I always envisioned the sale of my first piece of art as a romantic affair.
There would be an auction, people would shout bids. Eventually someone would shake my hand and offer me a comically-sized sack with a dollar sign on it.
The reality was slightly different.
Think me, in sweats, literally rocking my crying two-year old daughter while trying to figure out how much the Ethereum gas fees for the NFT someone offered me $83 for would actually cost me.
It worked, though. It was bizarre and unplanned, but I sold a piece of art. Specifically, I sold an NFT of a painting of mine. And I sold it in about an hour — after never successfully selling a piece of art in my 37-year life.
NFTs have become a billion-dollar industry nearly overnight, and selling my own helped me understand why. Even if it was a confusing process that I didn’t initially understand. More-so, it helped me see how the smart contracts underpinning NFTs could potentially upend the worlds of art, music, collectibles and beyond.
“I think everything we’re seeing now is very unsophisticated, basic and straightforward,” said Moish Peltz, an intellectual property attorney who specializes in NFTs. “The technological possibilities that are unlocked by this are limitless and some of the things I’ve heard coming are mind blowing.”
That hardly means the current climate is sustainable. In fact, the first wave for NFTs is already crashing.
Peter Overzet, a comedian and podcast host who found NFTs in January, said he’s thinking differently about his purchases than he did a few months ago.
“If I buy something I want to hold it for a very long time,” he said. “And because I've spent a lot of money already I'm being very choosy now with what I buy.”
The process of creating an NFT is simple enough. You can make virtually any piece of media into a non-fungible token and there are already a half-dozen services — think OpenSea, Rarible and Makersplace — that will help bring it to market via underpinning blockchain tech.
I’d spoken to a few artists who had told me, like anything else, that an NFT has as much integrity as you put into it. It’s easy to make a bad one. So, I chose a painting of mine that I loved so much I photographed it while it was still wet — a fortuitous decision as I left it to dry on an uneven surface, ruining it by the next morning.
My past mistake actually helps me here, because it makes my NFT unique. After I created it and destroyed the JPEG I’d taken, the NFT is now the only representation of the original art left.
I posted it to my Twitter account, which is mostly followed by rapid basketball fans who frequent an NBA TopShot price guide I run. I had an offer, unsolicited, within minutes from an artist named Gokuu, for 0.05 ETH, or about $83 at the time. I accepted.
“You definitely could’ve gotten more,” said Ed Clements, of OpenSea, said when I approached him about this story.
Alright, easy Ed.
Here’s where things get sticky. When money gets involved, the barrier for entry goes up.
On OpenSea, you first have to initialize your account, a one-time process that costs about $50 and acts as a de facto registration fee. You do all this through MetaMask (or similar software), a browser extension that connects websites to your digital wallet. After that you’ll need to pay gas fees to complete the transaction itself.
Herein lies the biggest threat to mass adoption, according to virtually everyone I spoke to. Gas is the virtual fuel that powers the execution of smart contracts, and it is notoriously inefficient on the Ethereum network. (We know they're working on it, ETH maxis)
It can get expensive paying gas fees to complete transactions on the network. Just creating a store to house your wares on Mintbase, another NFT marketplace, would have cost me more than $1,000. NFTs like NBA Topshot, which is built on its own blockchain (FLOW), do not have this issue, though the blossoming sports collectible service has had more than its share of scaling issues.
I found the explanation of all this confusing, but in fairness this is the point my daughter woke up from a nightmare so my focus was not razor sharp. It all took about 15 minutes. The consumer in me wanted this process to be faster and simpler — the complicated nature of it made me skeptical I had in fact even completed the sale.
Clements acknowledged there are still high barriers to entry, but said efforts are already underway to lower them.
“The space is just growing so quickly, and there's so much low hanging fruit,” he said. “There are so many things that all the different platforms are tackling and focusing on.”
Technical obstacles aside, this is where things get interesting, because this is where smart contracts come in.
In the tangible art world, this would be the end of the artist’s involvement in their piece’s micro-economy. But with NFTs, every future sale of that work, in perpetuity, will earn me a 7.5% commission, a rate I set and can change at any time.
For artists, musicians and other creators, that’s a game changer.
“I don't think we're there yet, but I think there are ways where I could make my living from engaging super fans,” Overzet said. “I mean we're what now, two-and-a-half months since I even knew what all of this was, and now I'm rethinking what this could mean for my career? That’s exciting.”
Economically, this is what’s raising eyebrows behind the surface headlines. But there’s something else here that shouldn’t be discounted.
I have not been able to sell a piece of artwork in my entire life. In a little more than an hour, NFTs fulfilled this minor dream of mine. That’s not nothing.