Every image and video that is posted on the internet can be duplicated. It is common practice for all forms of digital media to be reposted, re-blogged, screen recorded and torrented.
This has long been an issue for online creators; how do you monetize your work when it can be so easily copied and shared? This is especially pertinent for digital artists and designers who rely on the notion of authenticity and scarcity to substantiate the value of their creativity or products.
Well...there is finally a solution to this problem. In 2017, a technology was introduced that revolutionized online monetization models. It came in the form of specialized, blockchain-based cryptocurrency tokens called “NFTs” (Non-Fungible-Tokens).
This is a monumental technological breakthrough that enables new behavior on the web, paving the way for expanding business models and investment opportunities, as economic gains can be captured in ways not possible before.
Monetization of publicly accessible digital content “has never had a strong basis on the internet, since it suffers from the public goods problem… but NFTs give us new tools to solve this problem — by representing previously infinitely reproducible creative works as scarce, tradable digital assets.” 
As a result, “artists can now sell a scarce digital asset, while the content itself remains open and freely accessible (a public good).” The total addressable market for this technology is massive but there has been particular adoption of NFTs for art, gaming and collectibles industries.
Keep reading as I walk you through how this technology works, its seemingly limitless possibilities for application, and how savvy creators and investors have been cashing in!
At their most basic level, NFTs are certifiably one-of-one, irreproducible tokens generated by a smart contract on the blockchain.
A smart contract is a self-executing, irreversible contract where the terms of the agreement are directly written into the code. When a transaction is made, it executes automatically.
Smart contracts allow developers to build a variety of functionalities into NFTs including the ability to store art, collectibles and even program gaming experiences.
NFTs are differentiated through their smart contracts, which is where their identifying information is recorded and stored on the blockchain. It's this information that makes each NFT "non-fungible," or unable to be directly replaced by another token.
To reiterate, “NFTs cannot be directly exchanged with one another. This is because no two NFTs are identical – even those that exist on the same platform, game or in the same collection.” Think of them like airline tickets. Each ticket contains specific information including the purchaser’s name, where they are going and where they are sitting, making it impossible to trade your ticket with another person.
In comparison, if an item is fungible, it can be substituted or exchanged for any similar item. Fiat currencies, like the US dollar, are fungible. One US dollar bill representing $1 can be exchanged for any other single US dollar bill representing $1. Cryptocurrency tokens like Bitcoin are fungible because one Bitcoin can be exchanged for any other one Bitcoin token – they are interchangeable with one another.
The most common type of NFT is built on the Ethereum blockchain and is called an ERC-721 token. Though Ethereum was the first to institute NFT functionality, NFTs are not exclusive to this blockchain. Other blockchains such as Flow, NEO, EOS and TRON also have their own versions of NFTs. In essence, though, they are the same. Each token is assigned a digital identity code that distinguishes it from every other NFT.
Once purchased, an NFT is in the buyer’s possession and is completely traceable via the blockchain. NFT owners have the ability to buy, sell and trade their digital items completely independently, whenever they choose to do so.
The first example I want to introduce you to is “crypto art,” as this is what the growing interest in NFTs has been centered around. To give you some perspective, according to the NFT Report 2020 published by L’Atelier BNP Paribas and Nonfungible.com, the NFT market tripled in size overall in 2020, and its total value rose to more than $250 million.
For clarity, the only difference between digital art (animation, graphic design, illustration, etc.) and crypto art is that the latter is attached to a cryptocurrency token, a process that is called “tokenization,” while the former is not. Tokenization is the process of connecting (most commonly) non-physical/digital assets to a digital token on a blockchain. This token digitally represents a tradable asset.
NFTs present a tremendous opportunity for artists who create digital art works and have had trouble monetizing them. For traditional artists (painters, sculptors, etc.), they may have a significant following but want to expand their collector base or income streams, in which case NFTs present a great opportunity.
