Do NOT Sell NFT Crypto Art without reading this!
Non-fungible tokens seem to promise opportunity for digital artists as a whole. But it’s not all roses and sunshine for small artists wanting to get in on the newest market.
For years, digital artists have struggled to find ways to make money with their art. Usually this meant putting their digital art on physical products like t-shirts or canvass prints. Now, in an ironic twist, fine artists crafting physical works are trying to turn them into digital pieces just to capitalize on the NFT crypto craze.
Whether you’ve already tried minting NFT’s or you are just looking to start, I want to outline several problems for artists right now. I’m not trying to discourage you…Many of these will improve with time. I just want you to have realistic expectations.
#1: Unrealistic Expectations
The first problem I want to cover is artists…and in many cases people who have never made art before…have unrealistic expectations about the NFT market. Many think it’s as simple as tokenizing a piece of digital content and having billionaires line up to buy them.
If only it was that easy. The reality is that most NFT’s do not sell. Combine this with the upfront cost to make an NFT and you find yourself with a bad business model.
Those making money selling NFT’s are artists who already have a solid following. Beeple is an extreme example. But others have demonstrated that it takes an established following to get people interested in your art. If you haven’t already done that, minting NFT’s will probably be futile.
What you can do is start now. If your art has a potential audience, start building it up on social media. Instagram is probably the best place to start but Facebook, ArtStation and Twitter are also good ones to use.
As a rule of thumb, if nobody wanted to buy your art in some form before, they’re not going to suddenly want to now because of NFT’s. Build an audience and THEN begin gradually converting sales.
#2 High Gas Fees
Most NFT marketplaces use the Ethereum Blockchain. The largest are Opensear, Rarible and Mintable. There are other blockchains emerging as contenders but Ethereum is where most of the action is right now. The big problem with Ethereum is high transaction fees. It’s easily costing $100 to mint and list an NFT right now (and more when it’s sold). That means someone would have to be willing to spend some serious money on your art if you expect to make a profit.
Gas fees are the result of how Ethereum maintains decentralization. Decentralized marketplaces are a new concept that I don’t think a lot of people have fully wrapped their heads around yet. There’s no central authority (bank, company or government) running these marketplaces…which is exciting! But in order for Ethereum to incentivize individuals to do what’s necessary to independently verify transactions, there has to be a fee. That fee is known as the “gas fee.”
There are a few glimmers of hope though.
First, Ethereum will eventually transition to what is known as “Ethereum 2.0” through a series of upgrades. This will increase bandwidth on the network, which may help a little. But it will also move away from the “Proof of Work” method of verification to a “Proof of Stake” method. This is complicated stuff but I have a video which attempts to simplify it for artists.
Many sites like Opensea and Mintable allow you to upload your artwork and list it without incurring a gas fee. But this is just delaying the inevitable. The gas fees must be paid when the art is purchased. This is a good system because you don’t have to pay gas unless your piece sells. But it’s still not perfect.
Many are excited about NFT’s which can be sold on other blockchains like Cardano and Tezos. These are competitors to Ethereum and offer advantages. But, since most NFT’s are currently sold on the Ethereum network you may not find the big buyers on these other blockchains. Currently, they aren’t interchangeable either. But, for a fraction of the cost you can look into creating Cardano or Tezos (and I’m sure many others) NFT’s.
#3: Crowded & Unorganized Platforms
Top open platforms include Opensea, Rarible and Mintable. They’ve improved in some areas over the last few months but they’re still very unorganized. It’s difficult to search and filter for an artist you’re looking for…or even a specific type of art. That’s because the open platforms are not curated. Curated marketplaces like SuperRare and Foundation are only allowing a select few to join. This keeps it organized but also keeps most of us from participating.
The second part is crowding. There are so many people (I say people intentionally because so many are not really artists) minting NFT’s that there are 100 pieces of junk for every piece that someone would ever consider buying. This causes problems for legitimate artists looking to sell their work. If you mint on an open platform, your work will be burried among thousands…maybe millions…of other NFT’s that often are just junk.
How do you combat this? Well, if you have a decent following you can apply to sell art on sites like SuperRare and Foundation. These sites will help promote your work but will also take their cut of the profits. Otherwise, it will largely fall on you to promote your work, provide links to where people can buy them and otherwise market yourself.
#4: Little Support From Markets
Another effect I’ve seen from people not fully understanding decentralization is that when they need help, they have trouble finding it. We as a society are used to centralized markets. If I buy something from Amazon and am unhappy with it, I have a path of recourse. I can speak with customer service and can probably return it for a refund.
