digital art investment trusts and willsub
In 2021, the art market had approximately $65 billion in sales. Art has been an established investment vehicle for many years, primarily because of its low correlation to other assets. High prices for blue chip pieces and difficulty in buying and selling art have limited the traditional art market to the wealthy.
NFTs have changed the game by allowing smaller investors access to art as an investment. NFT art investment differs from NFT art collection in that investing has a buy
Sell strategy. This series of three articles will provide an overview of the digital art market and how to buy and sell digital art NFTs with a framework that takes subjectivity out of the equation.
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. The art that is purchased is the finished product. There is no promise of any future value. This saves the investor time from having to follow the progress of a project and to understand its technology or business. Additionally, it minimizes risk by minimizing the variables that can affect its price
In this article series, we will not be considering Profile Picture Projects (PFPs) as digital art. The NFT collections such as the Bored Ape Yacht Club do have a promise of future utility.
A sustainable strategy for successful digital art investment must take an objective data-driven approach. Price appreciation is driven by demand exceeding supply.It’s not what we think that leads to demand creation. It’s what others think. We need to get away from the subjective “I think…..” mentality and stop guessing. It’s a game with winners and losers and that’s how it needs to be played.
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Using data-driven strategies to play the digital art investment game is still in its infancy which provides a very desirable asymmetrical risk-to-return opportunity.
The next article will outline a digital art buying strategy that can provide the asymmetrical risk to return that we are looking for.Humanoid robot Sophia, developed by Hanson Robotics, is seen through a plastic plate with paint on it during a demonstration before auctioning her own non-fungible token (NFT) artwork, in Hong Kong, China March 16, 2021. Picture taken March 16, 2021.
LONDON -- The meteoric rise of Bitcoin and other cryptocurrencies has seen many once skeptical institutions embrace a digital alternative to traditional currency.
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The last two years has seen an explosion in the sales of digital artworks, which have been embraced by major auction houses and have fetched prices ranges from a few dollars to the tens of millions.
Unlike traditional artworks, these can be duplicated exactly with a couple of clicks of a mouse, which raises a divisive question: Can a digital artwork ever really be as valuable as a piece that was physically created by an artist?
Behind the explosion in the digital art marketplace are nonfungible tokens, known as NFTs. The artworks are digital assets that can range from anything to a photograph, a video file or even a piece of music and they are backed by what is effectively a digital ownership record, both of which are part of the blockchain -- a public digital ledger -- which authenticates the digital items as unique.
Nfts And Art Investing
Last month a collage by digital artist Mike Winkelmann, known as Beeple, fetched over $69 million when it was auctioned by Christie’s; an NFT of Twitter CEO Jack Dorsey’s first-ever tweet fetched a comparatively meager $2.9 million.
In one unusual case, a digital artwork twinned with a physical painting that was created by a humanoid robot in Hong Kong fetched nearly $700, 000 at auction.
FILE PHOTO: A detail shot from a collage "EVERYDAYS: THE FIRST 5000 DAYS", by a digital artist BEEPLE, that is on auction at Christie's, unknown location, in this undated handout obtained by Reuters. Christie's Images LTD.
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In addition, a host of major brands have entered the market with a diverse array of companies including the NBA, Breitling watches, LVMH, Nike, Formula 1 and Real Madrid among the big names launching NFT projects.
“It is clear to me we are moving fast into a digitally native world. For the younger generations I would argue digital items are of even more importance than physical ones -- kids prefer a skin in a game to new sneakers, ” Miami-based digital art collector Pablo Rodriguez-Fraile told ABC News.
Fraile made headlines last year for selling a Beeple digital artwork, comprising a roughly 10-second video clip that can be viewed for free online, for some $6.6 million, after paying around $67, 000 for the work just months before.
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Fraile is highly confident that digital artworks are well placed to hold their significance and value as well as traditional physical artworks do in the long term.“This movement will be of more importance than any artistic movement we have witnessed in our lives. I strongly believe that the most important digital works will be of a lot more significance than most of the tier one creators today, ” he said.
On the other side of the argument, experts cite a range of issues with the technology and the smart contracts it underpins as undermining the overall value of many digital assets.
“They [NFTs] don't give you any rights other than bragging rights, ” Nicholas Weaver, a lecturer in computer science and a researcher at UC Berkeley’s International Computer Science Institute.
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“[An NFT] doesn't actually convey any ownership rights. You don't gain copyright over the NFT. In reality, it's more like a baseball card. It's a cute little piece of paper. But the thing is, is since you don't actually have the baseball card itself on the blockchain, but just a pointer to it, it can actually disappear at a moment's notice, ” he explained.
In addition to high-dollar sales, the overall market for NFTs has grown exponentially in recent years. Between 2019 and 2020, the amount of dollars transferred through NFT sales grew by 2, 800% year-on-year, according to Nadya Ivanova, chief operating officer at foresight business L'Atelier BNP Paribas.
Humanoid robot Sophia, developed by Hanson Robotics, draws on a piece of paper before auctioning her own non-fungible token (NFT) artwork, in Hong Kong, China March 16, 2021. Picture taken March 16, 2021.
Digital Art, Nfts, & The Metaverse
Ivanova sees the possibility that both the market and the technology that underpins it evolving over time in a way that could allow it to operate in a way that conveyed more value to buyers.
“What you're buying is certain rights that come from ownership. So, for example, you can buy it [an NFT], you can sell it, you can rent it down the line … not necessarily have the right to reproduce it commercially.
“That doesn't mean, though, that you can't do that. The technology is so versatile that it allows you to encode into that sale, into the smart contracts that manages the NFT. It allows you to encode all kinds of things if you want, so you can actually put a copyright clause there that then specifies how you can actually use that NFT, ” she said.
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Away from the multimillion-dollar sales, many smaller artists and even hobbyists say that the evolution of the market has been empowering for them.
One such artist is Jay, who preferred not to use his full name in print, a Dublin-based creator in Ireland of pixel art – a style that evokes the graphics of vintage video games -- under the name Genuine Human Art.
Describing his digital art as a creative outlet rather than a full-time job, Jay told ABC News that he has sold around 20 unique pieces, some of which he has sold multiple editions of, for around $4, 000 to $6, 000 worth of cryptocurrency.
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“For me what matters is the emergence of a new digital art market. For years, artists have been trained through social media to see their art as disposable, valueless. This movement changes that. It's changing the lives of young artists in particular. In what have been very difficult years, it's bringing income to artists in a way that just hasn't happened before. Not like this, ” he added.
Whether the NFT art boom is a symptom of a major shift in cultural norms around the ownership of intangibles or, as some critics suggest, an economic byproduct of the pandemic, with bored people holding large amounts of appreciating crypto-wealth and looking for new ways to invest, will ultimately be determined by the market.
For the time being, however, if you’re looking to spend thousands or even millions of dollars on a JPEG, there is not shortage of opportunities to do so.The art market has long been a thing of intrigue. Blind auctions, paintings going for tens of millions of pounds, theft and forgery, maverick trading – it is the stuff of Hollywood thrillers. It is also often dismissed as elitist, and inaccessible to those of modest means – a plaything of the very wealthy who can spend vast amounts of money on artworks they seldom put on display in their own homes.
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But like all markets it is forever evolving. In terms of impact and scale of transformation, the latest phase might well be the most profound since the rise of auction houses in the 18th century: the growth of digital art and the technology for buying
