NFT Art Market Boom Is Overwhelmingly Benefiting Male Creators

Following the auction of Beeple’s NFT-based work of art at Christie’s, which eventually sold for $69.3 million with fees, the NFTs as a model of ownership seem to have been particularly attractive to up-and-coming artists. With fewer barriers than the traditional art market, it becomes easier to get your name out there, and earn some (serious) money too. Even blue chip artists like Damien Hirst are jumping on the NFT bandwagon.

Due to the incredible growth of crypto art, which shows no signs of slowing down, the NFT art marketplaces have boomed on Ethereum. Even the traditional auction houses have recognized this is something to capitalize on, aligning themselves right up against a potential paradigm shift. Christie’s offered the above mentioned Beeple’s piece EVERYDAYS – The First 5000 Days in a single-artwork auction, describing the current craze as “a moment in time where there could be a drastic shift—a demographic shift, a generational shift—when it comes to what excites younger collectors.” On the other hand, Sotheby’s has chosen to sell the work of Pak, a digital artist who has been working in the digital art sphere for over two decades, and it is unclear whether they are an individual artist or group of digital engineers. The works from the artist’s series Terminus have already been auctioned on the platform MakersPlace and NiftyGateways.

A crypto space where artists can sell their NFT-based art and potential buyers and collectors can own it through a blockchain entry, a NFT marketplace creates a digital token for it carrying unique identifiers, and preserves it in its digital locker/wallet. However, concerns have been raised that the NFTs are perhaps not so great for the environment, as the model consumes lots of energy. The majority of these platforms, which typically sell NFTs in timed online sales known as< “drops”, exist on the energy costly Ethereum blockchain and are created based on a process known as Proof-of-Work (PoW), which necessitates the use of large networks of processing machines that emit CO2. Selling just a single-edition artwork on Ethereum has a carbon footprint equivalent to a 1 hour flight.

Using PoW, the consensus algorithm that is hundreds of times more inefficient than the other ones, Ethereum is regarded as the most inefficient and ecologically costly. This is why activists are proposing alternative, more sustainable platforms that use Proof-of-Stake (PoS), such as Algorand, Tezos, or Polkadot. While these currently have much less volume than those existing on Ethereum, they hope that as more artists migrate to these emerging waters, this can encourage platforms, developers, investors, and collectors, to bridge to develop more ecologically friendly and transparent platforms.

Lindy Effect

Now, this NFT trend may seem precarious. Pessimists may argue that something will break with this process in future. It may. However, the history of cryptocurrencies and the so-called Lindy effect suggests that the technology may prove robust. The longer a technology lasts, the longer we might expect it to remain. NFTs have a short history of just a few years, but Bitcoin has now lasted two decades. Hence the technology looks set to remain and evolve, even if valuations can be debated.

What The Art Market Tells Us

The long-term history of the art market suggests that there may be a future for some NFTs since, for now, the NFTs look closest to the art market. However, there are some big caveats too. A detailed analysis of the history of the art market by Rachel Pownall at Tilburg University shows that the returns to art have been about 7% a year over the 1980 to 2006 period.

It’s important to note that’s an average and returns to art have varied, being quite strong in the 1980s, generally weaker in the 1990s, with prices often declining, and more robust in the 2000s.

Dead Artists And Scarcity

A crucial economic principle is that of scarcity. Water or oxygen may be necessary for life and therefore essential, but they don’t command high prices as they are abundant.

Certain cryptocurrencies have performed well, in part, because their supply is limited by design. Looking at art, the  works of Matisse are highly valued, but he died in 1954. Hence there won’t be any new Matisse paintings.

Indeed, most of the value of the art market consists of dead artists.

This is an issue for NFTs. Of course, they don’t plan to produce any more CryptoPunks beyond the 10,000 that are out there. Still, Larva Labs, who produced the CryptoPunks have also produced 20,000 Meebits. Then there are Super Yetis, CyberKongz, DeadHeads, Voxies and the Bored Ape Yacht Club. The list goes on. Mike Winkelmann, a leading NFT artist, is very much alive at 40 years old. He’s unlikely to stop producing.

The point is that because NFTs are successful, others are getting in on the action. Supply is increasing. It’s classic economics. That’s seldom good for retaining value. In addition to scarcity, we have second crucial point, selection bias.