The best of both worlds came together for a crypto art collaboration in October 2020. José Delbo, an artist for DC comics who has worked on Batman, Wonder Woman and The Transformers, teamed up with well-known crypto artist Trevor Jones. Together, they produced a 5-piece crypto art collection featuring Batman.
The auction took place on crypto art sale website MakersPlace, where the combined sales for the pieces raked in over $200,000!
Yes, you read that right... Files that could be endlessly copied, pasted and screen-recorded were purchased for six figures!
It is clear that collectors are making big bets that NFTs will eventually increase in value, viewing them as another asset class to invest in and trade. People are catching on to the upsides of crypto art on both the investment and creative sides of the business.
The most expensive image in the Batman collection, “Genesis,” sold for about $113,000. It is a video (a still image of it is pictured here) of Jones’s paintbrush strokes on an etching of Batman’s profile drawn by Delbo.
Although art tokenization offers great benefits (aka attaching a digital art image to a cryptocurrency token, most commonly an ERC-721 token), the process can get very complicated. In response to this, several crypto art sale websites have emerged.
These sites basically act as commercial galleries, where artists can submit their digital work and have it tokenized. In addition, these sites will display the work and take a commission when it is sold as well as on subsequent sales. For instance, Makersplace, where the Batman collection was hosted, takes 15% on the initial sale and 2.5% on secondary sales (which is programmed via smart contracts).
NFTs provide artists with tremendous freedom in terms of how they can choose to sell their work. An artist can have one token representing a single, one-of-a-kind work, or they could have several tokens created, which represent an authorized edition of the work, similar to how traditional artists might create limited-edition prints.
For instance, in December 2020, Mike “Beeple” Winkelmann, a successful digital artist whose clients include Louis Vuitton, Apple, and Nike as well as Justin Bieber and Katy Perry, made a huge splash in the crypto art space.
Beeple raked in a combined $3.5 million for his NFT collection called “Everydays,” which he sold on NIFTY Gateway, another crypto art digital gallery and marketplace.
As part of the collection, Beeple sold 3 numbered “open edition” NFTs, and made them available for a designated 5-minute time period. During this window, buyers could log onto NIFTY Gateway and purchase any or all of these 3 works for $969 each. The sale ultimately raised $582,000.
The image pictured to the right, “Into the Ether,” was one of the items offered, and 207 editions of this image were sold during the auction.
Because of these types of limited runs, a vibrant reselling business has emerged. According to NIFTY Gateway’s website, the average resale price for editions of “Into the Ether” is $21,150, a stunning over 2,000% increase!
In total, there has been approximately $960,000 in secondary market volume for this piece. Users are seeing this not only as an opportunity to collect art, but also as an opportunity to earn a quick dollar, or hold long term as an investment.
It is just a matter of time before more people catch on to the distinct functionalities of this technology and its significant advantages, including its comparative liquidity. There have always been expensive transaction fees involved when buying traditional art including shipping, storage, and even cross-border currency exchange fees. With purely digital crypto art, logistical issues all but evaporate as tokens can be traded sitting right at your computer with no expensive shipping or currency exchange fees.
Don’t forget, if you want to sell your crypto art immediately after you purchase it, you can. The NFTs I have been referring to are all digital, meaning it is very easy to put them up for sale at any time and immediately tap into a global audience of buyers online. The most popular crypto art sale websites are NIFTY Gateway, Superrare, Makersplace, Async Art, KnownOrigin and Opensea. I suggest you log on and check them out!
I believe that crypto art will continue to grow in popularity, as it presents legitimate solutions to issues that have been plaguing the art world for decades around authenticity, provenance, and commission structures, as well as liquidity and storage issues.
Although art is the category of NFT that is receiving the most attention, this technology is also used in both the collectible and gaming spaces, where scarcity and authenticity are also paramount.
One of the fastest growing areas of crypto collectibles is digital sports cards, with the leader in the space being NBA Top Shot. In late-February 2021, two of their LeBron James dunk highlight digital cards sold for $208,000 and $100,000 respectively.
