The beginner’s guide for the traditional art collectors.
The propaganda of crypto art continues to reach wider audiences. We can see more customers joining the crypto space to buy another NFT (a non-fungible token, which can be described as a crypto card). More platforms appear to offer tokenization services and a marketplace for new artists to mint their works and sell their tokens to crypto collectors. I know this tech vocabulary may sound overwhelming for those who have no experience with the new art & tech community. As a pioneering art gallerist, who has been the first to introduce NFTs to traditional art collectors and exhibit this movement’s protagonists since 2018, I want to share this guideline with you.
Now, how do you start as a collector? Where do you look for works? How do you identify what is worth your collection? Where do you go to buy it? How to buy with cryptocurrencies? How do you store the work? How can you view your digital art collection? Do you pay tax on this? How do you resell it? And how do you deal with this if you lose access to your Metamask account?
So many questions, so little answers one can give. As a beginner collector, you are lost in this space. A few years ago, it was easier to get around and pick up some knowledge and identify some crypto art stars, as there were few. In 2021, with the whole craze around NFTs, more blockchain platforms, online galleries, a new type of NFT art dealers run to offer similar things. Millions of artists flooding all the blockchain platforms, new and old, trying to sell their work, all seem very overwhelming. Media & Clubhouse talks initiate huge FOMO to everyone new, and some people don’t even have the expertise to talk about it. Any psychologist can agree — if one makes decisions based on fear, one can only lose. My advice, please identify the reason first- “why do you want to collect NFTs/digital art”? You may have thousands of reasons, and there is no right or wrong one, except it should NOT be based on the fear of missing out. So once you know why you start your digital art collection, stay calm, rational, do your research, read this guideline and contact the right people if needed. As an insider, I try to help you with complete information that you will not find anywhere else. Yes, for free.
I. What language do they speak? Terminology.
Let’s start with the terminology of a non-fungible token, known as “NFT”. NFT is an entry on a blockchain, the same decentralized digital register technology that triggers cryptocurrencies like bitcoin to give a high-level description. Unlike regular cryptocurrencies, NFTs cannot be directly exchanged with one another. This is because no two NFTs are identical. Whereas Bitcoin is fungible, meaning each bitcoin unit is similar, NFTs do not have this property. Instead, NFTs are unique digital tokens.
Think of them as digital cards. Each card contains detailed information, including the purchaser’s name, the date and the information about the underlying etc. This data makes it impossible for {the digital cards} to be traded with one another.
Most NFT tokens are built on Ethereum mainchain, using one of two Ethereum token standards ERC-721 and ERC-1155 (more details in this Coindesk article here). Ethereum chain allows software developers to deploy NFTs and guarantee they’re compatible with the larger ecosystem, including exchanges and wallet services like MetaMask and MyEtherWallet.
Typically, an artist uses an existing blockchain platform to “mint”, or, in simpler words, generate an NFT. The newly minted NFT usually doesn’t have the graphic file (i.e. jpeg image) or other data that make up an artwork. That data is stored somewhere else, most of the time, off-chain. It could be stored on a centralized server, e.g., the Interplanetary File System (IPFS), a peer-to-peer network that duplicates a file across many machines, acting as a form of decentralized storage. The NFT will contain a unique signature that points to that file’s location on IPFS. The Non-Fungible Token Bible is an excellent source to learn more technical details.
Why is it so revolutionary for digital artists? Apart from the obvious provenance, the main benefit is that the blockchain technology enabled creators ‘direct’ access to the collectors without dealing with the auction house or a dealer. Blockchain platforms allowed artists from all over the world to enrol on their marketplace and generate the NFTs. The critical part here is that the artist keeps a share of the profits he/she makes from sales from the secondary market, so-called ‘Royalties’. The artist’s fee from each sale on the secondary market can also be programmed into digital artwork. ‘Democratization of the art world is to eliminate the middlemen where blockchain marketplace substituted an art dealer, and take same commissions (some more, some less) for permitting the artists to trade and show their works. The accurate picture is that artists get royalties from the secondary market but still pay to be shown. Collectors should also be aware of the royalties and commissions that platforms take because it may influence you in the future once you decide to sell your NFT.
