Making the most of fine art as a digital asset

Making the most of fine art as a digital asset

By Asif Kamal

Art is considered one of the most exclusive asset classes in the world. With an estimated $65 billion in annual sales worldwide, the fine art market is a significant asset class and a popular choice for investors. However, traditional fine art has up to this point presented significant barriers to the average investor, dealing with high ticket sizes, dependence on exports, galleries, auction house fees, long holding periods and maintenance costs.
On the other hand, fine art presented as digital assets, such as NFTs, is significantly more feasible. NFTs offer much and more convenience than traditional modes as they can be unquestionably minted, sold and distributed. NFTs have benefited buyers and creators and are gaining momentum in the fine art world.

Blockchain technology and NFTs are gaining ground

The advent of blockchain technology enables the fractionalization of artwork into multiple parts (coordinates), giving people access to multiple paintings through NFTs that represent a portion of ownership. They can buy an exclusive work of art with a small initial investment and liquidate it in the secondary market at any time. The ability to show that the painting is real and who owns it will always be possible thanks to the blockchain’s storage of all transaction data.
Blockchain opens up new global audiences without physical borders. NFTs make the ownership of art transparent and simple to trace, as they have an additional layer of security and provenance verification process. The new age mechanism enables access for all to make investments in signed assets. When assets are signed into an NFT, ownership can be transferred between individuals more effectively and efficiently. A new investment opportunity Investors are always eager for new opportunities to diversify their portfolios by investing in shares, mutual funds, fixed deposits, etc. Fine art has beaten these conventional assets for decades and is open to public investment. Tremendous potential lies ahead for investors looking to earn higher (ROIs). Non-flippable tokens enabled investment in a wide range of popular global creations. A new perspective escalates investment in the eclectic artworks of renowned artists such as Picasso, Banksy, VS Gaitonde, Sacha Jafri, MF Hussain, and many more. These NFTs are well-known, reliable, steady and considered as sound long-term investments. They also have a reputation
for growth and value creation, making them safer investment avenues.
An affordable option for artists and collectors

Artists are considering NFTs as an alternative to conventional distribution channels. One of the main issues artists have dealt with over the years is the inability to monetize their artwork. The tangibility that NFTs gave to digital assets allowed artists to sell their paintings while simultaneously establishing their reputations and presence in the art world. For example, graphic design artist Beeple sold an NFT for $69.3 million, a record price for an artwork at auction by a living artist. In the traditional art market, artists only receive payments after the first sale of their artwork. They do not receive a share of the proceeds when those artworks are resold. Because of this, artists
only get credit for a small percentage of the true value of their works due to lack of royalty payments. In the history of the fine art world, there has never been the chance to receive royalties or sell a portion of the paintings. However, artists can now automatically receive royalties from all future artwork resales in the case of digital assets. On the other hand, collectors can partially sell works of art while keeping the rest in their wallets to use in the future at a higher price.
Key takeaways
NFTs remove all the limitations that fine art has traditionally faced, and subsequently provide investment opportunities. It serves as a perfect investment avenue for prospective buyers looking to invest in fine art that has appreciated over the years. Thanks to the accessibility, fractionalization of works of art, and, above all, the provision of deserving royalties, NFTs are navigating a change in the fine art and investment landscape.

The author is the founder and CEO of Artfi


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