NBA Top Shot is a blockchain-based platform that “allows fans to buy, sell and trade numbered versions of specific video highlights.” Launched in July 2019, it is a joint venture between the National Basketball Association (NBA), the National Basketball Players Association (NBPA) and Vancouver-based Dapper Labs, a blockchain-based games and entertainment outfit.
This type of offering is unique to the digital world because it incorporates moving images into the trading card medium. And with globally respected brands like the NBA getting involved, it demonstrates the credibility of this technology and its expanding applications.
I predict that the earlier you can get in on collecting NFTs, the more potential upside there will be in reselling them in the coming months and years.
Although spending large amounts of money on digital assets is a relatively new practice in the art and collectibles world, there is actually a meaningful precedent for this in video games.
Perhaps the most notable example is Fortnite. The online video game became a cultural phenomenon in 2018–2019, and players were paying an average of $8–$20 for equipment and costumes for their avatars to wear during battles (called skins).
However, these items didn't technically belong to the players. Fortnite could change the rules at any minute, or even boot players off the platform and take away their items.
But when gamers play “blockchain-based games,” they actually own their in-game assets, preventing gaming companies from taking things away from them, even if the rules are changed.
Gods Unchained is one of the most well-known blockchain games. To play, you acquire card packs and start building your reserve of unique cards. Each card is linked on the Ethereum blockchain in the form of an ERC-721 token.
Because you actually own your cards, you are not just a player but an investor in the game. While you can use your cards in the game, you can also resell them on any NFT sale platform whenever you choose. Remember, a non-fungible token (NFT) is a type of cryptographic token representing something unique – art, a playing card, a gaming item. This demonstrates a different kind of gaming model where players can build equity while they participate.
The last example I want to discuss is how NFTs are applied in “virtual worlds.”
Possibly the most popular blockchain-based virtual world is Decentraland. Within the game, the “LAND” token, which is a non-fungible ERC-721 token, represents the ownership of virtual land. Each token gets you a specific 33x33 feet plot.
LAND owners control the content published on their plots, which is coded into a smart contract. Through these smart contracts, you can build anything from art galleries to games to amusement parks.
When it initially launched between December 2017–January 2018, users bought $30 million worth of virtual plots. The following December (December 9–23, 2018 to be exact), users bought an additional $6.6 million worth. , These numbers suggest that users saw the inherit and potential value of the game. 
Within Decentraland, participants have the ability to create and build all types of businesses and “they can also sell individual digital items they accrue during gameplay such as costumes, avatars and in-game currency on a secondary market.” The world’s total all-time trading volume is over $40,000,000, and there have been more than 76,000 assets sold since March 2018 for an average price of $325 per asset.,
It is clear that users are seeing these plots as not only a way to enjoy the gaming experience but also as a means of building digital businesses and investments. When you play, you are also an owner and investor.
NFTs facilitate true ownership, bringing us one step closer to all digital content becoming blockchain-based. We could see the expansion from art, collectibles and game assets to music, podcasts, movies, and so much more.
Despite the massive growth it has experienced, the NFT market has only been around since 2017. This means that there are still incredible opportunities to actually collect and invest in NFTs, as the resale process is relatively seamless compared to investing in “traditional” assets.
We are still in the early phase of NFTs, so it’s still possible to get in on the ground floor. I suggest following the space closely, learn as much as you can, and if something catches your eye, buy it!
Blake Finucane, Contributor
for Investors News Service
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FNN FOOTNOTE: Blake Finucane has been following the NFT space since its inception in 2017 and published one of the first academic thesis on crypto art back in 2018. She is considered an expert in the field, writing about it extensively in an academic context.
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 Prices as of February 26, 2021
 https://twitter.com/nba_topshot/status/1352694177943834625?s=20 and https://twitter.com/pranksyNFT/status/1351605987430420480?s=20, Photo source: https://www.nbatopshot.com/moment/jsettleman23+4a74f974-1425-4dae-ad8f-a89cd5ad767d