The nature of art is that it is constantly evolving to suit its time, to be present and relevant. As practitioners in a field that is constantly changing and growing, artists too need to be able to evolve and grow, to embrace change.
The digital age has transformed practically every aspect of our lives and art is no different. Artists create incredible things using digital media and technology. But one other way art is evolving is through how technology is used to sell art, and this is where the NFT (Non-Fungible Token) comes in.
Artists and NFTs have become closely associated in recent years due to the growing popularity of NFTs in the art world. Put very simply, NFTs are unique digital assets that are stored on blockchain networks, typically using Ethereum’s blockchain. They represent ownership or proof of authenticity of a particular item, such as artwork, music, videos, or other digital creations.
To delve a bit further into the subject of art, artists, and NFTs, The Sunday Morning Brunch sat down with Urban.lk Co-Founder and blockchain product company Hyperglade CEO Kalana Muthumuni. Urban.lk is a tech equipment platform which, in 2021, hosted Lanka’s first-ever NFT art auction through its virtual art gallery The Gallery.
Getting the jargon out of the way
Muthumuni first spoke with Brunch about what an NFT is. Most explanations on NFTs are quite tech-related, but to break it down, an NFT is quite simply a digital asset. NFT means a Non-Fungible Token.
Most NFTs are part of the Ethereum blockchain (this is the blockchain that the cryptocurrency ‘ether’ is based on. Blockchains are digital systems or ledgers that record information in a way that makes it difficult or impossible to change or hack once it has been stored.
Blockchains also allow multiple parties to maintain a shared and tamper-proof record of transactions or information without the need for a central authority. It provides a transparent, secure, and immutable way of storing and verifying data. An NFT is a unit of data stored on the blockchain that certifies the NFT to be unique and not exchangeable.
In the context of NFTs, blockchain serves as the infrastructure for creating, storing, and verifying the ownership and authenticity of digital assets. Ethereum’s blockchain is one of the most widely used blockchains for NFTs, but other blockchains such as Binance Smart Chain and Flow also support NFTs. Now, cryptocurrency like Bitcoin is easily exchangeable with no change in value, but an NFT is more unique and each NFT is different from the others, unlike currency.
The origin of the NFT, and who it belongs to, can be tracked on the blockchain, the digital ledger. “This is why the NFT blew up in 2021,” Muthumuni explained. “In the physical world, art is easy to sell and its provenance is easy to trace. In the digital world, there was no way to sell art like that until NFTs. You can trace NFTs back to the original artist, artwork, or owner.
“NFTs can be created for anything digital, from drawings to music to any other kind of digital assets. Think of an NFT as something like a deed to a digital asset that only you possess. The NFT signifies that the ownership of that artwork is with someone else, and based on the agreement they have with the platform and the creator of the artwork, the owner can use it in a commercial or non-commercial sense as they would like.”
Another unique feature of NFTs that also hugely benefits artists is that after the initial sale of the NFT, the transaction doesn’t end. With each NFT, artists can build in a percentage of how much they will receive from the proceeds of any resale of the NFT after its original sale. With normal transactions, once a piece of art is sold, the artist receives no benefits from any other sales of that piece of art. With an NFT, however, the artist can receive a percentage of the proceeds every time that NFT is resold.
Artists and NFTs
But practically, how do artists use NFTs?
“There are several ways,” Muthumuni explained. “One is if you already have an audience that loves your work and you tell them that you’ve made NFTs of your work that are available for purchase at an NFT marketplace; another is if you produce limited editions of your work that are only available to purchase as NFTs. There are many use cases for artists and NFTs; artists can also use NFTs to crowdfund or to receive royalties from a project.”
As with all new technology, part of why NFTs seem so mysterious is because many people, especially artists, don’t fully understand how they work. The process of making an NFT, Muthumuni explained, is pretty simple: “It’s as simple as logging into Instagram and posting. To make (or ‘mint’) an NFT, you can log in to an NFT marketplace. In most cases you don’t have to pay anything to use these marketplaces.”
But what of blockchain and cryptocurrency? As the two go hand-in-hand, you often see NFTs being sold only in cryptocurrency. As Muthumuni revealed, this is no longer a limiting factor. “Many of the main marketplaces also have options that accept credit and debit card services like Master, Visa, or MoonPay. You no longer need a digital wallet or cryptocurrency to mint an NFT. In 2021 or 2022, these options weren’t there, but now they are more accessible.
“The main reason why you see cryptocurrency-based payment in most marketplaces is because NFTs are based on blockchain and they started out at intertwined markets. It was more infrastructure-based than anything else.”
The traditional method of minting NFTs does still involve cryptocurrency though, and cryptocurrency to mint an NFT is almost always secure, but this really depends on which NFT marketplace is being used. It is always important to err on the side of caution.
