a great impact and influence on the investor community, and has also spread to the art world. A series of artists began to release works as NFTs.
2. The “fever” of the global NFT competition
The movement of buying and selling NFT paintings quickly spread around the world. A lot of large transactions are made to exchange NFT artworks. The excitement of the NFT painting trading market opens up new development opportunities for art works in the era of digital transformation 4.0.
One of the typical NFT work deals is the sale of a 10-second video by artist Beeple. At the end of 2020, the video was purchased for 67,000 USD by collector Pablo Rodriguez-Fraile. In early 2021, the work continued to be sold for up to 6.6 million USD.
In addition, Beeple also sold another NFT painting called every day: The First 5,000 Days for a huge amount of up to $ 69.3 million. This is also the most expensive NFT painting sold to date.
In addition to NFT paintings, other art forms such as music videos, dance and dance videos of fictional characters, and fashion items such as shoes, clothes, photo collections, and albums… can be bought and sold at very high prices.
Thanks to the participation of artists and celebrities in the market, more and more NFT paintings of great value appear. A series of Vietnamese and international artists have also begun to orient their work through NFT.
The most expensive NFT painting today every day: The First 5,000 Days
3. Why are NFT paintings so expensive?
NFT paintings have great collectible value. Each work is unique and cannot be copied or replaced. So, the more unique the pieces, the more likely they will sell for a higher price.
In addition, investors make money through NFT by buying and selling works. Following the wave of the market and buyers’ demand, the value of many works is pushed up many times higher than their original price.
4. Why should artists create NFT paintings?
At any given time, artists have a “headache” with optimizing the profits of their works. NFT works help to solve those problems. NFT offers artists the three biggest benefits as follows:
Artists and artists don’t just profit from selling NFT paintings for the first time. They continue to earn royalties on future transactions as long as the token exists.
Authors can program royalties into their digital artwork. This allows them to get back a portion of the lifetime profits of that NFT painting any time the work is sold to a new user. The percentage is quite high, usually 2.5% to 10%.
Reduce associated costs
Since the sale of NFT artwork is made online through various peer-to-peer marketplaces for global buyers, artists don’t have to spend money on auction houses and art galleries. This allows them to save a significant portion of their sales costs.
Verification and authentication
While anyone can view the token of an NFT work, link to it, or even download it, it is owned by only one person at a time.
Once imported into the Blockchain, the NFT painting possesses an unmistakable certificate of authenticity. The creator, the purchase price, the subsequent owner, and even the buyback price all come with the work. This contributes to market transparency unmatched in the traditional art world.
5. How to draw NFT pictures?
As one of the types that can bring a huge income, NFT painting is something that many people are interested in.
5.1. Choose NFT Market
This is the first step when you want to draw NFT pictures. There are two commonly chosen NFT market categories:
This NFT marketplace category only allows authorized artists to mint or create digital art tokens. They mainly focus on high-quality digital art tokens instead of simple, low-quality collections.
These platforms have higher transaction fees and lower flexibility on the percentage of royalties that an author is allowed to program into his artwork.
This peer-to-peer marketplace allows anyone to create their NFT with whatever they like. So participants can create their work using photos, videos, or audio files. It also allows the author to set any royalty rate for each work.
The risk of entering this market is that there are often too many imitators and fraudsters.
5.2. Set up a digital wallet
The next step is to create a digital wallet to store both cryptocurrencies and NFT paintings. Cryptocurrencies, Ethereum (ETH), will be essential in the NFT creation process.
It would be helpful to have Ethereum, as some NFTs are generated on this blockchain. ETH is used to pay GAS fees (Gas Fee – a fee that needs to be paid to perform transactions or interact with smart contracts on a Blockchain platform), Ethereum blockchain transaction costs before listing any tokens.
ETH costs typically fall between £10 and £200 to pay for gas fees while generating NFTs.
5.3. Create your collection
Next, the author can start creating his collection of NFT paintings. The platform acts as a digital artwork store or gallery.
5.4. Generate tokens for digital artwork
After completing the collection, the user starts the NFT generator. Optionally upload metadata (metadata) including image files (JPG, PNG, GIF, etc.), audio (MP3, etc.), or 3D (GLB, etc.)
The number of tokens is not limited, but you must choose to mint simultaneously; just be aware of how many versions of the same token you want to create.
Next, the author can add attributes, levels, and stats if relevant. They allow buyers who explore a collection to filter NFT work by need.
After adding all the necessary details, including social links, updated images, description, and name, press the “Create” button to add the NFT to the Blockchain. This step will require ETH to pay the approval fee and GAS fee.
The author can then choose the accepted payment token for his NFT painting and the percentage of royalties received on the resale of the work.
5.5. Selling NFT paintings
NFT paintings are not automatically listed for sale after creation. Authors need a listing to sell their work. There are many ways to sell NFT paintings. Authors can choose to list either a fixed price or an auction. When creating and selling NFT paintings for the first time, sellers must pay GAS fees before listing their artwork.
Sellers can advertise their work. Usually, they will share direct links with potential buyers and promote the work to fans on social media.
6. Investing in NFT paintings: Potential or risky?
The million-dollar deals are a very clear demonstration of the potential of the market for buying and selling NFT paintings and other NFT artworks. However, undeniably, investing in NFT paintings still has many risks:
6.1. Too much speculation
At an unstable time, the market is highly speculative, with the participation of many new investors looking for a quick return on capital. This caused the market to buy and sell NFT paintings to be overpriced.
Currently, there is no mechanism for pricing NFTs. The price is decided by the seller and the buyer. Also, no one can guarantee that these pieces of code will last long into the future.
The NFT market also lacks management and supervision, and there are many risks, such as fraud, money laundering, etc. After analysis and monitoring, Chainalysis – one of the leading companies in the US specializing in Blockchain crime investigation, found 262 customers reselling the same NFT at least 25 times. Therefore, the possibility of trading and manipulating prices is very high.
To control and prevent this behavior, it is necessary to check all transactions recorded on the blockchain. However, this is a very time-consuming and complex process. Very few people have enough knowledge and experience to perform this operation.
6.2. High GAS fee rate
Sometimes, the fee rate for transactions on the Ethereum blockchain can be very high, affecting the price of NFT paintings. If the NFT paintings are priced too much apart from their actual value, the number of potential buyers will decrease, resulting in a loss for the seller.
6.3. Can’t sell right after drawing NFT
According to research by experts from University College London (UK), only about 1% of the 4.7 million NFT works are worth more than $1,500. The rest are very cheap or worthless.
NFT paintings can be lost in most other works of art. Therefore, the author needs to find ways to attract the attention of collectors and investors. Frequently, authors with a large fan base are more likely to sell NFT artwork for a high value.