Making the most of fine art as a digital asset

By Asif Kamal

Art is considered one of the most exclusive asset classes in the world. With an estimated $65 billion in annual sales worldwide, the fine art market is a sizable asset class and a popular choice for investors. Traditional fine art, however, has, up until this point, provided considerable barriers for the average investor, who had to deal with high ticket size, dependencies on exports, galleries, auction house fees, long holding periods, and upkeep charges.
On the other hand, fine art offered as digital assets, such as NFTs, is considerably more feasible. NFTs offer a great deal and more convenience than traditional modes as they can be minted, sold, and distributed indisputably. NFTs have benefited buyers and creators and are gaining momentum in the fine art world.

Blockchain Technology and NFTs Are Gaining Ground

The advent of blockchain technology enables the fractionalization of artwork into several parts (co-ordinates), giving people access to various paintings through NFTs that represent a portion of ownership. They can buy an exclusive artwork with a small initial investment and liquidate it in the secondary market anytime. The ability to show that the painting is genuine and who owns it will always be possible thanks to the blockchain’s storage of all transaction data.
Blockchain opens up new global audiences without physical borders. NFTs make the ownership of art transparent and straightforward to trace as they have an additional security layer and provenance verification process. The new-age mechanism enables access for everyone to make investments in tokenized assets. When assets are tokenised into an NFT, ownership can be transferred between individuals more effectively and efficiently. A New Investment Opportunity Investors are always keen on new opportunities to diversify their portfolios by investing in stocks, mutual funds, fixed deposits, etc. Fine art has beaten these conventional assets for decades and is open to public investment. Tremendous potential lies ahead for investors eyeing to earn higher (ROIs). Non-fungible Tokens have enabled investment in a wide range of popular global creations. A new perspective escalates investing in the eclectic artwork of renowned artists like Picasso, Banksy, VS Gaitonde, Sacha Jafri, MF Hussain, and many more. These NFTs are well-known, reputable, steady, and regarded as sound long-term investments. They also have a reputation
for growth and value creation, making them safer investment avenues.
An Advantageous Option for Artists and Collectors

Artists are considering NFTs as an alternative to conventional distribution channels. One of the main issues artists have dealt with over the years is the inability to monetize their artworks. The tangibility that NFTs have given to digital assets has allowed artists to sell their paintings while simultaneously establishing their reputations and presence in the art world. For instance, graphic design artist Beeple sold an NFT for $69.3 million, a record price for an artwork at an auction by a living artist. In the traditional art market, artists only receive remittance post the first sale of their artwork. They do not receive a share of the proceeds when those artworks are resold. As a result, artists
only get credit for a small percentage of the true worth of their works due to a lack of royalty payments. In the history of the fine art world, there has never been the chance to receive royalties or sell a portion of the paintings. However, artists can now automatically receive royalties of all future artwork resells in the case of digital assets. On the other hand, collectors can partially sell artworks while keeping the rest in their wallets to redeem at a higher price in the future.
Key Takeaways
NFTs remove all the constraints that fine art has traditionally faced, subsequently offering investment opportunities. These act as a perfect investment avenue for aspiring buyers who wish to invest in fine art that has been appreciated over the years. Thanks to the accessibility, fractionalisation of artwork, and, most importantly, the provision of earning royalties, NFTs are navigating a change in the fine art and investment landscape.

The author is the founder and CEO of Artfi