Blockchain And The Future Of Digital Art: A Beginner’s Perspective

Welcome to the crazy wacky world of NFTs, the new craze set to become the future of digital art. I was so intrigued when I first heard about this that I got sucked in to hours and hours of watching videos and reading blog posts to try to understand what is going on and why.

What I found is both a revolution for the digital art world and mind baffling amounts of money being spent on low-res drawings of cats!

CryptoKitties – it’s a game where people collect and breed virtual cats. No, seriously!

This is Dragon. She sold for 600 ETH (we’ll get to ETH in a minute) which was worth $172,000 at the time. 600 ETH is now worth over $1 million. But you can get a regular CryptoKitty for around $65.

Okay, I probably shouldn’t show you the really wacky stuff first! Let’s move on. There is a place for us here.

The point is that NFTs are a both a way of proving ownership of digital products and a way to earn royalties on future sales of your work.

What exactly is an NFT?

We’re going to have to get some terminology out of the way in order to have this discussion.

Fungible

Just a regular word but one that wasn’t in my vocabulary before this!

Something that is fungible is mutually interchangeable. For example, a dollar bill is fungible. Every one of them is equal. You and I could trade dollar bills and we would have the same thing. Or if I gave you a $50 bill and you returned two $20’s and a $10, that would be acceptable.

Something that is non-fungible is unique and cannot be replaced. For example, diamonds are non-fungible because every one is a little bit different. Or, if I loaned you my car and you returned a different car, even if it was the same make, model, and year, that would not be considered acceptable.

NFT: Non-Fungible Token

A non-fungible token is a unit of data on a digital ledger called blockchain. It is like a certificate of authenticity for a digital item. It provides buyers with proof of ownership. In the digital world, where art is easily stolen, this is a big deal. The even bigger deal is that royalty can be built into the NFT. Now we’re interested! More coming on that below. But first a few more definitions.

Blockchain

So, you’ve heard of crypto currency like Bitcoin. In order to make crypto currency work, there needed to be a way to secure and validate the authenticity of each transaction in a decentralized manner. This stuff doesn’t live on some bank’s computer.

Blockchain is the digital ledger that keeps track of things. The reason it is so secure is because it does not live in one place. It is duplicated and distributed among a huge network of computers making it difficult to hack. Every transaction on the blockchain is validated by multiple computers on the internet. (And that uses some energy – we’ll get back to that.)

Ethereum

Ethereum is a crypto currency platform that is a decentralized, open-source blockchain with smart contract functionality (that’s where the royalties come in). Ethereum is the name of the platform. The currency is called Ether (ETH). It is the second largest crypto currency after Bitcoin. NFTs are part of the Ethereum blockchain.

Why I think this is a revolution for the digital art world

Royalties, my friends, royalties! When an NFT is minted, royalties can be written into the smart contract on the blockchain. Included in the NFT is information about who the original artist is and the royalty that they will get on every single subsequent sale of that item.

Just think of the poor starving artist who, in the beginning of their career, sold a piece of art for $200 because they needed the money just to survive. But then a few years went by, they got discovered, their art went up in price and the new owner sold it for $1,000 or $10,000 or $100,000. The original artist didn’t get any of that money.

Not anymore with NFTs! Your royalty, which is typically 10%, is written in to the smart contract on the blockchain. Now it is feasible for an artist to make more money on royalties than they made on the original sale of the item.

The NFT also details how many copies there are of an item. It could be just one. Or you can have a limited edition series. So unlike a first edition of some comic book where you don’t actually know how many first editions were made, that information is on the blockchain for NFTs.

Why would anyone want to buy an NFT?

For me, this is the hardest part to get my head around. I mean even if you have an NFT someone can still right click on the photo on your web page and steal it. Just like someone can try to fake a Picasso. But if you have a certificate of authenticity, or an NFT, you can prove that it is real and it is yours.

So why would someone buy it?

Collectors

Just like the regular art world of old, people love art, purchase art, and are willing to pay a higher sum for unique authenticated artworks.