Selection Bias

Even the average 7% annual return to art, as a rough number, may well be overstated. The reason is we have much better data on auction valuations than less glamorous and more routine dealer transactions.

The Quality Bar

Only art passing a quality bar makes it to auction. If something is found to be a fraud or its value declines in some other way, chances are it won’t be up for auction. If we’re just tracking the winners and seeing a 7% return, the return for the average person buying art may be quite a bit lower. Maybe they pick the wrong artist, or maybe an artist falls out of favor.

The auction houses chose what art to sell. That’s part of their usefulness and their criteria evolve over time. Indeed, some auction houses now sell NFTs, but of course only the more successful ones.

Tracking Winners

So art indices that track auction house valuations, because that’s where the good data is, likely overstate returns to art in general by just looking at the long-term winners. John Constable was certainly not the only British artist in the 1800s, but he’s one of only a few we still hear about.

This is a big issue for NFTs. Yes CyperPunks have done well for many holders with CryptoPunk #3100 selling for over $7 million in March 2021. But launching in 2017, this was among the earlier NFT projects. A lot of other NFT projects get a lot less attention and a worth far less. Importantly, a lot more NFTs are likely coming in the years ahead.

How To Buy at an NFT Marketplace

An NFT Marketplace is an online marketplace where artists sell their non-fungible art and where buyers can get them using cryptocurrency, like BitCoin. Most of the marketplaces also charge a transaction fee, and require an account with them (usually a free one)

Once an NTF is purchased, the buyer receives a token, a unique identifier usually containing proof of ownership, as well as information on provenance, authenticity, and author.

If the buyer decides to resell their NFT artwork, they can transfer it to a different marketplace if they are based on the same blockchain. Upon sale, they will also pay a royalty fee to the original artist.

If you’re wondering where you can look for NFTs to buy from or sell, here are the NFT marketplaces with the greatest volume and hence the greatest number of collectors and sales.

NiftyGateway

A premier marketplace for NFTs, or colloquially known as Nifties, NiftyGateway was founded with a mission to make them accessible to everyone. Teaming up with top artists and brands, the platform offers limited edition Nifties in drops that take place every three weeks.

Limited edition works are available for a limited time only. After the initial drop for a collection closes or sells out, you will only be able to get Nifties from that collection in the marketplace. Here you can find works by celebrated artists and musicians such as Steve Aoki, deadmau5, Grimes, Kenny Scharf and Beeple.

Anyone can apply to create with the platform. Tokens you purchase here will be listed under your profile and you can withdraw them to your wallet or an external account. At the same time, you can also import nifties from external wallets into your Nifty Gateway account.

OpenSea

The largest marketplace for ;digital goods, including collectibles, gaming items, digital art, and other digital assets that are backed by a blockchain like Ethereum, OpenSea is a decentralized marketplace that offers trading through a smart contract, meaning that no central authority ever holds custody of your items.

With over 4 million products in its portal, OpenSea lets you buy and sell crypto collectibles, gaming items, digital art, and other blockchain-based digital items, offering over 700 different projects, including digital art projects such as SuperRare and Makersplace.

Open for all, the platform offers artists an item minting tool to create a collection and NFTs for free, all without a single line of code. Believing that open, liquid marketplaces will help power these new economies, the team builds tools that allow any developer to build rich, integrated marketplaces for their digital assets.

SuperRare

A peer-to-peer marketplace for NFTs built on Ethereum, SuperRare describes itself as “Instagram meets Christies.” Still in early access, the platform onboards only a small number of hand-picked artists. However, through the form on their website, you can submit your artist profile and get on their radar for their full launch next year. All transactions are made using ether, the native cryptocurrency to the Ethereum network, which powers the platform.

When selling your artwork in a primary sale, you will get 85% of what the buyer paid for the token with the remaining amount charged as a commission by SuperRare. For secondary sales, creators receive a 10% royalty as a form of passive revenue if the artwork continues to get traded in the market.

Foundation

A creative community-curated playground for artists, curators and collectors to experience the new creative economy, Foundation was launched in February 2021 and has already had great success – the sale of the viral internet meme Nyan Cat, which went for $590,000, or their more recent record sale of Pak’s Finite, now worth $809,789.

