By Asif Kamal
Art is considered one of the most exclusive asset classes in the world. With estimated annual sales of $65 billion worldwide, the fine art market is a sizeable asset class and a popular choice for investors. Traditional fine art, however, has, until now, posed considerable obstacles for the average investor, who had to contend with high ticket prices, dependencies on exports, galleries, auction fees, long holding periods and maintenance fees.
On the other hand, fine art offered in the form of digital assets, such as NFTs, is considerably more attainable. NFTs offer much and more convenience than traditional modes as they can be minted, sold and distributed indisputably. NFTs have benefited buyers and creators and are gaining momentum in the world of fine art.
Blockchain technology and NFTs are gaining ground
The advent of blockchain technology allows for the splitting of artworks into multiple parts (coordinates), giving people access to various paintings via NFTs that represent part ownership. They can buy an exclusive work of art with a small initial investment and liquidate it on the secondary market at any time. The ability to show that the painting is authentic and to whom it belongs will always be possible thanks to the blockchain storing all transaction data.
Blockchain opens up new global audiences without physical borders. NFTs make ownership of art transparent and easy to trace as they have an additional layer of security and a provenance verification process. The new age mechanism allows everyone to access investments in tokenized assets. When assets are tokenized in an NFT, ownership can be transferred between individuals more effectively and efficiently. A New Investment Opportunity Investors are always on the lookout for new opportunities to diversify their portfolios by investing in stocks, mutual funds, term deposits, and more. Fine art has beaten these conventional assets for decades and is open to public investment. Huge potential awaits investors who want to earn more (ROI). Non-fungible tokens allowed investing in a wide range of popular global creations. A new perspective intensifies by investing in the eclectic artworks of renowned artists such as Picasso, Banksy, VS Gaitonde, Sacha Jafri, MF Hussain and many more. These NFTs are well-known, reputable, stable and considered solid long-term investments. They also have a reputation
for growth and value creation, making them safer avenues of investment.
An advantageous option for artists and collectors
Artists see NFTs as an alternative to conventional distribution channels. One of the main problems that artists have faced over the years is the inability to monetize their works. The tangibility that NFTs have given to digital assets has allowed artists to sell their paintings while simultaneously establishing their reputation and presence in the art world. For example, graphic designer Beeple sold an NFT for $69.3 million, a record price for a work of art at an auction by a living artist. In the traditional art market, artists only receive funds after the first sale of their works. They do not receive a share of the proceeds when these works are resold. As a result, artists
only get credit for a small percentage of the actual value of their works due to a lack of royalty payments. In the history of the fine art world, there has never been a chance to receive royalties or to sell part of the paintings. However, artists can now automatically receive royalties on all future resales of artwork in the case of digital assets. On the other hand, collectors can partially sell works of art while keeping the rest in their portfolio to buy them back at a higher price in the future.
Key points to remember
NFTs remove all the constraints fine art has traditionally faced, subsequently providing investment opportunities. These are an ideal investment avenue for budding buyers who want to invest in works of art that have been appreciated over the years. Through accessibility, fractionation of artwork, and most importantly, the provision of royalties, NFTs are evolving in the landscape of fine art and investment.
The author is the founder and CEO of Artfi