THE GROWING WORLD OF NFT
Non-fungible tokens are shaking up the art world, impacting the sports industry and attracting collectors to cough up millions
Football legend Pelé recently got immortalised in the form of NFTs (non-fungible tokens) on the Ethernity Chain platform. The unique digital collectibles have been created by Kingsletter, an Australian concept artist and Visual Lab, 90 per cent of the sales of which will go to the Pelé Foundation. Adidas will release a set of commemorative NFTs featuring Trevor Lawrence, the American quarterback, selected as No1.in the 2021 NFL (National Football League) draft to raise money for charity. In fact, Tom Brady, the seven-time Super Bowl champion, will soon launch his own NFT platform bringing together some of the biggest names in sports, entertainment, fashion and pop culture to work with creators and develop unique digital collectibles.
The above examples are just an indication of the rising number of NFTs within the sports industry and the rising mania surrounding them. But sports isn’t the only industry witnessing an adoption of NFTs; the art world is also quite shaken up by its adoption. NFTs, recently, came into major prominence when digital artist Beeple sold an NFT at Christie’s auction house for $69 million. The painting was bought by Vignesh Sundaresan also known as MetaKovan. Since then, several high-profile transactions have hit mainstream including a tweet by Twitter Co-Founder Jack Dorsey (sold for $2.9 million).
The NFT craze is being felt back home as well. “As per global industry estimates, the NFT market has surpassed $300 million as the total value of transactions and is growing rapidly. According to some estimates, there are about a crore of Indians with cryptocurrencies holding a value of about ₹10,000 crore,” says Nitin Sawant, Cloud Transformation Leader, EY India. Indian cryptocurrency companies are creating NFT ecosystems and marketplaces for local artisans, cricket aficionados, real estate registrations and many more industries where the unique collectibles tagged with the NFT digital certificates can be traded in a transparent manner using blockchain smart contracts.
But the question is: what are NFTs and what makes them so unique? NFTs are tokens created on a blockchain which by definition are non-fungible i.e. they are unique, indivisible and can’t be replaced with another such token. Each NFT has a computerised code implanted that makes it the only token with that specific identity. It is a unit of data stored on a blockchain that can represent a unique digital item like art, collectibles, ingame items, domain names, news articles, tweets, or even real estate. The best part about NFTs is that they cannot be stolen or copied.
Nischal Shetty, Founder, WazirX believes that NFTs will revolutionise the art collector and artist landscape and can be a boon for artists. The company recently launched one of India’s first marketplaces for NFTs, which will run on the Binance Smart Chain. “An artist who uploads a specific work as an NFT does not have to prove that he/she is the original creator. Our Binance Smart Chain would protect the copyrights and ownership rights of the artists with the help of their personalised smart contract. Additionally, artists have the right to reserve their royalty rights for their secondary sales which is an industry first development in this space.” Also, when a collectible is created, the creator is able to set a specific percentage as royalty for secondary sales. On WazirX as well, the artist/creator can set their royalty percentage while creating an NFT – the minimum royalty being 1 per cent and the maximum 5 per cent (on the price of the NFT).
Working in the art industry for the past 15 years, Aparajita Jain, Founder, Terrain.art, knows the strength and weaknesses of the $250-300 million Indian art market. “It lacks infrastructure, education institutions, accessibility and trust. While the world has thrived on opacity, this is the era of decentralisation. And blockchain gives that opportunity to art – transparency, ownership and value.” In a bid to build a virtual ecosystem to monetise and showcase talent, Terrain.art deals in digital art and works with younger artists. “Eventually, every work on Terrain.art will be NFTed, all ownership on our platform is via NFTs,” she says.
While NFTs can help artists to digitise, protect their works of art with a token and help them sell online, there are other industries that are leveraging NFTs. Core blockchain companies are creating NFT marketplaces for digital crypto games, where gamers can trade unique assets that allow them to progress to advanced stages of the game. NFT ecosystems have been setup for the world of cricket where celebrity players can tokenise memorabilia, authenticate personalised artifacts and create value for themselves and their fans. Industries like real estate are also tokenising unique luxury properties using NFT to create a rich crypto experience for buyers and sellers.
In fact, 1World online, is creating a Digital Content Marketplace powered by blockchain. The company is using a combination of DCM and NFTs to authenticate that a certain piece of content was created by a certain person. So, one can sell it but cannot change it.
In terms of regulations for NFTs, the debate is still on if the Indian Contract Act which acts for the sale/purchase of goods is applicable or the Securities Contract Regulation Act is applicable. “Also, many of the NFT marketplaces are operated outside India. Hence cross border rules like FEMA could be applicable which is still not clear, as it will be difficult to pinpoint the location of a NFT token in a blockchain system,” says EY’s Sawant.
In the absence of a robust physical infrastructure, we are trying to build a virtual ecosystem to monetize and showcase the talent that we have. Terrain. art deals in digital art and works with younger artists. Eventually, every work on Terrain will be NFTed, all ownership on our platform is via NFTs