Some artists have an established market in the art world. They mint NFTs by themselves and transfer the tokens to the collector’s wallets directly, avoiding any platform interaction. But this is a scarce kind.
I. Get familiar. Browse around some marketplaces.
Where do you look for NFT’s? This guideline is for collectors, not for flippers (speculators), so I will share the top 10 platforms that offer different service kinds. The beginner collector can get familiar with various artists. Depending on your budget, preference to collect the unique NFT’s or editions, taste, style and more factors, this list has it all.
1. OpenSea.io
2. SuperRare
3. Rarible
4. Makersplace
5. Async
6. Nifty Gateway
7. Knownorigin
8. Artblocks
9. Hic et Nunc
10. Ephimera
(USA) OpenSea is the world’s largest digital marketplace for crypto collectables and non-fungible tokens (NFT’s), including ERC721 and ERC1155 assets. You can buy, sell, and discover exclusive digital assets of any kind, not particularly art, but it has a variety to offer, even decentralized real estate. OS also provides one an opportunity to build your webstore powered by OS. Opensea can also be used to view your digital art collection; even if you bought your NFTs elsewhere, you could display your entire NFT collection holistically once you connect with your Metamask wallet in OS. This is an excellent support to any collector to view your collection that you shopped around at different marketplaces. This platform is suitable for any budget and can satisfy any collectors wallet and taste. https://opensea.io Budget: any
(USA) SuperRare is a marketplace to collect and trade unique, single-edition digital artworks. Superrare doesn’t sell editions, limits the number of new artists allowed to onboard weekly, and restricts the artist to produce no more than 4 NFTs per week. It helps keep the program more readable to the beginner collector, and its interface has a similar look to the traditional auction place, which many prefer. The price floor is high, and if you want to get the artists’ work but can not afford one on the SR, you can search the same artist at the other platforms, e.g. Knownorigin or Rarible, which offer editions and more democratic price level. If you wish to sell one of the items from your collections, you also have to bear the costs. https://superrare.co Budget: $$$
(RU) Rarible — another marketplace to tokenize and trade with its currency RARI, primarily for editions NFT’s and the price floor is relatively low. You can find many artists minting on SuperRare unique works, and doing editions on Rarible. The interface is user- friendly, but there are so many works that its again challenging to keep track of. I would advise searching for a particular artist here and see if he/she has anything to offer on this marketplace. Also, you can see the ranking of top sellers; I would not use it as a reference to top quality ones. Bear in mind, once you have the work and wish to re-sell it, Rarible asks the seller to pay the transaction fees. Budget: $
(USA) MakersPlace — offers both unique and edition digital creations, a marketplace that brings many artists from the traditional art world. The MakersPlace tries to curate its program and drops digital books or other collectables with lockable content, visible only after the purchase. It has both editions and unique works, so the price varies accordingly. You can see many overlapping collectors from Superrare. https://makersplace.com/#whats-makersplace Budget: $$$
(USA) Async Art or is a different kind of platform and has an experimental element that stands out from others. Async offers to create, collect, and trade programmable art: digital paintings split into “Layers”, which you can use to affect the overall image. The artists introduce the artwork with several layers, so the collector can choose to buy the main body of work with an additional layer, which varies, therefore give more power to the collector to decide and pick the work (layer) he/she likes the most. I did not collect anything on the platform, but I think it has strong potential with the Music industry. https://async.art Budget: $ varies
(USA) Nifty Gateway (this one became immediately famous because of its sponsors and current owners, the billionaires Winkelvoss Twins). It defines itself as ‘the premier marketplace for Nifties, which are digital items you can truly own.’ The platform is very commercially oriented, benefits from the marketing activities and high-end clientele. Therefore, claimed mission initially, “to make Nifties accessible to everyone”, isn’t true anymore. Some of the works are overpriced, and the interested parties push the promotion. For the collectors, it’s anyway worth checking and see for themselves. If they want to pay with a credit card, NG offers this service. The process of collecting, though, is not that simple. You need to buy your NFT with a credit card and then transfer it to your Metamask account outside their wallet to view your artwork afterwards. Everyone can judge by his/her own experience whether he/she likes it or not. However, if you want to pay with a card or fiat, its easier to buy with the art gallery, saves you a headache. https://niftygateway.com Budget: $$$ varies
