NFT arts are on the hype now. In fact, if the headlines are to be believed, digital artists are currently pulling in millions of dollars thanks to their NFT auctions. On the one hand, the mainstream commentary tends to speak in terms of price bubbles. In contrast, many of those in the blockchain community talk of hitherto unexplored use cases and industry adoption.
But who is buying NFT art? Apart from the small handful of celebrities that are making the news, who’s creating NFT arts? And what’s the meaning of all this? I tried to apply some basic psychology models to the NFT markets to understand why people seem to have become trapped in this starry-eyed, Gatsby-esque dream of the digital era.
Who is Buying NFT Arts?
Using an established customer-value creation framework, we can identify four main types of value created by organizations. Functional or instrumental value offers features, functions, attributes, or characteristics, while hedonic value relates to experiences. Expressive value relates to symbolism, while the cost or sacrifice value relates to that which would be associated with the use of a product or service.
Based on the above theory, we can divide the NFT buyers into two groups according to what value they seek in NFT — investors and collectors.
Investors — They Mean Business
Investors are seeking a business transaction, thus are looking for functional and cost value. Their purchasing behaviour is not about the art itself; it’s just an investment. This kind of investor is likely to be an early adopter of crypto, and perhaps they have a lot of ETH stashed away.
Buying an NFT is an excellent way for this kind of investor to transform their coins into something else — a way to diversify their portfolio. A price is just a number to them.
NFT investors have the financial clout to make NFT creators into NFT influencers, helping to gather a community. In turn, this leads to more people interested in their work, so that the price will get higher. The art they choose to buy is usually the pieces that will go viral, but they don’t necessarily have aesthetic value.
These investors are also the ones who talk about NFT collecting in utopian terms. They’ll speak about how they are helping foster the first “digitally native art movement,” the one that is “democratic and permissionless,” and how this is the best way to attract more outsiders into the field of NFT.
Collectors — Experience Junkies in Search of Meaning
Collectors are the opposite of investors — they’re seeking experiences and symbolic value. If they know there’s an original, one-of-a-kind version that exists, they’re more likely to crave the “authentic” piece. The mindset is more similar to the sneaker & baseball card collectors than the investors. NFT invokes the air of authenticity, so no wonder it will attract collectors.
The high priority put on authenticity is characteristic of the millennial generation. A survey conducted among 2,000 consumers found that 90% of millennials valued authenticity from the brands they support above all other traits.
How does this craving for authenticity translate into a desire for NFTs? I believe there are several factors.
Sentimentality is undoubtedly one element of value. An NFT in a profile represents an emotion at the moment you bought it. Owning an NFT is like uploading a piece of your memory, a fleeting feeling, or a unique thought onto the blockchain. It endows human emotions with weight and eternalizes them in the digital world.
Sometimes people like collectables because they have a biographical element that indexes some important events in the past or their relation to a person’s life in history. In the circulating process of collectables, the identity of the previous owner is also an aspect of biographical indexicality. Owning something that has been owned by someone you look up to or a famous public figure sounds appealing. Luckily, this can easily be achieved in the world of NFT.
Spending most of our time in the digital world, we are also keen to build our online identity. Presenting our collections is a way to show our taste and reveal a part of our past. Thus, collecting NFTs becomes a way to form our digital identity — how we want people to see us. Daniel Maegaard, an Australian NFT collector, told Time Magazine of how he turned down $1 million for one of his Crypto Punks pieces because “people almost now tie that character to me. It’s almost like I’d be selling a part of myself.”
Who is Creating NFT Art?
Despite all the industry-revolutionizing talk, there are two main groups currently creating NFTs, and arguably, there’s some crossover between them. However, let’s assume that creators are influencers looking for ways to monetize their following. What’s in it for artists?
Artists: NFTs for Expression and Connection
NFT offer an attractive playground for digital artists who have found themselves on the periphery of the art world, which traditionally focuses on physical media. But now, everyone can be an artist.
NFTs offer a way to connect with the collectors of their work. Pseudonymous or not, there’s always a link there via the blockchain. Furthermore, associating oneself with the idea of NFTs bestows titles such as “NFT artist,” “digital artist.” This brings more connections, more customers, and more income.
It’s a brand new medium and a brand new way to express their thoughts and do experiments. There is no time, geography, venue limits in the digital art world. Artists get to realize all their craziest ideas and show them to the world.
Finally, NFTs offer the simple opportunity to earn an income from art that would otherwise be distributed freely. The word goes: “The best way to survive as an artist is not to have to survive as an artist”. With NFT, the artist maybe can just survive as an artist.
What’s the Meaning of all This?
The idea of NFTs has undeniable charm. The internet brings the marginal cost of copying a file to zero. But NFT proponents purport to be solving precisely that problem: the near-impossibility of monetising digital artworks. It’s a punk movement, a revolution.
But to solve that problem will involve will changing how people view online works and how artists get paid. If you put pieces online to view, then everyone can access and save their own copy. Subsequently, it gives an impression of no value, and all the efforts the artists put in are gone.
NFT is changing how artists are paid and how their work is valued. NFT brings scarcity to something that naturally doesn’t have scarcity. In terms of artists that post works online, more scarcity could be helpful.
For digital native users looking for sentimental value, it seems natural to collect things in digital form. As mentioned before, NFTs endow human emotions with weight and eternalize them in the digital world. Pursuing the eternal is the everlasting theme of mortal humans, and externalizing emotions seems one of the most romantic ways to go.
In terms of bringing a brand new medium to the art world, I remain ambivalent. To the true art lover, digital art can never compare, let alone replace traditional art. Perhaps it could be compared to street art. But arguably, the digital format is a new medium to express people’s thoughts. As an extension, the emergence of NFT will eventually bring some new ways of expressions, and some of them will perhaps stay.
So in terms of where the NFT space has the most longevity, I believe that the long-term users will be artists that have a deep understanding of what this tech can become and what kind of new forms of art can this tech bring. On the other side of the transaction will be the digital-native collectors who want to build connections and preserve a piece of their memory.
NFTs are the equivalent of a newborn child when even the parent technology of cryptocurrencies and blockchain are still being judged as immature. I’m looking forward to witnessing the evolution of NFT and seeing how it can change the interaction mode of humans in the post-pandemic, digital era. But for now, I still enjoy visiting a museum to enjoy some tangible arts and buying the very latest Funko Pop to enrich my figurine collection.
Don’t forget, Gatsby didn’t realize his dream.
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