Why Collectors Buy NFTs and How to Get Started | Artsy (2024)

Jan 25, 2022 8:04PM

Last year saw the meteoric rise of NFTs (non-fungible tokens)—so much so, Collins Dictionary named NFT its word of the year for 2021. The growth of cryptocurrencies, together with the COVID-19 pandemic, paved the way for a surge in digital collecting.

Christie’s record sale of Beeple’s digital artwork Everydays — The First 5000 Days (2021) for $69.3 million in February 2021 put NFTs on the front page of newspapers worldwide. And more headlines emerged with the sale of a set of nine of Larva Labs’s Cryptopunks for $17 million and a selection of works by 18-year-old Seattle-based artist FEWOCiOUS for $2.2 million.

Other auction houses followed suit, driving further record sales by other native crypto artists including Pak, Mad Dog Jones, Sarah Zucker, XCOPY, Matt Kane, and Rhea Meyers. Yet the majority of NFT sales occurred through dedicated NFT marketplaces such as OpenSea, SuperRare, Rarible, Nifty Gateway, MakersPlace, KnownOrigin, Foundation, and others.

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While eye-popping auction prices have propelled NFTs to the fore of public consciousness, the market-focused narrative tends to shroud the foundational technology and philosophy at the core of an innovative digital art movement led by artists and a community of collectors. Companies like Verisart have facilitated artists entering in the NFT space, helping creators utilize blockchain technology to mint, certify, and sell their work. From January 25th to February 8th, Verisart is partnering with Artsy on “22 for 2022,” a sale of 22 NFTs by art-world and crypto-native artists, including Shepard Fairey, Recycle Group, Troika, Pindar Van Arman, Jennifer Rubell, Vhils, and more.

As creators continue to innovate on the applications and formats of NFTs, a dedicated community of collectors continues to expand across the globe. To gain insight on what’s driving collectors to acquire NFTs, we spoke to some of the major players in the space.

In an age when people are spending more time online and younger generations are increasingly entwined with the internet, the rise of digital art as a mode of expression is a natural progression. However, the prominence of NFTs specifically is foregrounded primarily by a growing interest in the utility applications of the blockchain—a decentralized public ledger technology that tracks and records transactions (the foundation of cryptocurrency). NFTs are unique cryptographic tokens that represent assets—such as digital artwork. These unique codes are powered by smart contracts (similar to a deed) typically run on the Ethereum blockchain, creating an open-access public record of provenance, price, ownership, and authenticity. NFTs also introduce scarcity to digital assets, giving creators the ability to sell—and collectors to own—inherently replicable works in finite amounts.

For many early adopters, collecting NFTs was not about the money that has brought a wave of new speculators to the market. Instead, they were drawn to the way blockchain technology empowers creators.

Colborn Bell is the founder of the Museum of Crypto Art (M○C△), a decentralized art exhibition platform that hosts a permanent collection of 200 historical NFT artworks. Housed in a virtual museum on Somnium Space, the institution represents a pantheon of NFT artists, including Trevor Jones, XCOPY, Dmitri Cherniak, Frenetik Void, Pak, and undeadlu. M○C△ bills itself as a “testament to those who dared to believe in a better future that prioritized sovereignty, market access, and freedom of expression in the arts.”

For Bell, crypto art is a visual language that communicates the ideals of cryptocurrency and its potential to cultivate a social and financial revolution. A former investment banker who became disillusioned with “crony capitalism and the powers that be,” Bell began investing in Ethereum in early 2017. That summer, he became an early collector of MoonCats, one of the first Ethereum-based NFT collectibles.

Currently, Bell’s personal collection totals somewhere around 2,000 NFTs, the majority of which he plans to donate to the museum over the next decade. “The reason I collect crypto art goes back to the reason I’m here to begin with: I believe cryptocurrency is a more superior and powerful technology than the current monetary system that we have,” he said. Thanks to use cases like NFTs, cryptocurrency, once associated with illicit activity, has already come a long way in terms of public perception. NFTs have effectively shown the value of crypto to be what Bell calls “an exercise in self-sovereignty.”

Most significantly, the opportunities presented by the technology to facilitate free expression and autonomy for artists are the primary drivers for Bell’s—and many other early collectors’—engagement in the space. “It’s a way for you to express yourself without censorship,” he said. “It’s a free and open-access network by which you can upload your creativity and prove your ownership over it.”