(UK) KnownOrigin is an artist-driven platform that makes it easy for digital creators to authenticate, showcase and sell the artwork. KO offers editions, doesn’t limit the onboarding process for artists and has a low-price level that can fit any budget. KO is a good alternative for the ones who cannot afford the unique works on Superrare or, for some reason, did not like Rarible or Opensea. The interface is easy to navigate, but the amount of artists is enormous; the copyright check of all the works is a question mark, so it may take a while ‘to find a needle in the haystack’. https://knownorigin.io/gallery Budget: $
(USA) Artblocks is a platform that hosts generative projects for the production of verifiably deterministic outputs. It makes sense for the collectors who like generative art. The founder cares about the curation of the artistic program. The number of editions can be shocking for the traditional art world (600–1000 works), which sell at relatively low prices. The auctions are usually accompanied by colossal anticipation, so ordinary people won’t get a chance to buy those works at a lower price. The direct sales distribute fast to ‘flippers’ and speculators, who make an easy profit on reselling in minutes. You can shop for these works afterwards on the same old Opensea and maybe acquire one at a competitive price if you are lucky. Budget varies on whether you are fortunate or not to win the robots bidding. Generally, good artworks to collect, but most people have to buy from the secondary market on Opensea. Budget: $$
Hic et Nunc art– a new kid on the block. Translates from Latin as ‘’Here and now”. Very different from all the above ones. Decentralized digital art assets, a public smart contract infrastructure on the Tezos Blockchain. IPFS NFTs minted and traded by permission less means. From the collector’s point of view, it is very tempting to collect here as it is the most affordable platform with an exciting artists list. Still, the process of collecting is painful, that you really have to be passionate about art to go through the whole process. First, you need to register a different kind of wallet. Instead of a common Metamask, you may use Kukai e.g.; you need to find a way to buy Tezos and top your Kukai wallet. Then, you go to the platform, feeling happy and ready to collect. You choose the work you like, you push the button ‘Sync”, which stands in the regular action verb as ‘Buy”, and it connects you to the Kukai wallet, and the rest of the transaction process is somewhat similar. It may take a while, but worth the journey, as some works by some artists you won’t afford to buy anywhere else. www.hicetnunc.xyz Budget: $$$
(USA) Ephimera — mainly focusing on photography and video. Here you can find longer videos as the platform offers more extensive storage for the artist. The team aims to curate a space for artists, collectors and galleries so that you can see more content from the gallerists as well. Ephimera launched in November 2020 during the #ArtProject 2020 art and tech expo with the Vancouver Biennale and expanded as the market demands. They sell exclusive single editions only. You need ethereum and Metamask to collect on this platform. Budget: $$$ varies.
I. Now, how do you set up your wallet?
As I explained above, most of the platforms are Etherium based. For the amateur, I would advise installing the Metamask digital wallet (Chrome browser plugin). You can then top up the wallet via Coinbase, a most popular exchanger, to buy ETH or another cryptocurrency. After topping up your Metamask account, consider you also need (50–100$ to cover the potentially high gas fees). So, you are ready to collect and hit the first platform to make your experience of buying NFT’s. Start carefully acquiring something with a decent price range first to understand the process. Try click on the Fox icon (Metamask) to confirm the intention to buy and approve the gas fees. Try to view the purchased token by all means first to ensure that there are no bugs/errors and that it displays correctly, and you can see it listed under your ownership. This process only can be learnt by doing it. Practice helps.
