Is NFT Art Valuable?
In recent times, the huge sums paid for a range of highly unique and innovative NFT (Non-Fungible Token) artworks by NFT artists, has clearly proved that NFT art can be very valuable. However, the real question seems to be just whysuch NFT art is valuable, or rather, what are the factors that make NFT art valuable? In other words, we know that NFT art can be valuable, but what is it that gives NFT art its value, what is it that differentiates one NFT artwork from another?
Because the field of NFT art is so comparatively new, the answers to these types of questions are difficult to obtain. One of the main reasons behind this is the long history of art compared to the field of NFT art. The general field of art dates back millennia, and even modern art dates back to the mid-19th century, i.e., more than a hundred years old. In comparison, the first known NFT, ‘Quantum’, was minted on 3 May 2014 by digital artists Anil Dash and Kevin McCoy (see below).
Quantum, 2014, Anil Dash and Kevin McCoy
Yet, NFTs did not arguably really become mainstream until the launch of the ‘CryptoKitties’ NFT collection in 2017. This illustrates a more realistic timespan of around five years, i.e., 2017 to 2021. With modern art, we now have a very wide range of factors that have been used to determine the value of art, such as artist; authenticity; characteristics; condition; cultural significance; genre; historical significance; innovation; market demand; medium; quality; rarity; school; and technique (Pracher 2021).
These arguably do not exist within the field of NFT art to the same extent. So, there seem to be relatively few ‘fundamental’ factors or characteristics of NFT art that can be said to effectively ‘guarantee’ the underlying value of NFT artwork. That being said, it has been proposed that there are certain value-determining factors that can be used to value NFT artworks. These include:
● market performance;
● net visibility;
● NFT storage condition;
● quality (NFT to NFT);
● social attention; and
● technique (Pracher 2021).
Sometimes, some factors may influence the value of NFT art more than others. For example, because the value of many NFT artworks is tied to the value of the Ethereum (ETH) cryptocurrency, an increase in cryptocurrency value in the long term may result in an attendant increase in the value of an NFT artwork. Some researchers have also identified that sale history and visual features of the associated digital object are good predictors of the price of NFTs (Nature 2021).
Other researchers have identified that the reputation of an NFT artist, along with artist-collector ties in the digital marketplace, also form highly important predictors of the price of NFTs (Nature 2022). This partly reflects the views of Dr. Pracher, a lecturer, art expert, and an art and cryptoart collector, who states “In my opinion, the current and potential value of an NFT is largely generated by its visibility on the net and by social attention” (Pracher 2021).
This may seem to explain why NFT artists that generate huge online visibility through digital marketing, social media platforms, media articles, video interviews, podcasts, and NFT marketplace listings, tend to increase their overall visibility, social relevance, and desirability as a NFT artist over time (Pracher 2021). This in turn increases the long-term value of their NFT artworks.