With a decentralized marketplace, the buyer (and seller) must beware. There is nobody out there to fix a bad transaction. If you accidentally sell something without understanding the fees associated with it, you are responsible for them. If you list a piece and don’t have all the ETH you need to complete the transaction, you’re going to lose what ETH you have and there is nothing you can do about it.
Far too few people on the marketplaces understand how they work and this has caused decent people to lose money. Blockchains follow the letter of the law (the “code”) to conduct transactions. They have no sympathy and don’t bend the rules if you don’t understand what you’re doing. And this can be expensive.
Do your research. Don’t keep excessive amounts of ETH in your wallet but understand you’ll have to have some ETH in your wallet to conduct transactions. Stay educated on how everything works or you could lose money and remember “THERE IS NO CUSTOMER SERVICE DEPARTMENT.”
#5: Copyright Theft
I don’t know how big of a problem this is. Nobody does. But what is keeping someone from stealing an artist’s work and minting it as an NFT? Not much.
The worst part of this problem is it can affect digital artists even if they aren’t minting NFT’s. In fact, popular artists who decide not to mint NFT’s are probably at the biggest risk.
But copyright theft has always been a problem if you’re posting your work online. NFT’s just add a form of incentive to steal artists’ works. Hopefully the gas fees will curb this.
If you want to sell NFT’s you should have an audience and you should be active in promoting where people can buy your works. Make sure you are providing clear links to your NFT market pages and expect people to reach out to you to confirm wallet addresses. If someone is doing that, it means they want to buy your work and are making sure it’s you they are buying from.
Many artists have locked down their accounts and taken their work off the internet to avoid being the victim of theft. I don’t know if this is necessary. One of the biggest benefits of blockchain technology is that every transaction is traceable to its originator. In the long term, it will actually be harder to steal work and sell it as an NFT than it is without them.
As an artist, I’m not overly worried about this but it’s something to be aware of and understand.
#6: Environmental Concerns
When I made my YouTube video on this topic, I got a lot of negative comments. But here I go again. I want to be clear – I’m not saying NFT’s are a big problem for the environment. I don’t think they really are in the long term. But the problem is a lot of people do believe this and there are some good reasons for it.
The Ethereum blockchain is INTENTIONALLY AND BY DESIGN inefficient. That’s the problem. The current system of authenticating transactions forces individuals or groups known as “miners” to compete via computing power to solve an equation and validate a transaction. Although many super computers (and I mean big ones) will compete to solve the equation, only one actually will. Then they will all compete to solve the next one and it’s simple luck that chooses a winner.
This simply means that a lot of electricity is going toward powering massive computers. Why? In a lot of cases, it’s so some guy can mint a stick figure and list it.
It’s not that digital art is bad for the environment. In most ways it’s better. It’s just that the entire system is, by design, inefficient and wasteful of electricity…which is still mostly created by burning fossil fuels.
A lot of people will throw out statistics about carbon footprints…either showing that this is not a big problem or showing that it is. I don’t trust any of these numbers and don’t think anyone can accurately tell how much carbon is being burned for NFT’s. But on principle, even the developers of Ethereum admit it is inefficient and less-than-sustainable.
The good news? When Ethereum moves to the “Proof of Stake” model that I mentioned before, it will be much more efficient and the argument will be mute. It’s just not clear when that will happen, which I outline in this video.
#7: Guilty By Association
The last problem is being guilty by association. Some people don’t like the idea of NFT’s. Some don’t like them because of the environmental concerns, others because they believe it’s a scam or a way for the rich to profit off of artists. In any case, some of these people might be fans of yours.
The last thing I’d like to see is an artist attempt to try their hand at NFT’s only to lose the following they already have. Some established artists have tried NFT’s only to quit after receiving death threats (extreme example I know).
Nobody knows your audience better than you. If you have a good relationship with them and believe they will support you in this exciting endeavor, then go for it. But do NOT alienate your supporters. Artists tend to lean toward being environmentalists and anti-capitalists. I personally believe NFT’s and blockchain technology are about as far from capitalism as you can get, but my opinion doesn’t really matter. Will your fans and audience support you? If so, this isn’t a problem.
I think NFT’s provide a huge long-term opportunity for digital artists. But as with all technology, they have kinks that need to be worked out. The biggest hurdle is understanding and wrapping your head around the concept of decentralized markets where no government, company or CEO is in charge. It’s exciting but is not without problems…and it’s different than anything we are used to.
To be successful with NFT’s, you still need to promote yourself and your art. You still need to make your art valuable to someone who wants to support you. You still need to understand the platforms and marketplaces you utilize to sell your art.
But, I don’t want to discourage you. If you are a digital artist looking for current updates on trends, including NFT’s, please consider subscribing to my YouTube Channel and signing up for my e-mail list below where you’ll be provided a Google Drive link to additional free content not available anywhere else.