“I believe just like how anyone can pick up a brush, canvas, and some paint, that the same can be done in the digital world with code, data, and NFTs.”
-Adrian le Bas, Founder at BlockArt.

Are Non-Fungible Tokens the answer for Digital Artists and Data Visualization Specialists creating art prints and framed art?

The big problem with developing digital art for profit has always been the easy reproducibility of an original work once it is published online. Of course, Digital Rights Management (DRM) tools have existed for decades, and selling physical prints of digital art with watermarked protection is a proven way to convert a data visualization hobby into a practical micro-enterprise. But supply chain issues, technology constraints, and other risks like shipping costs always limited the economic innovation for independent artists.

That was until the NFT showed up. The Non-Fungible Token.

For those brand new to the concept of NFTs, or Non-Fungible Tokens, their purpose is to convert digital assets into unique virtual products by securely recording who has authentic ownership on a digital ledger.

Without going deep into the technical aspects of a digital ledger, or blockchain, content creators can now use a process called minting to transform original digital works like pictures, videos, songs, tweets, scores, or virtually anything else into digital goods for sale. Once minting is complete, the digital record of ownership becomes tamper-proof and immune to any modifications, thus solving a critical problem of proving who owns the digital product.

Now, NFTs are suddenly hot on the scene with aspiring digital art collections going mainstream, like Paris Hilton and Stephon Curry, but the pattern for succesful NFT marketplaces has been proven for years.

In October 2017, a novel blockchain-enabled method for authenticating ownership over digital products and their transactions emerged -- using Non-Fungible Tokens (NFTs) -- as part of a hackathon submission from a Canadian team creating a virtual product marketplace for virtual cats, called CryptoKitties. The CryptoKitties themselves are acquired, collected, nurtured, and raised by collectors, who in turn participate as both buyers and sellers in the crypto kitty market.

How cute is that!?

Okay, but what is so transformational about a blockchain game running on Ethereum where players come together looking to purchase, collect, breed, and sell virtual kitties?

What first seems like a cute and cuddly gaming technology is now being used to model the strategy to monetize all digital goods. Auction-style bidding wars for assets have recently started to validate the economic opportunity for digital artists and data visualization specialists, and venture capital is flowing.

From a tweet selling for $2.9 million to a $70 million digital art transaction reported by artist Beeple in early 2021, NFTs are not only gaining mainstream awareness by crypto-art investors but making some creators serious money.

More importantly, the successes have validated the NFT marketplace concept as a new center of gravity for content innovation. NFT marketplaces like OpenSea, Foundation, and BlockArt, to name a few, are competing for unique content while offering artists promotional support, such as front-page discovery, email, social, search, and other marketing placements.

In July, Andreessen Horowitz (A16z) cemented the path of NFT valuation when it led the second institutional funding round for OpenSea, the leading digital marketplace for crypto collectibles and NFTs. The funding amount made OpenSea a unicorn, valued at over $1.5 Billion, and signaled the next wave of NFT marketplace participation for venture capitalists as well.

Blockart, a protocol leveraging NFTs and on-chain data on Ethereum, also announced it raised $1 million in a pre-seed funding round led by pioneer blockchain-focused investment firm, CoinFund. With additional participation from Focus Labs, Metacartel Ventures, Divergence Ventures, and other major ecosystem contributors, the community is noticeably placing early bets on digital content creation, digital artists, and collectors.

Questions about a valid path to market, as well as other concerns remain, however.

Can artists expect engagement and demand from the marketplace, or will they bring their customer relationships independently? And even more importantly, are crypto wallets ever going to hit the mainstream? Are there enough good artists out there to attract repeat customers? How easy is it to collect digita art and keep it safe? Is the NFT the same as a copyright?

We can take a look at the recent past performance of NFT marketplace operations for clues. Back in March 2021, for example, more than 3 million NFTs were in the marketplace, with sales volume on the top sources growing over 400x year over year to more than $100 million per week. Now, according to volume data from Dune analytics, OpenSea recorded monthly volume figures of $3.3 BILLION – approximately 1 million ETH – for the month of August.