Foundation are taking a creator-first, community-led approach by having artists select and invite other artists to join the site and mint NFTs. As for collectors, they can browse available artworks or host auctions. Some of Foundation’s artists include Nadya

Rarible

A premiere NFT marketplace, Rarible is a software allowing digital artists and creators to issue and sell custom crypto assets that represent ownership in their digital work. It is both a marketplace for those assets, as well as a distributed network built on Ethereum that enables their trade without a middleman.

While artists are required to submit their creations for approval, Rarible allows anyone to be listed on its portal. It also allows creators to specify their own percentage as royalty for secondary sales.

Rarible offers a range of NFTs, including digital artworks, memes and even parcels of virtual land. The platform uses RARI, their own cryptocurrency. The first governance token in the NFT space, RARI enables the most active creators and collectors on Rarible to vote for any platform upgrades and participate in curation and moderation.

Their ultimate goal is to evolve towards a Decentralized Autonomous Organization (DAO), where all decision rights will belong to the platform users. The tokens you create on Rarible can also be managed on OpenSea.

MakersPlace

A marketplace to discover and collect unique digital creations, MakersPlace empowers digital creators, such as artists, photographers, writers, and more, with the tools to protect and sell them to their fans and collectors. Open for all, they seek to offer a service that makes blockchain technology simple, and provide its benefits to all creators.

Seeing first hand the inequality in the immense value created by digital creators, and what they actually make, the team behind the platform founded it to change that.

For every sale, the platform has a 15% take on the value of the sale, while offering creators a 10% royalty as commission every time their art is re-sold on its platform.

NFT Showroom

A digital art marketplace, NFT Showroom is built on Hive, a fast and free blockchain that makes creating and collecting rare digital art simple and accessible. Open for all and welcoming all art styles and levels of experience, they claim to be easy to use and is an affordable alternative for creators, and collectors.

The only thing required in order to begin creating and collecting is to make a Hive account and Hive Keychain. To tokenize and purchase art, the platform uses a pegged token called SWAP.HIVE. The platform also gives creators two options to create tokens – Private and Limited Reproduction Rights.

NFT Showroom will charge you a 10% commission when you sell your art for the first time, while, for secondary sales, it collects a 5% commission and gives 5% to the original artist.

Decentraland

The first fully decentralized virtual world where users can create and make money on the things they build and own, Decentraland’s mission is to hand over control to the people who create and play in this virtual space. Using DAO, Decentralized Autonomous Organization, it allows the community tp propose and vote on policy updates, future LAND auctions, whitelisting of NFT contracts to be allowed inside the World, Builder and Marketplace.

Decentraland’s marketplace offers a range of digital assets, such as wearables, parcels and estates and names. You can buy and sell virtual lands in Decentraland and personalize them using properties built on top of it and the assets you own will be stored in a smart contract based on Ethereum.

Axie Marketplace

While other NFT selling platforms focus on art in that the pieces come from either established or emerging artists and creatives, Axie Marketplace is specific as it offers Axies. These fierce, adorable pets come from a universe of games where one can play with an Axie NFT. Over time, like in any other game, the experiences are built, and Axies can be used to earn cryptocurrencies.

Although Axies may resemble Pokemon, Tamagotchi, or some animal crossings, the difference is that players control the markets for in-game resources, creating a real, player-owned economy. To start playing and earning with Axies, you need to have a digital wallet, some ETH, and you are ready to go.

Aavegotchi (Bazaar)

Rare crypto-collectibles, Aavegotchis, live on the Ethereum blockchain and, similarly to original Tamagotchi, introduce the world of digital pets. Aavegotchis are playable NFTs, backed by the ERC721 standard used in other popular blockchain games such as Cryptovoxels, Axie Infinity, and Cryptokitties. The value of each Aavegotchi is defined by three attributes – spirit force, wearables, and traits.

Imagined as the ghosts of liquidated yield farmers fighting to return and bring honor to their guild, they introduce many innovations to the blockchain games, including dynamic rarity, rarity farming, voting, DAO-governed game mechanics, and open metaverse with smart contract interoperability.

To start playing, you just need to summon an Aavegotchi through a Portal or acquire one in the Baazaar by connecting your digital wallet.

