Covid, which affected the whole world, caused radical changes not only in the markets but also in the world. Changes have had an impact in many areas, and areas such as finance, culture and art have gained rapid momentum in digitalization. These changes have brought NFTs within the blockchain, which have a common cluster in the fields of art, finance and technology.
NFTs first appeared on the Ethereum blockchain. So what is Ethereum? Ethereum, in the simplest terms, is an open platform that allows you to write your own applications, and the ERC-721 standard within this platform also contains a standard that allows you to create your unique tokens, namely NFTs. This standard was first used with Etheria as a gaming on the Ethereum network in 2015, and then continued with EtherRocks and later CryptoPunk in 2017, gaining world fame is the “Everydays: the First 5000 Days” by artist Mike Winkelmann, known under the pseudonym Beeple. His work titled ‘’ was sold for 69.3 million dollars through the Christies auction house. Of course, the retrospective firsts of the NFTs of all recent history may also differ, so the chronological value of the first NFT samples will become anachronistic over time. It doesn’t make much sense to talk about a first directly for the art field.
We can say that Non Fungible Tokens, namely NFTs, are the digital documents of the uniqueness and originality on the blockchain. The realm of NFTs isn’t just about artwork or avatars. an NFT; deed, stock, song, photo, fashion, game, sports, video, jpeg etc. It can have endless content such as This is entirely up to the imagination of the creator.
To say something definite about what it is not, rather than the question of “What is NFT?”; NFT is not an art form. There is no such thing as an NFT artist. NFT is a document of the uniqueness of a work of art on the blockchain. Just like the certificate of authenticity, which includes the inventory record and the wet signature of the artist, given by the gallery or auction house when purchasing a work.
Finally, while making blockchain history as the first cryptos without FUD (a type of black propaganda used to create fear, uncertainty and suspicion) and regulation (rules set by private or public to keep the activities of the industry under control) on the blockchain, it also goes into the history of contemporary art. a new field and market began to emerge.
As it is known, NFTs that became popular last year, Refik Anadol’s Machine Hallucination, Tarık Tolunay’s Fractal Istanbul and Murat Pak’s Pixel made a name for themselves. Of course, all the artists named before were producing works focused on technological design and contemporary art. In short, the process did not take place for them with the click of a finger. In addition, the leverage of contemporary art gained momentum with Köenig Gallery in the Decentraland metaverse on the Ethereum network, and Sothebys joined the caravan and signed interesting works, respectively. Auction houses have now started to pay for cryptocurrencies with Bitcoin and Ethereum, and made a special launch for CryptoPunk, one of the first NFT collections, and took its place in the history of the network as the most expensive NFT collection at the time it was held.
Thanks to Blockchain, qualified works found buyers and artists created funds for other works and projects. Just as the contents of NFTs began to be called digital art, the fact that physical works could be sold as NFTs began to become widespread. The most interesting example on this subject was the 3D and 100-frame animation NFT by designer and sculptor Misha Kahn, which went on sale at Christies. This NFT showed that NFTs can have a physical as well as a digital counterpart. With this work of the artist; He created a “furniture” referring to both the “unique form” he designed and the uniqueness of NFTs, thus both physically offering his work on the blockchain base and creating an originality certificate with an NFT for the buyer.
While these developments were taking place in the contemporary art market, there was a really big development for contemporary art on a different network. Banksy’s “Love is in the Air” work, which went on sale at Sotheby’s on May 11, 2021, was sold for 13 million dollars in crypto money, and then we did not hear from the work for a few months.
Then, the work; It was learned that it was purchased by the Particle Collection project in the Avalanche network. Particle Collection, which was established to realize contemporary works of art on a more democratic basis in the field of art investment, stated that it will offer this work as FNFT, Fractionalized NFT (Fractionalized NFT), which is a type of NFTs. Thanks to the FNFTs created by this collection, Banksy’s work will be digitally tokenized with a smart contract created on the blockchain, open to the investment of more than one person. You will be able to manage and diversify at low cost. As we observed in the Particle Collection project, FNFTs will make a name for themselves in the field of contemporary art over time.
So how to make the right NFT investment?
Most NFT projects consist of random mapping of layer drawings to each other hundreds or thousands of times. For this reason, in order to make the right investment, it would be a much more accurate choice to invest in projects that make a name for themselves with the right collaborations, as well as an original NFT project. Because NFTs that contain art content, from the moment they are included in the collection, will turn a community or a company or a high-profile person into an identity that will express their image and brand.
However, it is useful to talk about where NFTs will evolve within the blockchain in the process. This process will inevitably lead NFT investments first to F-NFT formats and then to DAOs. So what does DAO mean after fractional NFTs?
What is DAO?
It stands for Decentralized Autonomous Organization in English. These autonomous organizations, decentralized on the blockchain, will eventually become the final pieces of the puzzle for the art market. These decentralized structures are simply democratic decision-making mechanisms within the community within the framework of the rules set by smart contracts. It would be against the spirit of DAOs to think of this organizational structure only for voting purposes. Essentially, the operation of DAOs is determined by the imagination of the creator or creators of that organization. The most important factor that distinguishes DAOs from a classical company or institution structure is that the decision-making mechanism is not pyramid-shaped from top to bottom, but rather like a circle in an Athens city council where everyone has a voice. So why will all the stakeholders of the art market need it?
Art Investment DAO
As I mentioned above; Instead of investing a hefty fund on a piece of art, being a partner in some of it and managing and diversifying your art investments more effectively and at lower cost compared to traditional methods is the subject of DAOs rather than FNFTs. Because it is possible to determine all the rules of a new collective creative economy through codes, thanks to DAOs.
With a simple example; We want to buy a piece of art that has been auctioned off at Sotheby’s and we don’t have the budget for it. An “Art Investment DAO” created within the rules determined by smart contracts on the blockchain will offer us a solution for this. Other users, like us, who do not have a budget but want to buy the work, will also join this DAO, create a pool, create the necessary funds and purchase the work. The future of the work can be determined by the majority decision of the community in the DAO, and it can be kept for investment purposes or it can be operated by re-auction or with different commercial models, generating income and profiting the users within the DAO. These new forms, which are out of the traditional collection management methods, also mean a low cost, democratic decision mechanism and a highly sustainable income model. The right combination of talent, knowledge and funds will undoubtedly shape the future of the art market.