How can I save myself some time and still start collecting?
There is a person who doesn’t want or doesn’t have time to deal with the whole process in every market. Many don’t want any exposure in cryptocurrency and don’t like to pay additional fees on the exchange to sell USD or buy ETH. There are companies/art dealers who offer the service to tell you how to collect and repeat the same information that I write for you here. Mostly charge you the advisory fee or add the costs on top of the artist’s price that they recommend to you. The most transparent is the one who communicates to you the fee for their service and allows you to buy directly. Its fine structure, and one can prefer it this way; you can save yourself many hours and drama of bidding wars that crypto artists and the platforms so much appreciate. Another way is to contact the art gallery or an art advisor with a minimum of 3–5 years of experience in this digital space. Ask them for the recommendations. Some galleries represent most of the artists and also willing to help. I believe it is the safest and the fastest way to deal with NFTs as a beginner. The art gallery will be able to transact the NFTs in a standard currency like USD or via credit cards and buy for you or send you the NFTs to your wallet directly. You can avoid plenty of headaches, and there is a real person to ask and look in the eyes to.
I. If you heard that NFTs influence global warming and can melt Swiss Alpes?
Yes, it would be best if you considered this concern. I am sure you heard from many media channels highlighting this environmental issue. Since NFTs use the same blockchain technology as cryptocurrencies, they could also use a lot of electricity per transaction. Many artists decided against NFTs and didn’t support this. Simultaneously, some argue that: if everyone stops creating NFTs now, it won’t have a significant effect, as the cryptocurrencies like ETH are used not only to generate NFTS. Therefore it’s like a train that goes anyway, regardless of whether you are a passenger or not. There are also many initiatives working to mitigate this issue; some propose to examine NFT-scaling solutions that will reduce gas fees and theCO2 footprint. Some integrate % that will be donated to green initiatives to reduce CO2 print. But most of them still don’t have a perfect solution.
II. How can you store and view your NFTs collection?
Well, like cryptocurrencies, NFTs are stored in digital wallets (though it is worth noting that the wallet does specifically have to be NFT-compatible), as I mentioned already Metamask or Kukai for Tezos (there are more, of course, but those are the easy-to-use ones). You should always remember your password and seed phrase (24 random words, given to you at the registration) to access your wallet. You can save the password on your computer. But the seed phase you probably shall write down and keep it in the place where you feel most secure (bunker or safe in the bank or under the mattress) is entirely your choice.
To view your NFT collection, you can log in with your Metamask account via Chrome on opensea.io and push “My Profile” to view all the artworks you have under this wallet address.
If you want to view your collection in the room, multiple solutions are available, from neural frames to digital canvases. The fastest, you can use your standard TV; if it has a USB portal or internet connection, you can plug in USB with your saved Jpegs or connect to your opensea.io account and display it.
I. Conclusion. “Don’t judge a book by its cover”
Like all assets, supply and demand are the key market drivers for price. Due to the scarce nature of NFTs and the high demand for them from gamers, collectors and investors, people are often prepared to pay a lot of money for them. I want this article to be taken as a free personal guide to those who chose to collect NFTs and need help with understanding more about the market. I, by all means, don’t encourage people to go and buy NFTs. It’s an individual choice. Seeing many articles by traditional art critics, I believe one should first: study, make an experience/research and only then — judge, not vice versa. Many people have spent years building a fair art market in the crypto space, and many talented artists just came out on the surface thanks to blockchain technology. Press tend to write only about the ones who came to the crypto art weeks ago, and their reason is more or less the obvious one. NFT world has its good and evil, the same as the traditional art market. So, I do encourage collectors to study, do homework and then make the judgement. As they say — “don’t judge someone else taste’. As for those who don’t want to collect digital files, we still offer physical works, signed by the artists in the old traditional way. The work that you can hang in the living room to detox from the digital world.