Yes, NFTs are digital, but they sometimes come with physical copies, or you can use one of many new technologies to display these works on your physical walls if you want.

Supporting Artists

Purchasing an artist’s NFT is a way to show your support for them and invest in their future.

Investors / Speculators

Good art increases in value and some people like to buy art that will hopefully increase in value and then they can sell it.

Other people have a lot of money in crypto currency and they are concerned about what happens if a particular crypto currency fails. So they want to invest in digital assets to diversify.

Gaming and Virtual Reality

Some NFTs are used in games or virtual reality. Like the CryptoKitties. There’s a virtual reality called Decentraland where you can buy NFTs for your virtual universe. In other games you can buy characters, or fashion for your characters. You can buy virtual pieces of land.

Status Symbols

For the younger generation, the status symbol is no longer a Prada handbag or a Rolex. It’s a CryptoPunk! CryptoPunks were the very first NFTs minted on the Ethereum blockchain. They are super simple 24×24 pixel characters that were created algorithmically. There are only 10,000 of them and owning one is like owning a part of technology history.

This status symbol is not so much about the art as it is about the fact that they were first and the proof of concept for NFTs.

But it’s not all CryptoKitties and CryptoPunks! There are a lot of photographers making their way into NFTs too. Here are some photographer NFT sites to check out:

Trey Ratcliff on Foundation: https://foundation.app/treyratcliff

Iliya Iliev on Makers Place: https://makersplace.com/iliyailievdigitalart/

Marcel Van Luit on Rarible: https://rarible.com/marcelvanluit

Robert Postma on Makers Place: https://makersplace.com/robertpostma/

And here are mine:

Anne McKinnell on Foundation: https://foundation.app/@annemckinnell

Anne McKinnell on OpenSea: https://opensea.io/collection/bald-eagles

Anne McKinnell on Rarible: https://rarible.com/annemckinnell

How to go about selling your art as an NFT

First of all, I want you to know that I am no expert here; I’m just sharing what I have learned. I am also not a crypto currency expert. Please do your research!

There are a lot of steps in this process, so let’s work backwards to help you understand what you need to do.

Before you can mint a piece of art as an NFT, you need to have a digital wallet with some Ether in it. The reason for this is that there is a fee to mint an NFT and that fee must be paid in Ether. This is because everything you do with NFTs is written to the Ethereum blockchain.

The first thing I suggest you do is pick a marketplace where you will sell your NFT, and then you can choose a digital wallet that is compatible.

Picking a Marketplace

There are two types of platforms where you can sell your NFTs:

1. Open platforms where anyone can mint an NFT such as Mintable, Rarible, OpenSea, Cargo, and Mybae.

2. Curated platforms where you have to apply or receive an invitation such as MakersPlace, Foundation, Nifty Gateway, and Super Rare.

Some of the curated marketplaces such as Foundation and SuperRare seem to be a better fit for photographers, but since they are curated they may take some time to get in to. In the meantime, you can get started on an open platform like Rarible.

Fees and Royalties

There are a number of things you must be aware of before you choose a platform and the way you go about selling your NFT.

Minting Fees

“Minting” an NFT is how your digital art becomes part of the Ethereum Blockchain. You will have to pay gas to complete the transaction (see below). Once it has been minted, it is on the blockchain forever. (Unless it is not sold and then you can choose to burn it, but you will have to pay gas for that too.)

Gas Fees

Every time a transaction is written to the blockchain, gas fees must be paid. These fees go to Ethereum miners who provide the computer power to verify the transactions. These fees do not go to the marketplaces where you sell your NFTs. The price of gas changes throughout the day and is higher during peak traffic. You can actually choose how much gas you are willing to pay. If you lower the price that is defaulted, your transaction will take longer. So if you are willing to wait, you can pay less. But, if you lower it too much, the miners will drop it and your transaction won’t go through.