Miguel Faus, a filmmaker based between Barcelona and London, whose NFT collection includes notable PFP (profile picture) projects including a CryptoPunk, a Bored Ape, and Cool Cats, shares a similar sentiment. As an artist, the concept of NFTs “clicked instantly as a long-awaited revolution that would mitigate a lot of the problems that creators of all kinds have faced on the internet since its inception.” He explained, “I think that’s the promise of Web3 in a nutshell: redistributing value towards creators and audiences, rather than towards intermediaries and gatekeepers.”

While digital art has been around since the 1960s, how it was bought, sold, and displayed ultimately didn’t stand the test of time. “NFTs have made it possible to own a digital piece of art,” said Faus. He cited Walter Benjamin’s 1935 essay “The Work of Art in the Age of Mechanical Reproduction,” in which the philosopher addresses the paradox surrounding photography in an age when artworks can be readily reproduced. “The Blockchain has come to solve this problem with NFTs: a JPEG by Beeple remains fully reproducible and non-scarce, but an NFT that he minted is unique, scarce, and non-fungible, hence making the artwork ownable and valuable.”

Jeremy Zahora, an early collector of NFTs who has been involved in the space since 2018 and owns works by Mad Dog Jones, Pak, Beeple, FEWOCiOUS, and Refik Anadaol, posited that “artists have so much more autonomy now than they ever had in the past. Artists can decide when and where they will drop their art, as well as sale prices and royalty rates.”

He continued, “I think any time a new artist enters the space, it opens it up to a whole new audience. I love to see traditional artists entering the space as they quickly see the benefits—royalties for future sales amongst so many other things.”

While NFTs primarily exist in the digital realm at present (NFTs do not have to be digital assets, but the technology pairs particularly well with the medium), much of their value lies in the human connections they facilitate. Many seasoned collectors consider themselves patrons of the arts and are directly engaged with the artists they collect.

For TokenAngels, an Italian collector who comes from a family of art collectors and owns the historically significant Homer Pepe NFT, the value of collecting is “linking your name to an artist or a work. It is timestamping a special moment; it is expressing yourself and telling the world who you are. It means supporting a cause, an idea, or a human. NFTs empower both the artists and collectors; that’s the real revolution.”

He continued, “There are two kinds of players in the space, the real collectors and the traders and flippers. I am a collector, so I advise you to buy what you like…what gives you emotion.” He encouraged collectors to “try to find those artists that are real, whose works you imagine will have an impact and be remembered in the future—those that are taking risks and especially those that still find time to talk to you and explain their work.”

Miami-based collector Eduardo Burillo approaches NFTs in the same way that he does with more traditional contemporary art. Burillo notably gifted a CryptoPunk (CryptoPunk 5293) to ICA Miami last July, marking the first NFT to join a major museum collection (Burillo sits on the board at ICA). “When I buy something, I’m always looking at it as a piece of my collection that I’m going to hold onto or even donate in the future,” he said. “Sometimes there is a right time to sell, and that’s something that has to be done with the same kind of finesse that we would handle with any other art form.”

Burillo expressed that one of the major values of buying NFTs is the opportunity to learn more about the space, though even more compelling is the opportunity to engage directly with artists.

“The nice thing about NFTs is that the artists tend to communicate with their fans—they are part of a community that is very engaging,” said Burillo. “Reach out to them. I reach out to artists and have conversations with them, and it educates me on who they are. When I have that background information, I am more inclined to be a patron for their work.”

As an experienced contemporary art collector, Burillo explained that his considerations for exploring and deciding which NFTs to acquire are essentially the same: He learns about the artist’s background and career trajectory; their narrative and historical significance; and the messaging of the work. “Primarily, I would say collect things that resonate with you, and the messages that you feel have a purpose,” Burillo said. “Outside of the technology itself, I think that the most important thing is to collect what touches your soul. Connect with artists who you want to be associated with, and look for things that make you happy and transmit joy.”

When navigating the NFT space, Jeremy Zahora looks for artists with a unique and identifiable style and narrative. He cited Roger Dickerman’s podcast Origin Stories as a resource for learning more about NFT artists. “These types of interactions provide such amazing insight into the artists, their journey, their personality, and just who they are as people,” he said.