$3.3 Billion. In a single MONTH.

But how does an NFT work in terms of creating business value?

Stick to the fundamentals of customer value creation. In the case of CryptoKitties, which utilizes an Ethereum-backed non-fungible token, each kittie is unique and owned by the user, with data about the kittie validated through the blockchain on each transaction and stored visibly. The level of participation drives an appreciated or depreciated value (based on the market supply-demand) for each virtual pet, establishing the basis for a virtual marketplace. Due to the security and validation process afforded by the NFT, CryptoKitties cannot be replicated or transferred without permission, locking in protection for the owners and a sense of security. Kittie owners then interact with their CryptoKitties creating viral engagement attracting others to also buy, sell, and breed them to further scale the virtual ecosystem.

“We can sell virtual Mavs gear, sneakers, art, pictures, videos, experiences, anything our imagination can come up with we can sell. We are looking at adding virtual jewelry, accessories, and clothing that we create to real pictures on social media. So you can add cool Mavs virtual sneakers that look as real as the ones on your feet to your posts.”
-Mark Cuban, Owner, Dallas Mavericks.

So how are corporate investments in NFTs paying off today?

For a current example, NBA franchise Dallas Mavericks owner Mark Cuban has discussed several novel use cases for showcasing new digital products, including in-game and in-app experiences like NBA Top Shot, generating $400 million in revenue in the process.

In an interview with Coindesk back in March (2021) and covered by CNBC, Cuban said, “We can sell virtual Mavs gear, sneakers, art, pictures, videos, experiences, anything our imagination can come up with we can sell. We are looking at adding virtual jewelry, accessories, and clothing that we create to real pictures on social media. So you can add cool Mavs virtual sneakers that look as real as the ones on your feet to your posts.”

Not impressed yet?

For another insanely clever example, Argentinian designer Andrés Reisinger sold ten pieces of virtual furniture on Nifty Gateway. The most expensive sold for almost $70,000. The virtual items DO NOT PHYSICALLY EXIST and can only be placed in any 3D open-worlds like Decentraland or Minecraft after purchase.

For data visualization as art use cases, each digital viz created for a collection would go into a marketplace or online storefront to be auctioned to collectors who wish to own the token to the original work outright. Artists could also incorporate custom licensing and royalty terms to provide custom licensing opportunities, all recorded in the NFTs smart contract.

For some data viz authors, this will be a valuable component of the NFT ecosystem. Downstream transaction royalties should be negotiated as part of the initial auction whenever appropriate, creating incentives to update the underlying data as derivatives go to larger audiences. Just as vital, revenue-share incentives for partner opportunities managed by the token owners can become important for creators who care less about the marketplace, allowing pure creators to focus on what they do best while receiving downstream income.

Long-term, the prospects are promising for data visualization content creators and digital art collectors alike. The NFT marketplace and overall awareness of crypto-wallets exploded in 2021, with the current opportunity to pursue income coming from one of two paths.

First, individual contributors can immediately get their original works to market with NFT platforms like OpenSea, which operates as a peer-to-peer marketplace for crypto collectibles and non-fungible tokens. Since OpenSea includes collectibles, gaming items, and other virtual goods backed by a blockchain, it requires customers and artists to use a crypto-wallet with digital currency like Ethereum to complete transactions or mint new artwork.

Second, data visualization specialists will partner with brands for new product concepts, like digital sports cards, augmented reality displays, and more. The data-driven experiences branded and managed by corporate interests targeting customers, employees, and partners will become a net-positive driver for customer engagement and continued investment over the next decade as well.

In July 2021, the NBA Chicago Bulls launched its first-ever portfolio of NFTs –– including digital artwork of NBA championship rings –– by launching an online store on Shopify. Instead of requiring an NFT marketplace as an intermediary, Bulls fans can now purchase the digital art directly with the team online store using a credit or debit card.

For data visualization creators who are already investigating a Shopify front-end or using one for their current storefront, the opportunity to participate solo or in a new marketplace with customers looking to purchase original digital works securely will be hard to pass up.

Only one question remains.

How long until you mint your next NFT?

#myFirstNFT #myNextNFT