Tokenization of fine art: A revolutionary development in the art industry

Synopsis

Historically, investing in art was a privilege limited to the affluent populace. With the emergence of fine art NFTs, several business houses, organizations, and individuals have started considering it as an investment avenue, just like equities, mutual funds, fixed deposits, etc.

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Explore NowNon-Fungible Tokens (NFTs) are unique digital identifiers that can’t be replicated. They have become commonly associated with cartoon profile pictures and gaming avatars due to pop cultural developments over the past couple of years, but this association is temporary and obscures their most important use case as tokens, which represent physical real-world assets such as fine art.

Thanks to NFTs, investors would invest in fractionalized units of tangible assets such as blue chip artworks.

The tokenization of fine art allows physical art to be transacted on the blockchain. It also allows the fractionalization of artwork into thousands of discrete units that can be owned and traded as fine art NFTs.

Fine art NFTs enable wider audience participation
Historically, investing in art was a privilege limited to the affluent populace. With the emergence of fine art NFTs, several business houses, organizations, and individuals have started considering it as an investment avenue, just like equities, mutual funds, fixed deposits, etc.

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Blockchain ecosystems also enable investors to store fine-art NFTs in a digital wallet, allowing them to initiate partial trades of NFTs in the future.

Investing in fine art NFTs is flexible and more efficient as they can be purchased, sold, or traded 24/7 from anywhere in the world through dedicated platforms. The digital presence of assets also ensures that NFTs cannot be forged, giving art collectors more security over traditional certificates of authenticity, which have a history of being counterfeited. Above all, fine art NFTs allow art collectors to own a piece of luxury art collectibles without investing a hefty amount.

Fine art NFTs revolutionizing the art industry
While the fine arts market has traditionally been offline, the online art market has gained significant momentum over the past few years, with sales reaching $2.6 billion on NFT platforms. This volume is outside the global fine art market’s turnover of $65 billion due to the increasing demand for original and unique artworks from renowned artists.

Thanks to the emergence of fine art NFTs, artists have found a unique way of earning royalties for their work. By democratizing fine art, artists can earn royalties on every ownership transfer of NFTs. The percentage is calculated and designated by the creator at the time of minting the NFTs.

Fine art NFTs are also bringing about a change in the global art market. With the rise of the NFT art market, a new parallel market has opened its doors to artists, collectors, and sellers. Additionally, artists and art lovers can now democratize fine art through dedicated platforms without paying hefty transaction and service fees to auction houses.

The way forward
NFTs have paved the way for the decentralization of traditional art-collecting practices, enabling several art lovers to own, collect, and democratize art. Redistribution of fine art through tokenisation and fractionalisation of physical works of blue-chip fine art can potentially drive competition in the art market so that organized collectives can build art portfolios that rival those of billionaire art collectors. As technology is constantly evolving, NFTs are predicted to play a crucial role in revolutionising the art industry.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)Print EditionPrint EditionFriday, 02 Dec, 2022Experience Your Economic Times Newspaper, The Digital Way!Read Complete Print Edition »

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    Updated: 12/02/2022 — 10:00