It seems like every time you go online nowadays you stumble upon some kind of opinion or news piece on NFTs. Clubhouse, LinkedIn, and Reddit board discussions on this topic are trending on the daily, with investors, digital artists, as well as curious day-to-day people sharing their thoughts, expertise, and speculation on this new craze. But what exactly are NFTs, and what’s the big fuss about them all of a sudden?
Here at Cutting Room Music, we’ve hopped on the internet and gone on a research spree to understand exactly how NFTs work and try to explain the sudden surge in popularity from the perspective of both artists and investors, to finally eliminate any confusion surrounding this subject. We’re sure most of you know at least a little bit about NFTs by now, but might struggle to understand the small details and the mechanism behind this new wave.
With this article, we aim to address every little detail about NFTs in the most understandable and consumable way possible, including their presence in the music industry. So let’s jump right in.
What exactly is an NFT?
NFT, or a Non-Fungible Token, is a unit of data stored on the Blockchain that certifies a digital asset (in this case, an image or song) to be unique and therefore not interchangeable. Confusing, right? You can think of these tokens as unique signatures of artists who create the artwork, gif, image or even a song. The digital artist has to buy a token for their content to certify its authenticity. You can only buy NFTs using cryptocurrency, like Ether, for example.
Once an artist stamps their content with an NFT, it becomes one of a kind. Whether it’s an image or a song, it can be copied and shared on the internet, but only the original will have the authenticity stamp. Think of famous paintings, for example. Arguably Van Gogh’s most famous work is The Starry Night, and even though the world is filled with replicas and posters, there’s only one original with his name on it. Same case with digital artwork barring a non-fungible token.
When it comes to music, artists are getting really creative. Huge names in the industry like Grimes, Linkin Park’s Mike Shinoda, Deadmau5 and Shawn Mendes, just to name a few, have all jumped aboard the NFT train. Whether they’re producing music on Twitch and stamping them with an NFT badge, or releasing extra songs from their albums as NFTs, artists in the music industry have been keeping busy trying to release unique content and making a name for themselves even in the crypto world.
NFTs are not interchangeable like Bitcoin, Ether, or any other cryptocurrency. Both money and cryptocurrency are fungible, and can be exchanged, but NFTs are unique, and can’t be swapped for something similar. That’s what makes them so sought-after. Once you buy one, you’re the sole owner of the unique digital content. Just like cryptocurrency, NFTs are stored on a digital ledger (Blockchain), where you can see the buyer, seller, and transaction info, however, the data is encrypted and safe, in a similar fashion to cryptocurrency.
As An artist, should I venture into the world of NFTs?
Many artists have found success selling their artwork or music as NFTs, with some of their content selling for exuberant prices. Famous NFTs are even auctioned online: Christie’s auction house sold a digital artwork by Beeple for a record-breaking $69 million. Grimes auctioned off her digital art pieces for 5.8 million within 20 minutes, while electronic musician 3LAU sold 33 digital albums for a staggering $11.6 million in NFTs. Kings of Leon are also releasing their upcoming album as an NFT.
If you’re not an established artist in the market, chances are your content won’t be sold for an insane amount of money as soon as you start creating it. However, there are a couple of websites where you can start uploading your work if you’re just starting out, like Rarible. On Rarible, you can upload both original musical compositions or artwork, or combine the two. It’s really a great starting point if you’re looking to hop into the NFT trend. SuperRare is also an awesome website worth checking out.
Should I invest in NFTs?
The whole buzz around NFTs came from the idea that if a piece of content is unique, its value could increase as time passes. The reason NFTs are so popular now is because everybody who’s either creating or collecting believes it to be the next best thing. But what happens if people decide NFTs aren’t cool anymore? It’s still pretty early to tell if this is only a phase or something that’s here to stay.
According to a new report by NonFungible.com published by The Wrap, more than $2 billion was spent on NFTs during the first quarter of 2021, an increase of roughly 2,100% from Q4 2020. That’s insane. Clearly, there’s an NFT bubble at the moment, but that is expected when a new technology starts becoming popular on the market. For the NFT market to remain stable, investors need to think long-term when buying these unique pieces, instead of trying to make a quick and easy buck short-term. Long-term investments are usually what sustains the market when trends contract.
Now that you know how NFTs work and their place in the market, it’s up to you whether you want to venture into this field as an artist or an investor. Here at Cutting Room Music, we’re deeply fascinated by this new art form, and if you’re ever in need of an original composition as an NFT, you know where to find us. Plus, if your a skilled digital artists who wants a backing track to your NFT artwork, we can deliver on that, too.