·
This is a topic that has been debated and discussed about since NFTs broke the mainstream in 2021. It’s a big and nuanced topic but an important one.
A fundamental issue we are facing, especially now during the “bear market” is that liquidity is thin. When most crypto native participants (who are the vast majority of collectors in our space) are highly dependent on the performance of cryptocurrencies, then at difficult times they collect significantly less. This is a blessing in disguise for many, as it teaches you to collect more thoughtfully but it’s a big hit for artists. We’ve seen artists who thrived during the bull market now struggle to sell out collections and pieces and looking for alternative income streams.
This was always going to be solved by something that many disagree with, the entry of traditional art collectors or retail. The liquidity that exists in traditional art markets is astronomically larger than in the NFT space. This additional liquidity will be pivotal for the longevity and health of the NFT market. In order for this to happen though, onboarding rails must be improved. Wallets, cryptocurrency, seed phrases are all Greek to the average Joe. There is work being done to create these rails but we are not 100% there yet.
I think this is inevitable with the biggest wealth transfer in history happening in the next three decades, estimated to be around 100 trillion dollars. With Gen X and Millennials being the first recipients of these inheritances, I believe we will see a vast majority of capital flowing to digital art, something these generations understand better than the previous ones. The big shift will, in my opinion, be when Gen Z and future generations receive these funds as these generations will have been naturally born into technology. From the moment they are born they have a screen in front of them, they interact with digital currencies (for example in video games like V-Bucks in Fortnite) and digital ownership (for example in vide games like skins in Counter-Strike). These generations will embrace digital art and collectables more than ever before, ushering the golden age of acceptance and normalization of digital art.
What else do you think needs to happen?
4 comments
Liquidity of cryptocurrencies is one issue, but I don’t see it as the main problem. Art collectors still have some budget available, either in fiat or crypto. I think that the biggest issue for NFT art is the lack of good options to display digital art in the collector’s home. This issue has been systematically ignored and downplayed since 2021 with the argument that the experience of owning an NFT in itself is the core of the collector’s relation with his/her NFT. Many companies tried to put on the market digital screens specifically made for NFTs, but most of them were awfully expensive, had a mediocre design, or had a terrible user experience.
Sadly I can’t post pictures to illustrate my point but NFT activity (volumes) is highly tied to the performance of the cryptocurrency market. As most people will not deposit fiat to buy NFTs, at least not at the moment, this means they have to tap into their existing crypto reserves. If the market is down, a collector will be more reluctant to spend said crypto.
Digital displays for collectors are for sure an issue, but from my experience the vast majority digital art collectors do not want another screen in their house. We are already surrounded by screen at work and at home, most of us don’t want more of that. Also if you excluded animated or interactive pieces, many digital art pieces/series look better on paper that on a screen.
hmm. just there is not ONE “art world” I don’t think there is ONE “NFT space” at this point. so every sub-space has it’s own need.
2- I don’t think genZ is particularly interested in digital art from my experience parenting, and being around genz and also hearing from friends who are teachers. SURE they are all very fluent. but there is a real rejection of digital culture, social media, and corporate AI. young people are going to the movie theater again, music festivals, bars and restaurants, gyms and parks. I think they are tired of screens. but TRUE they are more versed in digital culture and currencies.
Also based on the market researches I see (and what the auction houses are doing which is an indicator) they are interested in “experiences and luxury collectibles” no?
What the fine-art NFT space needs is what art-generally needs; eyeballs, being seen as an important part of society and not just for entertainment and investment. We’re in a low-time in society generally with so many global problems and regional. so it makes sense that art, artists, and patrons of all kinds are having a hard time figuring this out.
Agreed on the first point because the NFT space includes art, collectables and more. Even in NFT art you could argue this is true but the space is so small I don’t think the lines are blurred that much.
As for gen Z, my experience from friends that age and siblings of friends is that they are glued on their screens and are into digital experiences a lot. That doesn’t mean they still don’t enjoy IRL activities, I think that hasn’t stopped for most people, yet. But even there they will constantly check their phones and go online. I think that’s more of an attention issue and maybe part addicted to the dopamine hits that social media gives them.
Yeah I 100% agree with the eyeball argument but that’s part of my point. With more eyeballs, more liquidity and patronage will eventually come to art NFTs.