How to Invest in Crypto Art

Crypto art can be broadly defined as art that takes place on the blockchain. It could be a photograph, a video, a musical composition, writing, even a video game, as long as it lives on the blockchain. 

Crypto art enables an efficient form of economic value creation for both artists and collectors, powered by blockchain’s capabilities around tracing provenance and authenticity as well as implementing mechanisms to ensure artists receive compensation at the point of sale and resale. These benefits would not have been possible in a pre-blockchain world.

The first generation of crypto art – Rare Pepes

Rare Pepes can be considered the first example of crypto art. Rare Pepes was the first blockchain community where anyone could submit artwork to be bought, sold, traded, or destroyed on the blockchain and it did not take commissions from sales on their site. Pepe was originally part of a comic by artist Matt Furie called Boys Club. It was featured in a zine he made using Microsoft Paint called Playtime, which was a series of blogs he posted on Myspace in 2005.

Is crypto art a good investment?

Since its early beginnings, NFT collectibles has generated over $5.6 billion in sales, while digital art has generated over $1.8 billion. During Q3/2021, NFT trading volume hit $10.7 billion — a 723% gain from the previous quarter and a staggering gain of over 38,000% year-over-year. 

In 2017, Cryptopunk #753 was sold for just 8 ETH worth $1,464 at the time. In 2021, the same artwork made headlines after selling for more than $11.7 million in a Sotheby’s auction.  

What makes NFT art so unique is that an artist or a content creator who creates his artwork on the blockchain does not need an art gallery, store or museum, nor does he require an agent. The artist can also receive compensation, usually between 5 to 10% royalties when his work is resold on the secondary market, and his copyright is immutably recorded on the blockchain without the need for a central entity. 

Crypto art as well as physical art relies on non-fungibility as a source of its authenticity. You can go online, download the Mona Lisa image and store it on your computer but that image and the replicas or copies will never be worth anything close to the verified original. Similarly, each NFT token is signed with a unique transaction that is common only for that particular token. 

How to invest in NFT art?

As with every other type of investment, the very first step is to identify your investment style. For example, Seed Round Investors have access to crypto art projects at the early stages – from being a part of a VC firm, well connected, or being an influencer. IDO/IEO investors get to mint NFT art at rock bottom prices. So-called meta traders invest in a certain trend or game, such as investing only in dog-themed tokens. 

The core tenets of your crypto art investment strategy should be based on overall industry trends and the quality of the art team or individual, from their technical skills to their background and experience in the crypto space. You should not consider your investment into crypto art as a quick turnaround, and instead see it as a long-term investment.

Investors in crypto art will also need to take care of several technical aspects. You will need to obtain a crypto wallet or digital wallet (such as Metamask or Coinbase Wallet) that allows you to store non-fungible tokens (NFTs) and cryptocurrencies. You will also need to buy some cryptocurrency, usually Ether (ETH), depending on which currencies the NFT marketplace chooses to accept as payment. You can buy crypto art using your credit or debit card on crypto exchanges such as Gemini, Coinbase, Binance, or Kraken or on NFT marketplaces such as Opensea, LooksRare, and Rarify. You can then move your crypto art from the crypto platform or exchange it to the crypto wallet of your choice.

If you are not an art connoisseur and not technically savvy enough to manage your web3 wallet and hosting/storing your crypto art, it is advisable to co-invest with NFT investment funds. NFT investment funds and holding companies are well equipped with the manpower, connections, and war chest to invest in promising metaverse projects before they hit the secondary markets. 

One such company is NFT Tech, a public company started by crypto veteran and serial founder Mario Nawfal. NFT Tech is already an investor in a series of blue-chip NFT projects such as CryptoPunks, Axie Infinity, Sidus Heroes and FaithTribe and works with influential individuals, artists, celebrities, and athletes to incubate and launch NFT and Metaverse projects. 

NFT art is a speculative endeavor, and you shouldn’t bet money you can’t afford to lose.

Closing thoughts

NFTs are a mechanism to optimize human coordination and interest alignment. There is a big opportunity for large brands/IP to coordinate their biggest fans via NFT ownership. Crypto is a libertarian idea – Rather than money issued by a nation and administered by central banks, crypto is a networked, decentralized, widespread system of value. The value in crypto and crypto art as such lies not in the product but in the network. Like cryptocurrency, crypto art is encrypted as it takes experts to understand it and relies on scarcity to bolster its price. Art is both a currency and a store of value and crypto art is no exception.

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