The concept of NFT Crypto Art has been growing at a rapid pace, but the concept itself hasn’t been through the same kind of rigorous self-evaluation process that mature and maturing concepts should go through. This article takes a critical look at the shortcomings of the idea and suggests some ways in which the concept can improve in order to become something more substantial than just another passing fad on the web.
What are Non-Fungible Tokens (NFT)
Non-Fungible Tokens, commonly referred to as Cryptocollectibles or Digital Collectibles, are unique tokens on a blockchain network. These crypto-assets can represent virtual goods or other crypto assets. Each digital asset is distinguished by a specific ID number which means it is non-fungible and one of a kind. This is in contrast with cryptocurrencies such as Bitcoin that are fungible because each Bitcoin has exactly identical copies.
What is Cryptocollectibles and Blockchain Art?
There are many different kinds of crypto collectibles. Cryptocollectibles are unique non-fungible tokens (NFTs) on blockchains. A fungible token is one that you can substitute for another similar token, like bitcoin or ether.
Each unique ERC-721 token (the type of non-fungible token used by CryptoKitties and many other crypto games) can’t be substituted by another, which makes it a crypto asset that is truly individualized and completely yours.
What made the CryptoKitties project successful?
Personally, I think it was a combination of three things: First, it made use of Non-Fungible Tokens. NFTs have been around for a few years now and I believe their novelty, as well as their fun (yes, fun!) usage case, has played an important role in bringing Ethereum into mainstream consciousness. Second, it was released at exactly the right time. The peak of all crypto madness was during December 2017, when anyone who hadn’t heard about blockchain before started hearing about it everywhere they went. A project involving cats certainly didn’t hurt, either!
Why do most blockchain projects fall short?
This is perhaps best explained by examining how crypto art projects function. Most of these projects are built on Ethereum’s ERC-721 protocol, which means each artwork has its own individual wallet. Such a scheme forces buyers to part with their funds in multiple ways—if they want multiple works from an artist, for example, they must exchange for each one individually.
It also requires them to monitor each project and maintain separate wallets; every time they move tokens in or out of storage, they risk disrupting market prices (that’s right—NFT Crypto Art is subject to pump and dump schemes). Most importantly, though, it creates bottlenecks; if your funds are locked into many different addresses around town, you can’t buy more art or invest in others as easily as you might like.
How can non-fungible tokens gain traction in a crypto ecosystem?
The concept of non-fungible tokens is somewhat foreign to many people. They aren’t exactly sure what they are, how they can be used, or how their value could be measured. To help separate fact from fiction, here are four common misconceptions about non-fungible tokens: 1) Non-fungible tokens do not have any intrinsic value. 2) Non-fungible tokens are only digital assets. 3) Any currency can hold non-fungible assets.
High mining fees on the Ethereum network
As discussed in more detail earlier, one of Ethereum’s biggest problems is scaling. Mining fees are surging and transactions can take a long time to process. A recent wave of spam attacks clogged up Ethereum’s network and caused mining fees to spike even higher.
Miners need an incentive for their heavy-lifting roles on ETH, but for them, it needs to be worth it—and right now that’s clearly not true. The gas price is too high, which brings us back around to another major pain point for users: transaction speed. If you want something done quickly in Ethereum you need a large fee attached—which you might pay just so your transaction isn’t rejected by other miners as spam.
Other ways to monetize blockchain art
Make money from NFT Crypto art? In theory, it’s possible. But how? Artists should avoid treating blockchain art as a way to make extra cash, but instead a way to build their brand and reach more people. Network effects become incredibly powerful in today’s digital age, and everyone knows that early adopters are key in any tech revolution. Blockchain art offers access to an emerging community of early adopters—people who can potentially help artists grow their brands and carve out new revenue streams for themselves.