The phrase “NFT Market Collapse” has been circulating in the media lately. Are NFTs dead? Especially art-based NFTs are still preferred by art collectors. So, what is the whole hype about? How can we reach a conclusion about the role of NFTs as an investment vehicle? What are the key determinants?
In order to understand the value of NFTs as an investment, it is necessary to consider three main factors. These include understanding the demand for NFTs, examining their role in the art world, and exploring their linkages to different mediums. All three factors grow in importance when we consider the explosive importance of digitalization and digital art.
First, since NFTs are a form of investment, it is appropriate to evaluate the demand for them. The more demand there is for an investment, the higher the value of that investment. The demand rationale has three driving factors. The first is the ever-growing popularity of NFTs due to the attention of the media. The second is the fact that NFTs still work well for collectors and artists as they are easier to trade online. Technology brings convenience, and people still enjoy that. The third is the popularity of cryptocurrency. As people accumulate more crypto wealth, they need to invest their wealth somewhere. In this context, NFTs are an asset class that exactly targets that need.
Second, NFTs have a material impact on the contemporary art world. As a recap, contemporary art is the art form that works on current issues. With the advent of NFTs, previous art movements have been ever-more digitalized and reunited into contemporary art. For example, surrealism, abstraction, expressionism, and cubism have become available to be explored by masses again thanks to NFTs. On one hand, through this new fusion, artists not only digitalize and contemporize old art forms, but also create a brand-new submarket under the overall art market. On the other hand, art collectors continue to easily access those works (without revealing their personal identities) and easily sell them in the secondary market.
Third, NFTs have been nurturing the digitalization of new mediums. For example, let us consider the relationship between contemporary sculpture and NFTs. Primarily through 3D design applications, contemporary artists have been developing digital sculptures, not only focusing on figurative but also on new abstract structures. They then make NFTs of these digital pieces. Through this innovation in medium, NFTs continue to attract new collectors and artists alike, promising new buyers unique, novel works and new artists the potential to innovate more conveniently.
As a result, contrary to the claim that NFTs said to have lost its popularity, they still have significant importance through their contributions to contemporary art. To fully grasp this importance, it is necessary to comprehend the threefold rationale laid out in this article. In sum, NFTs are still worth the investment, because the demand is there; they digitalize art movements; and they invent new mediums.
