Snoop Dogg. Jay Z. Trina. Nas. John Legend. Everybody who’s anybody in entertainmentseems to be getting into the NFT game. And if you’re a lover of art, a tech geek, a collector of all things digital, or someone looking to invest in something super-risky but very fascinating, the NFT playground might be the pandemic-induced escape you’ve always dreamed of. For those of you unfamiliar, NFTs, or non-fungible tokens, are basically unique electronic elements or items that can’t be replaced with anything else.
For example, you can trade one bitcoin, which is “fungible,” for another and you’ll still have a bitcoin on your hands. This is not the case with an NFT, which is one-of-a-kind. It can be anything digital, from a work of art to a song, to artificial intelligence (or AI), to virtual experiences, to social media updates. For many brands or entertainers, the NFTs are connected to extensions of their brands and they’re curated for superfans or people who love innovations in visual arts.
Trina, for example, released an artwork set on Jan. 23, in collaboration with artist Zevi G. The artwork features a chrome-hued character wearing printed tops and sitting in meditation positions, and there will reportedly be a rollout of customizable gems. The orange and blue colors within the piece were included “in memory of her beloved mother and little brother” who passed away.
Jay-Z's NFT was a piece called "Heir to the Throne" and was created by renowned artist Derrick Adams. It was connected to the 25th anniversary of his legendary hip-hop debut album Reasonable Doubt and sold for $139,000 at auction.
Particularly intriguing is the fact that everyday Black creatives are getting their piece of the NFT pie, offering unique works and getting bids in the upper six and seven figures. Iris Nevins, an avid collector according to CNBC, launched an NFT studio to support Black artists and made $140,000 in less than a year. Another Black artist named Vakseen accepted a bid worth more than $18,000 in April 2021, for the first in a series of digital Michael Jordan paintings, according to CoinDesk.
And just like with anything else on the cusp of greatness, Black folk are not only riding the wave of NFTs, they're innovating and cultivating communities for potential success. Black Enterprise reports that sales of NFTs reached roughly $25 billion last year, and Black investors, entrepreneurs, and artists are boldly and strategically coming to the forefront, with new findings that show some 23% of Black Americans own cryptocurrency, (which is "more than double of the 11% of white Americans, and higher than the 17% of Hispanics.”)
Will NFTs be a saving grace for Black creatives to gain access to resources, exposure, and capital for expanding and elevating? Will NFTs become a dominating part of stock portfolios and brand negotiations? Maybe.
So, What’s the Big Deal About Making Money With NFTs?
Well, one-of-a-kind items obviously have values that can increase over time, like a rare piece of art, a limited-edition sneaker, or a collectible baseball card. NFTs are basically like those but are part of and supported by a cryptocurrency blockchain called Ethereum. (And to go back a step further: A blockchain is an open, distributed register that records transactions in digital code.)
The blockchain hosts the ownership rights, and we all know what happens when you actually own something, especially if it’s rare, it is attached to a major news event, celebrity, or popular community, and has the potential to impact the creative world in huge ways. You then hold the key to offering something of great perceived value to the highest bidder (or keeping it for yourself, just to have bragging rights and support the works of artists and creatives you love.)
Still don't see the big deal? Well, take hip-hop icon Nas, who recently partnered with a platform called Royal to sell his streaming royalty rights to tracks, “Ultra Black” and “Rare." (The offering actually crashed the site after only a few days of launch.) He's also working with DJ Florian Picasso (yes of that artist's lineage) for a backing track for a collection of NFTs. And who doesn't love anything that Nas puts his hands on? The visuals alone might make even the biggest Nas hater raise an eyebrow in wonder.
What’s With the Hype Around NFTs?
Much of the conversation around NFTs centers on digital art, but fascination—and investments—have spanned past that. It’s truly the cool factor and the allure of the collectors’ rush that can somewhat be likened to the sneakerheads who revel at owning the last pair of Js that Jordan released while still in the league. Artists and musicians are especially keen on NFTs since, again, there’s the option to exclusively own or sell a one-of-a-kind work that can exponentially increase in value over time. Also, there’s a feature where the owner of the NFT gets paid a percentage each time it’s sold or transferred.
Oh, and there’s also the actual money factor. For example, someone paid $390,000 for a 50-second video by music artist Grimes. Another paid $6.6 million for a video by digital artist Beepie, and one of his pieces was auctioned at Christie’s. There was the “Gucci Ghost,” which was being sold for more than $3,500. Another teenager has reportedly amassed a multimillion NFT collection in just one year. Another Snoop enthusiast reportedly paid more than $450,000 to be his "virtual neighbor" in an NFT. (And just remember, these dollar amounts reflect the "equivalent" of what was really paid in cryptocurrency. We cover more about that below.)
How Can I Create or Invest in an NFT?
There are marketplaces, or what Motley Fool, a leading personal finance platform, called “the Amazon of the NFT world,” that facilitate the selling and buying of NFTs. (Here’s a link to a few of said marketplaces.) According to Motley, once you’ve created a digital file (work of art, graphic, or another digital item), you must choose a marketplace, “mint” the item, and upload the file. You can also, depending on the marketplace you’ve chosen, select the appropriate royalty options (in order to collect fees over time.) Once “minted,” the item can be listed for sale, and you can set certain details into play such as what types of cryptocurrencies can be used for payment and how long the item will be available for auction.
And, of course, there are fees associated with transactions, just like when you trade stocks and bonds or you cash out that 401K. You also must be the proven owner of the copyright for whatever you’re selling.
If you’re simply interested in buying an NFT, you’d research the same aforementioned marketplaces (CNBC reports that OpenSea is a “big one”), and buy them via one of those platforms. You’ll need a “wallet,” which can be downloaded to your computer or phone just like any other app. The “wallet” stores your assets and protects access to them. Typically, wallets are created once you sign up for a particular marketplace, and more often than not, you can use the same wallet for multiple marketplaces.
What Are the Critics Saying About NFTs? What Are the Implications?
Of course, there are critics and concerns about NFTs, especially with their seemingly growing popularity. Writer Luke Savage called them outright crap. "And, like most forms of bullshit in America — think WeWork, the Fyre Festival, or any number of other venture capital-hatched disruption rackets — they’ve come packaged in a phony populist language of community and an even phonier rhetoric of innovation," he added via Jacobin. Savage indicates that “at best” NFTs can be understood as “speculative investments in which a privileged few can wring money from something of no redeeming social benefit.”
There are also environmental concerns since, according toTime magazine, the digital process consumes energy. In fact, the global banking industry is cited as consuming “about 263.72 Terawatt hours per year in energy.” Also, the creation of blockchain, i.e. “mining” requires more than a bit of labor, making it “energy-intensive.” (To put the impact in more everyday terms, this particular Joanie Lemercier NFT art “drop,” reportedly used the equivalent of two years of energy in its production and release.)
These issues are especially important, especially as they relate to minority communities, considering the wealth gap, the energy insecurities and deficiencies in energy access in Black and Brown communities, and the disproportionate economic and quality-of-life impact global warming has on those communities. Many investors or users of color who are riding the NFT wave might want to take these facts into consideration, do more research, and act accordingly.
Will you be buying and selling your own collections of Black art, tweets, songs, buttons, or GIFs for Black empowerment through NFTs—building communities of wealth, connection, and creativity? Well, if you do, please be sure that, as with any investment, you do your research, consult a financial advisor or expert, and proceed with educated caution. For the culture.
Featured image by Luis Alvarez/Getty Images