So far, blockchain technology has proven particularly beneficial for creatives who feel ostracized by the traditional art world and have sought out NFTs as a means to tell their story and engage with a global audience. “The art world can be very elitist, and all of a sudden, NFTs are giving a platform to other people to express themselves differently with different tools,” said Sibylle Rochat, founder and director of London-based art advisory firm Rochat Art Consultancy.

The most powerful crypto artworks are those that “speak to the power and promise of the medium,” said Bell. “Crypto art opens up the conversation to a broader array of individuals and perspectives, and we have a market system that can reward them. That’s where the medium really shines.”

“Absolutely anyone can become a collector of NFTs. I think this is part of what is so exciting about the space,” said Zahora. “There are NFTs at all price points across a number of blockchains. Even the biggest artists in the NFT world often have drops that are quite affordable.” He continued, “Artists provide opportunities for collectors to land pieces without taking out a mortgage. There are drawings on the major platforms that are lottery-based, so if you love a piece, enter the drawing and keep your fingers crossed!”

While virtually anyone can collect NFTs, collectors rushing into the space with no prior knowledge of cryptocurrency and the sole intention of making money are likely to be disappointed, as scammers see the same potential to turn a profit. “There’s a lot of rug pulls,” said Zahora, referring to a common crypto scam where investors are conned out of money—specifically surrounding projects that garner a lot of hype and speculation. Transactions on the blockchain are immutable, so sending funds to the wrong address means that you won’t be able to reclaim them.

“I think it’s important for people to realize that security is their responsibility,” Zahora continued. “In the crypto space, there isn’t an 800 number on the back of a card you can call if you mess up—so you really need to be mindful of what you are doing.”

Most importantly: Never share your recovery phrase (or seed phrase) with anyone; don’t connect your wallet to sites that you don’t recognize; and don’t respond to DMs with offers that sound too good to be true.

“You have to remember that you are your own custodian of this work,” said Bell. He explained that collectors and artists need a basic understanding of blockchain technology, such as how to keep public and private keys safe and secure, and recommended that “if you believe in its artistic merit and value, you have to have a familiarity with the technology or have somebody alongside you that you fully trust that is going to help and guide you.”

“Whenever someone asks me, ‘How do you get into collecting art?’ I always tell them the same thing: ‘Write a check that hurts,’” said Burillo. “It forces you to learn about it, to educate yourself. And that’s what culture is; that’s what art brings you. Primarily with NFTs, just get familiar with the technology.”

NFT primary sales, or “drops,” are conducted either in cryptocurrency although some platforms like Nifty Gateway allow collectors to use a credit card. If you buy an NFT with Ethereum, you first have to purchase cryptocurrency through an exchange such as Coinbase.

“There are tons of resources in the space for crypto and NFTs,” said Zahora. “Utilize the information that is out there—even Coinbase has some great training videos on crypto that I highly recommend to newcomers.” Faus recommended the NFT Bible on OpenSea as “a must-read for anyone entering the space.” To get started with buying NFTs via Artsy, visit our help center.

A distinguishing factor surrounding NFTs, in comparison to traditional fine art, is the community surrounding them. “When you buy an NFT, you are joining the community of collectors that have also collected that artist,” said Zahora. “I make sure the energy of that community is in line with my belief system too.” He continued, “there are some really knowledgeable people in the space, so it’s worth it to take the time to identify these people and pay attention to what they share.”

“One of the easiest places to connect with NFT artists and their communities is NFT Twitter,” said Zahora. NFT artists and collectors also interact on Discord and other platforms like Clubhouse. Zahora advised that collectors “take the time to really explore and don’t be afraid to participate in the conversations that are occurring.”

While the technology is still very new and the trajectory of the NFT space remains to be seen, the current momentum suggests that the applications of blockchain technology in the arts will only continue to grow. As notable contemporary artists such as David Salle, Tom Sachs, Petra Cortright, JR, and Roe Etheridge increasingly enter the space, that momentum doesn’t seem to be slowing down any time soon.

Browse “22 for 2022,” Artsy and Verisart’s curated NFT auction of 22 leading artists.

Continue the discussion by joining Artsy’s Discord, where our community explores all things NFT.