American artist Mike Winklemann, also known as Beeple, was auctioned as NFT on March 11, 2021, and was sold for $69 million. According to the auction house, he earned the sobriquet of the top three most valuable living artists, the other two being Jeff Koons and David Hockney. Beeple’s work — Everydays: The First 5000 Days — broke the world record of the most expensive NFT ever sold. It paved the way the global collectibles will be traded or acquired in time to come.
NFT democratises art. Anybody can download the art, but the token belongs to only one person. It is a technological innovation.
Digital art has been around for years. It is now that an effective monetisation is possible of such art. Sotheby’s introduced sales of NFTs at the beginning of this decade, and it has witnessed impressive sales.
It should be noted that digital art and NFTs are not superior to traditional art. They are different. Many traditional artists are now creating NFTs. It is an opportunity. NFTs empower artists and protect their ownership, and make a viable secondary market for digital art. While creating NFTs, artists can frame rules regarding licensing, royalties and profit sharing.
Many NFTs are minted so that the artist receives a percentage of the sale, each time it is sold.
At Sotheby’s, NFTs can be attached to physical objects such as traditional paintings to enhance the transfer and proof of ownership and secure the authentication process of physical works.
Every transfer or purchase of an NFT is recorded; it has also access to documentation of ownership history which is non-alterable.
It is necessary to monitor the transactions continuously, and take advantage of the time stamped for the transaction in future.
The creators benefit from NFT accounting. On an asset being sold, the original creator gets a percentage of the sale. The platform gets a small percentage and the current owner gets the remaining revenue. The whole thing has a potential for continuous revenue as the digital assets are bought and sold over time.
NFTs are not governed by any specific regulation in India. Maybe, Indian Contract Act, Securities Contract Regulation Act can govern them. It is a high-risk asset, and the person who acquires it must have high risk tolerance. NFTs could also be treated as commodities.