In 1889, Vincent van Gogh sat to paint “Starry Night,” heralding modern painting with his technique and stylistic novelty. 132 years later, digital artist Mike Winkelmann — also known as Beeple — sold an NFT at Christie’s for $69 million, signaling the growing popularity of yet-another paradigm shift in art: towards the digital world.
NFTs, or non-fungible tokens, are pieces of unique metadata that record ownership spanning digital images, videos, songs, memes, trading cards and social media posts. Just like the originality of “Starry Night,” NFTs work because they are unique. NFTs use blockchain technology to create a chain of ownership from the original artist to the current buyer, which makes them authentic and dictates their value.
The past few months have seen artists, content creators, celebrities and brands explore NFTs through crypto-art collections, collectibles and individual pieces. Notable examples of artists that made it big include Chris Torres, who monetized a meme he made 10 years ago for $590,000, Larva Labs’ series of 10,000 CryptoPunks — sales from last year total to $1.7 billion dollars — and American DJ/producer Steve Aoki’s 36-second electro beat video which sold for $888,888.
This artist’s guide to NFTs offers an in-depth perspective into the NFT economy, and outlines a step-by-step guide for creators interested in exploring the sphere.
Why Begin NFTs
NFTs are intricately linked to the rise of the “creator economy.” Earlier, consumer preferences followed a model called the “attention economy,” whereby big companies like Google, Apple and Facebook competed to capture and monetize their audience’s attention. In recent years, creators have begun to build their own personal brands to directly engage with customers and fans, prompting the rise of the creator economy. The creator economy prioritizes individual creators by allowing them to directly engage with audiences without intermediaries. In democratizing and decentralizing content-sharing away from big-name platforms, this model nurtures artists’ creativity and passions and gives audiences more agency of choice. And it’s lucrative — the creator economy has an estimated worth of $104 billion this year.
With NFTs, creators can move beyond external platforms — such as social media, where one is often restricted by algorithms and advertisements — to connect directly with fans. By giving creators complete freedom over their content, NFTs make it possible to make millions of dollars from a single piece of art. Additionally, because NFTs gain some inherent value in being owned, creators can explore ways of designing NFTs as unique tangible experiences for users.
There are three main reasons why NFTs offer better financial opportunities for creators: they eliminate intermediaries, allow for granular price tiering and make users content-owners. Intermediaries diminish creative and financial autonomy because they receive percentages of creators’ earnings, own content rights and have control over an artist’s visibility; NFTs, on the other hand, give creators independence over their content and royalty earnings from each re-sale. Secondly, NFTs allow pricing tiers, which afford interested buyers more flexibility in paying their desired price, ultimately capturing more consumer demand than fixed prices. Lastly, NFTs eliminate customer acquisition costs — the costs of winning over customers — since cryptocurrencies like Bitcoin and Ethereum have close to zero marketing spend.
At the same time, the sale of NFTs depends on a creator’s following and the brand value they deliver to people. Without a large following, or if audiences are unfamiliar with cryptocurrency, an artist may end up attempting to sell to buyers with no knowledge of their work. Because the market is flooded with content, it’s harder to establish a piece’s scarcity and value without a prior following. For a creator, NFTs can open other avenues only if they are willing to engage with the community, connect with fans and establish a brand identity. NFTs require the use of cryptocurrency, which can likewise pose huge initial costs starting out.
What to Think About When Creating A Collection
When considering how to craft an NFT collection, there’s a fair amount of strategy beyond the actual art pieces.” Planning is key.
- Project: To begin, it’s important to have a clear idea of the nature of your project and its end goal. What kind of multimedia are you using? Who or what does the project represent? What kind of value does it create, and how will you distinguish it from other NFTs?
- Platform: Decide how you want your art to reach other people. What kind of platform are you using? Would you prefer an open platform like OpenSea, or receive an invite for a more exclusive platform such as Nifty Gateway?
- Pricing: Don’t overprice your NFT, particularly if you are new to the space. Consider its value proposition, your fan base and audience’s loyalty — you can always price up after a few initial good sales.
- Exclusivity: Creators often produce a limited supply of NFTs to take advantage of consumers’ perceived scarcity and drive up value. For example, CryptoPunks and Bored Apes Yacht Club created 10,000 designs, while MeeBits has 20,000 unique characters.
- Audiences: Who is your fan base? Designating your target audience, preparing your marketing strategy and communicating with them is of utmost importance. Most projects have either artists or influencers speaking directly with fan bases to promote loyalty. Once you decide a launch date, focus on building anticipation and hype about your work.
Marketers note that any public action — from creating a portfolio to sharing a story — can contribute to marketing a project. They recommend creating a “Home base,” taken in the form of a website, to add credibility to your image, connect with other NFT creators and collectors and share your narrative with fans through writing, video, images or any other format.
How to Create a Digital Wallet and Navigate the NFT Marketplace
- NFT marketplaces: At the moment, there are various auction marketplaces where artists can sell NFTs. The most popular platform is OpenSea, founded in 2017 as the first open and decentralized marketplace for any non-fungible asset on the Ethereum blockchain.
- What does OpenSea do? Part of a growing industry, OpenSea facilitates instant transactions between creators and buyers that rely on a suite of “smart contracts” called the “Wyvern Protocol.” This way, neither the buyer or seller of an NFT is liable if the deal goes sour.
- Why OpenSea?: The transparency of this infrastructure is the main appeal for many users— it is empowering to be part of a peer-to-peer network that operates on its own without a centralized entity controlling it.