Here is a useful website that shows the current price for various transactions.https://tools.gravityenterprises.co.za/#/Cost

When I minted my first NFT I paid $36 USD. Since then I have seen it go up as high as $118 and as low as $5. Usually the prices are lower on weekends.

Gasless Minting

Some marketplaces allow you to do gasless minting. This is when you can put off the actual minting until your piece sells. At that time, you will have to pay the gas. However, there are downsides to this. Sales fees may be higher, royalties lower or non-existent, and you’ll have to pay the price of gas at the time.

Royalties

As I mentioned above, I believe that royalties are what will make NFTs become the future of digital art. Make sure you check how the royalties work on the platform your choose. They are not all the same.

Sales Fees

Each platform will collect a percentage of your sales. That is how they make money. Check how much this percentage is. Again, each platform is different.

Gas Paid on Sales

Check who pays the gas when a sale is completed. Sometimes the buyer pays, sometimes the seller pays.

Instant Buy or Auction

Most platforms allow two different ways to sell your NFTs. You can set a price (called instant sale or buy now price) or you can have an auction. Or you can do both. That’s when you set a price for instant sale but also people can bid on your NFT and you can choose whether to accept it or not. Be sure to check who pays the gas in each case on the platform you choose.

Mintable and Rarible Compared

Mintable

On Mintable there are 3 ways you can go about selling NFTs:

1 Gasless

You can choose the gasless route on Mintable which will allow you to get into the NFT space with no initial cost. However there are drawbacks to this. Mintable will take 5% of your sale as their fee and you will get no royalties.

2 Regular Minting

Mintable will take 2.5% of your sale as their fee and you will get a 5% royalty.

3 Creating your own store

You can create your store on Mintable, which costs quite a bit. When I created my NFT I checked the price and it was $600 to create a Mintable Store. Included in this price is 50 tokens, so you can mint 50 NFTs without paying any additional fee or gas. Also, you can set whatever royalty you want for your NFTs.

On Mintable, the buyer always pays the gas on a sale whether it’s instant sale or auction.

Rarible

On Rarible, there is only regular minting. There is no gasless minting option. Rarible takes 2.5% of your sales as their fee and you can set the royalty you want for your NFT. The buyer pays the gas on instant sales and the seller pays the gas to accept a bid at auction.

Things to do before you can mint an NFT

Because we’re getting into crypto currency now, there are a number of things you’ll have to do (or should do) before you can get started.

1. Set up a brand new secure email address

You’re going to be setting up accounts on crypto currency exchanges and setting up your digital wallet and you’ll have to verify things via email. Please do not use your regular email address for this. Everyone knows your email address. Set up a brand new one that is secure using a handle you have never used before. For this I recommend ProtonMail.

ProtonMail uses end-to-end, zero-access encryption for your emails, so they are always encrypted when in transit or when stored on the email servers. It is much more secure than gmail. And you can get an account for free.

2. Set up Two Factor Authentication

Two factor authentication is where you not only login to a service with your id and password, but then you have to enter a unique code that is sent to your phone. That means a person trying to login would have to not only have the id and password, but also be in possession of your phone and able to unlock it.

It might sound easy to skip this step, but some of the crypto currency exchanges require it, so you might as well just do it.

I like an app called Authy. Instead of having a code sent to you by text message, you just open up Authy on your phone and the code is just sitting there. The code changes every 30 seconds.

3. Set up your Digital Wallet

Your digital wallet is where you will store your ETH and also you will be able to see your NFTs in your wallet.

All of the NFT marketplaces I have looked at support and recommend MetaMask. MetaMask is a browser extension that works in the Chrome, Firefox, Opera and Brave browsers. Find out more about MetaMask on their website here:

https://metamask.io/

Depending on where you live, you may be able to buy ETH directly from MetaMask. Otherwise, you will use a crypto currency exchange to send money from your bank to the exchange, exchange it into ETH, and then send the ETH to MetaMask.