NFTs in the Sri Lankan marketplace
The year 2021 saw a lot of attention around NFTs, especially at a time when in the midst of the pandemic, Sri Lankans were looking to make a global impact and reach global customers.
Muthumuni’s platform Urban.lk saw the potential for Sri Lankan art to make a mark internationally and responded to this by forming The Gallery – a space for art lovers all around the world to have the opportunity to discover talented Sri Lankans who didn’t have a way to commercialise their work and get it before customers.
The Gallery served as a bridge connecting artists and consumers through a platform where consumers can discover new artists and artists can commercialise and exhibit their work easily without worrying about logistics. Primarily, The Gallery served as a virtual art gallery, carrying mostly digital art which, once ordered, was printed, framed, and delivered to the customer.
Urban.lk also saw the potential to go digital with NFTs, and in June 2021, hosted Sri Lanka’s very first NFT art auction. The highlight of the auction was a piece of digital art by artist Adaash Lanthra (Deluge of Ash) titled ‘Sigiriya 2077,’ a dystopian representation of Sigiriya in a futuristic cyberpunk setting.
Cyberpunk is a subgenre of science fiction and gaming that deals with a dystopian futuristic setting that features heavily advanced technology alongside a breakdown or radical change in the social order of the world. The name ‘Sigiriya 2077’ draws from the online game Cyberpunk 2077, which is one of the most famous examples of cyberpunk.
With minimum bids for each NFT set at $ 50, the auction also saw artists’ work given a minimum value. In the end, the auction raised over $ 2,000, with the focal piece of the auction, ‘Sigiriya 2077,’ selling for $ 1,275. The auction was held in partnership with the charity Round Table Sri Lanka, with Urban.lk contributing a portion of profit from the auction to Round Table Sri Lanka to support its work with underprivileged children.
The response to the auction, Muthumuni shared, showed that while NFTs were a new technology, their potential was very much applicable to the Sri Lankan art context, should they rise to the challenge, and with enough research, there is no reason why Sri Lankan artists cannot market their art to an incredibly diverse international audience.
The pitfalls of NFTs
As with all new technologies, the NFT world does have some pitfalls. “As with all new spaces, the NFT world is still being sorted,” Muthumuni explained. “It’s an unregulated space and right now there are no hard and fast rules. If you have a buyer for your NFT you can sell it. Simple as that. There are no standards yet.”
An example of how the as yet unregulated space of NFTs can have pitfalls is when it comes to using NFTs to sell physical art. There is a good deal of room for the physical art to be disengaged from the NFT and resold without the artist receiving royalties from the resale as they would with a wholly digital piece of art sold as an NFT.
Outside of that, there is also room to fall prey to scammers. Here too, Muthumuni shared some insight. A lot of it boils down to practising the same caution you would when thinking of any other online scam. “If someone directly reaches out to you and asks you to sign up somewhere so they can buy your work as an NFT and there is a payment involved to make the NFTs so that person can purchase it, that does sound a bit scammy. There are bots active online that send out these kinds of messages.
“It’s always important to be very careful when making a payment or connecting a wallet to a platform. In most cases, these scammers come up with big numbers (thousands of dollars per artwork, for example), so artists get interested and then there are steps to follow.”
Most of these scams bank on offering a big payout and people’s lack of knowledge on NFTs and NFT platforms. Muthumuni’s chief advice to artists on not falling victim to scams of this nature was to, as a rule, avoid making payments before selling an artwork, and to never connect your digital wallet (or your credit or debit card for that matter) to an unknown platform. Instead, if an artist is unsure about someone’s authenticity, they are much better off using one of the bigger, more established platforms to mint their NFT and asking their potential customer to purchase it off that verified platform.
NFTs are also used by scammers in bids to obtain personal information (phishing), and here, Muthumuni shared: “The beauty of tokenisation is that you can simply create an artwork, turn it into an NFT, and then someone can buy it from you off an NFT marketplace. You don’t need to provide your personal information to anyone to verify that it is you.
“In the NFT field, you get what is called a public address which validates your authenticity, and you can put this public address on your Instagram page or your portfolio and say ‘NFTs available here’. Then anyone wanting to confirm your authenticity can simply visit the page of your choice, check your public address and whether that matches the address of the NFT they are thinking of purchasing, without the sharing of any personal information on either side.”
The main takeaway
NFTs provide a valuable pathway for artists to reach new (potentially high-end) customers and sell their work safely. Of course, there is no such thing as a free lunch, and NFTs do come with a certain amount of risk, from the artist themself not being knowledgeable in NFTs and how they work as well as the as yet unregulated nature of the space.
As with all new avenues, it is vital to enter into it cautiously, do your own research, and see if NFTs are something that truly works for what you are trying to achieve. Like all new technologies, the potential is limitless, but only if used wisely.