Why Do Digital Art NFTs Have Value

Connor D | November 11, 2021

Last updated on February 5th, 2022

With the recent boom in the market for NFTs, you have to ask yourself the question, “Why does digital art have value?” 

Non-fungible tokens or “NFTs” are a hot topic across the blockchain space. NFTs represent unique assets on the blockchain, whether it be rights to an underlying physical asset, an identity document, a collectible, or in this case: digital art. 

NFTs can prove ownership of a unique copy

In the past, the problem with selling digital art was that there was no proof of ownership. While copyrights may protect businesses from competitors, nothing stops you from saving a copy of your favourite digital art. While copyright may have value, no one copy is more valuable than another. With Non-Fungible Tokens, it is now possible to prove ownership of your digital art. While copies can still be made, NFTs prove ownership of a unique and often original copy. “But,” you may ask yourself, “why should digital art have value? It’s just a picture on a screen which can still be easily copied.” You would be correct to point out that a picture can easily be copied. This is also true of physical art; many fakes were made of paintings by Picasso, Leonardo Da Vinci, and Monet, often showing equal technique and craftsmanship. At the end of the day, these “copies” are equally as beautiful and would look exactly the same on your wall, but it is undeniable that there is value in something that can be proven to be a unique original.

There is value in something that can be proven to be a unique original

We as a society have decided owning specific copies of art, such as an original or first edition print, has value, and the same goes for Digital Art. The value of art may have a cultural significance, or someone may feel connected to an artist. In today’s digital world, these types of connections and cultural impacts are increasingly happening online. NFTs enable these valuable copies to be tracked and traded, giving consumers a comparable cultural experience as they might have to buy physical art. 

NFTs benefit the artist when art is traded

Another great thing to come from NFTs is revenue when the art is resold. When digital art is resold on the market, NFTs can allow the original creator to receive a royalty every time it’s resold to another person or a unique NFT copy is created. This type of technology could also be used to channel proceeds to charities or trusts. Because transactions are tracked and verified on the blockchain, it is verifiable when digital artwork is sold. One digital artist “Beeple,” who recently sold an NFT worth $69 million, originally sold 100 digital art pieces for $1 apiece just to test the market and technology. Some of those pieces are now being resold for upwards of $300,000. In this example, a 10% royalty would mean $30,000 for Beeple for this artwork even though its original price was only $1.

NFT art has value, but the current market still feels like a bubble

Digital Art, without a doubt, has value and is here to stay. But, for myself, the current market feels like a bubble because there are so many pieces of digital art flooding the market and going for what seem to be astronomical prices. It feels like the ICO frenzy of 2017 where users bought into ICO’s out of fear of missing out or “FOMO.” The same thing appears to be happening here, with seemingly random pieces of digital art selling for thousands of dollars and more. Although digital art and NFTs have real value, It is difficult to rationalize why the specific pieces of art being traded today have so much value, and the only explanation I keep coming back to is “FOMO.”

While you may want to jump on the NFT bandwagon, I am inclined to let the frenzy settle and look forward instead to seeing NFTs cultivate a more sustainable and liquid marketplace for digital art in the future.

 

 

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