4. Pick a Crypto Currency Exchange

Now you’ll have to do some research again to pick an exchange that works best for you. Since I am in Canada, I chose a Canadian exchange since I heard that on some other exchanges, while they claim to work in multiple countries, users encountered a lot of difficulty trying to transfer money from Canadian banks to those exchanges.

If you are not in Canada, you’ll have to research exchanges since I only have information on the two Canadian exchanges I tried.

I set up accounts on two different exchanges and they both have their drawbacks. Also, they both have referral rewards, so if you do decide to set up an account use the links below and you’ll get some free money that you can use to buy crypto currency. I did this and I’m really glad I did since I made some mistakes along the way that ate up my free money!

Be careful because they all claim to have zero fees, but you’ll pay something somewhere! There are gas fees involved to send crypto currency around.

ShakePay

ShakePay has no fees on money coming in and out of the exchange and they cover the price of gas. They make money on the difference between the buy and sell price of currency.

I first decided to go with ShakePay, until I tried to send money from the exchange to my digital wallet. Then I discovered that there is a minimum amount of ETH you can send out and it is 0.1 ETH which, as of writing this post, is $193 USD. I was playing with smaller amounts of money to get started and learn how everything works so I didn’t want to go that way. But, if you are moving larger amounts of money, this would be a good choice.

Use the link below to get $30 when you buy $100 worth of crypto:

https://shakepay.me/r/7TBTNGR

Coinberry

Coinberry also has a spread between the buy and sell prices and that is how they make money. In addition, you’ll have to pay a flat gas fee of 0.011 ETH ($21 USD) to withdraw. There is no minimum amount of ETH you must withdraw.

Use the link below to get $20 when you buy $50 worth of crypto:

https://app.coinberry.com/invite/8fc8d92a508

This works rather nicely because the free $20 will cover the gas fee to transfer money to your wallet, so you can try all this out without paying fees using your own money.

Some Cons to be aware of

Please be careful in the world of crypto currency

Entering the world of crypto currency is daunting, and it should be. Please take security seriously. Set up a new secure email using a handle you’ve never used before. Be serious about your password. Don’t use a password you’ve used before, don’t use real words or a phrase. Use two factor authentication. Don’t invest more money than you are willing to lose.

This is early times. You could be getting in on the ground floor. Or it could all fizzle out into nothing. But I don’t think so. In my opinion, crypto currency and NFTs are the future. NFTs require blockchain to work and right now no regular currency uses blockchain.

Environmental Impacts

I have recently come across some accusations that NFTs cause carbon emissions that harm the environment. This is simply untrue. I think it is important to understand where this idea came from, what is causing energy usage, and what is being done about it.

As I mentioned earlier, every transaction on the blockchain is validated by multiple computers on the internet. Known as “mining” these multiple transactions are what makes Ethereum a secure platform, but it is also energy intensive.

However, Ethereum has a fixed energy consumption. Individual transactions such as minting and selling NFTs do not increase the energy consumption. If everyone stopped doing transactions, the energy consumption would be exactly the same.

You are not harming the environment by minting and selling NFTs. It makes no difference.

Blockchains are still early technology with a lot of room for improvement. Currently, ETH2.0 development is underway to make the next version of the Ethereum network cleaner and more efficient.

Copyright Infringement

One of the current risks is anyone can mint anything as an NFT. No one is checking to ensure a person actually owns the copyright for anything. Some artists have discovered that other people have copied their images and minted them as NFTs. Some people have minted art that is in the public domain.

Right now this is no different than other theft of digital images. If you’ve ever had this happen to you, you will be familiar with sending a DMCA takedown notice to the site or host of the site that is displaying your copyrighted work.

Overall Impressions

Blockchain and NFT smart contract technology has the potential to reinvent the art market for the digital age. I think there is a lot of potential here for more artists to be able to make a living from their art.

In these early stages, there is not a lot of digital photography or even digital painting in this space. It’s a bit off-putting when you see mostly pop art graphics in the NFT space. But this is just the beginning and I believe that we will soon see more and more photographers and digital artists using NFTs to sell their art.