Hic et Nunc

Hic et Nunc (H=N, Here and Now) is a place dedicated for experimental creators. The platform allows users to manage digital assets and serves as a public smart contract infrastructure on the Tezos Blockchain. OBJKTs on H=N can be minted and traded by permissionless means, creating an alternative crypto economy. It is, however, recommended to verify the seller’s information before making transactions. 

The H=N platform is eco-friendly; it combines cost-effective utility with the eco-friendly characteristics artists care about. It continues to develop, supported by the work of volunteer developers. It has no invite system or gatekeepers, which allows for a constant flow of images, audio experiments, interactive objects, and other media.

Institut

Developed by art market professionals, Institut is a premier art world NFT platform. The team behind the platform worked previously in curatorial and developer sectors and has built collections for the leading collectors. The platform’s mission is to broaden contemporary art audiences and empower artists by using new technologies.

Leading the new digital art renaissance, Institut follows emerging trends, shifting the way we perceive, collect, and interact with art. With the generational shift and growing digital economy, the art market is also changing, with NFTs and blockchain technology being a key for the future art world.

Institut aims to bridge the gap between the existing and developing communities in art by offering a place to focus on quality instead of quantity and providing a curated, innovation-only program. Engaging traditional and crypto collectors, Institut seeks to engender true artistic quality.

This summer, when Fame Lady Squad launched, claiming to be the first ever female-led crypto art collective, it quickly raised $1.5 million from people who wanted to support underrepresented artists. Weeks later, it turned out, the group was actually run by men.

After an uproar, the founders handed over control to a group of women, but the incident hinted at deeper gender disparities in the digital art market: Male artists are overwhelmingly cashing out on the NFT art boom.

Over the last 21 months, female artists accounted for just 5% of all NFT art sales, a new report released this month by research agency Art Tactic found. (Though, gender was unknown for 16% of transactions.) They also made much less money for their work, too. Grimes, the musician, is the only woman to crack the top 10 in dollars earned over that time frame. Three-quarters of all the money made went to male artists, according to the report, which analyzed market activity through Nifty Gateway, a digital-art auction platform.

An NFT, which stands for non-fungible token, is a certificate of authenticity that conveys ownership in a digital asset like an artwork. Unlike traditional art, NFTs can be structured in a way that allows artists to make money on sales in the secondary market. The crypto art market, while volatile, has had a record-breaking year, generating $3.5 billion in sales just in the first 9 months of 2021.

Men Dominate NFT Art Sales

Men have overwhelmingly benefited from the digital art boom over last 21 months.

Crypto art has been touted as a great democratizer of a notoriously walled-off world. It allows artists to sidestep many of the gatekeepers, such as collectors and gallerists that hold sway over most traditional big-ticket sales, showings, and museum exhibitions. One study found that 87% of artists showcased in major museums were male and 85% were White. Yet, this new data suggests the NFT market is failing to live up to that promise.

The continued gender disparities were on full display at last week’s NFT.NYC conference. Women made up only around 18% of speakers, said Jodee Rich, co-founder of the conference and chief executive officer of NFT.Kred, a platform for NFT brands and influencers. Just 30% of sponsor exhibits had women, versus 70% men, said Julie Lamb, the event’s volunteer coordinator. Attendees were overwhelmingly male, too, estimated Rich.

NFT art sales might see even bigger gender disparities because of who tends to buy in that market, said Amy Whitaker an assistant professor at New York University, who studies economic sustainability for artists. “Not to paint with too broad a brush, early HODL crypto investors skew toward what we might call tech bros,” she said.

Kelly LeValley Hunt, chief executive officer of Mint Gold Dust, an NFT platform that connects creators with collectors, said, at times, she’s the only woman in meetings or on panels. At the German CeBIT Tech Expo in 2016, where she was invited to speak, a male attendee handed her his espresso cup after he was done drinking it.

At last week’s NFT.NYC event, a group of men waiting in line to get into the conference asked if she knew what an NFT was. They apologized after she introduced herself. 

Last, make sure you’re purchasing NFTs because you love the work, believe in the artists, and want to support them and not because you want to be part of a fad.” It goes without saying that such a rapidly-growing industry is ripe for fraudsters, so the old adage of “buyer beware” doubly applies here.

No matter what, don’t feel pressure to jump in until you’re ready. Despite all the chatter, there are not many people actively pursuing these projects. There’s plenty of room for newcomers to jump in and join the madness.