Creators who want to sell on platforms such as OpenSea must first create a digital wallet; the purpose of this is to pay for listing fees, which will be explained later.
- What is a wallet?: The most popular browser extension wallet is MetaMask, founded in 2016 with the intention of lowering the barrier of entry to decentralized applications. The wallet is most compatible with the Ethereum blockchain because it only stores Ether and other ERC-20 tokens.
- Why MetaMask?: MetaMask has been popular for users because of its ease of managing private keys (securing your wallet) and connecting the wallet to NFT marketplaces such as OpenSea.
- How to create a wallet: To create a MetaMask wallet, users need to first install the extension using their preferred choice of search engine. (For the purpose of this tutorial, Google Chrome will be used, but the workflow is the same for other browsers.) From there, MetaMask takes users to a new window where they can create a new account and a strong password. It is crucial that every user collects a “recovery phrase” which is made up of twelve unique and randomly generated words that allow users to recover their wallet if they ever lose access. It is important to note that not even MetaMask can help users recover their account. This common industry practice goes to show how committed companies like MetaMask are to maintaining full ownership to the account holders. Once an Ethereum wallet is created, artists can connect their OpenSea to their wallet service of choice and begin listing their art pieces.
- Auctioning methods: There are two methods of auctions available on OpenSea: English auctions (“highest bid”) and Dutch auctions (“set price”). The former closes on the highest bid at the end, whereas the latter closes after all bids have been submitted and prices tend to fall overtime.
- Artist fees: Before accepting any bids, however, first-time artists must pay a one-time account initialization fee for OpenSea and wrap their ETH (WETH) to allow ease of exchange with other Ethereum-based tokens. Furthermore, artists need to be aware that they will run into recurring transaction “gas” fees every time they transfer an NFT to someone, accept an offer, etc. Artists won’t need to pay gas fees for actions such as minting a new NFT, listing an NFT as an auction and more. Once artists select their selling method and pay their gas fees, the NFT is ready to be listed.
How to Strategically Launch an NFT Collection
For creators of all levels, the cultivation of organic communities holds immense importance for their work. Whether it is to collect feedback or generate interest for their NFTs, doing proper promotion will help all artists in the end because the space is still in its early stages of growth. Therefore, it is critical to nurture the right community, determine the best channels to connect with them, and communicate with buyers throughout their whole journey. Such strategies will be explored in the following section.
- Nurture a community: Most popular artists today gained credibility by leveraging their fan base and like traditional art, NFT prices reflect the hype and buzz around the talent. Artists must find a way to demonstrate to their buyers what makes them unique and stand out from other creators.
- The Bored Ape Yacht Club is a great example of how the utility of NFTs can be driven by community. Rather than using ad support, BAYC launched its collection of 10,000 unique apes through native social media interaction between community members on Discord. Further, BAYC’s collectibles are launched and distributed fairly, where all apes cost 0.08 ETH each. Supporters in turn have responded enthusiastically to the rise of fair and accessible sales. BAYC also rewards their consumers with full commercial usage rights to their NFTs and gives members special access to “The Bathroom,” a collaborative graffiti board. These small actions are effective ways for artists to show that they care about their communities.
- Determining the best channels: Artists will also need to select the best channel to communicate their projects depending on which platform caters to their target audience, whether be Reddit, Discord, Telegram and more. Once a relationship is established, artists need to stay connected via a constant stream of activities— live streams, polls, comment floods, Q&A, giveaways, etc. One of the more popular venues are AMA (“ask me anything” functions). At these events, artists can request questions from users on social media or livestream platforms. Some have likened this strategy to a “marathon” of promotion, showing that it takes time to become an established, talented and serious NFT artist. These promotions help users put a name and face to the NFTs they buy, which puts the artists they are supporting in an authentic and personal light.
- Catering to the user journey: Another way for artists to show customers why they should desire their work is to make it easy for people to access it. Creators must ensure that their work connects with users at every touchpoint. The journey may follow a user from when they first learn about the NFT to when they finally decide to make a bid. It is important to note that every buyer’s experience is different; therefore, artists must pay attention to the quality and quantity of content they produce that would attract the right audience. The most common tactic is to create a website because artists can use these online hubs to freely compile information on their NFTs, publish content and optimize their target user’s experience. Good example websites include XCOPY, RTFK and BAYC.Each use their platforms to tell their stories and update users on upcoming drops. More significantly, artists can use their websites to generate waitlists and signups which could simply come in the form of a Google Form.
- Pro tip: Finally, many artists choose to do “minting events,” which are when generative NFT pieces are created and sold simultaneously at launch, and the lucky buyers won’t need to go through secondary markets such as OpenSea. For speculators, the major appeal of these events is the randomness. Early buyers go through their crypto wallets to pay for the NFT and the gas fees that the smart contract needs to create the particular randomized collectible. As a result, every buyer has the same amount of chance in scoring a “rare” NFT with cool traits that may resell at a very high multiple on the secondary market. Minting events are great for artists who want to create hype around their pieces, especially because many users are attracted to the exclusivity.
ABOUT THE WRITERS
Ivy Tsang is a Tech Innovation Fellow at Identity Review from the University of Southern California, where she explore the intersections between the Arts, Technology and Business of Innovation. Contact Ivy at firstname.lastname@example.org.
Freya is a Tech Innovation Fellow from Yale University, where she is exploring the political economy and the public sphere through the lens of economic structures and businesses, policy and data governance, and journalism.Contact Freya at email@example.com.
Do you have information about NFTs and blockchain-tech to share with Identity Review? Email us at firstname.lastname@example.org. Follow us on Twitter @IdentityReview