NFT in art business: real opportunity or short-term novelty? A theoretical approach

Abstract

In recent years the blockchain and the digital innovation has caused paradigm shifts across very disparate sectors of our society (Rangone and Busolli, 2021). In such a context, the non-fungible tokens (NFT) more specifically have started to transform everything from finance to art (Kashevarova and Starikova, 2022; Qin et al., 2021). There’s good reason to suspect that, once their full potential is realized, almost no industry will be left untouched. Although the technology has been around for a while, NFTs took off in 2020 and have been growing in popularity ever since, particularly in the digital art world (Habrel, 2022; Dragos Popescu, 2021; Trautman, 2021). In that year, the rapid growth of the NFT sector and its numerous mentions in mainstream media surprised many in the crypto space. In 2021, many NFTs from the most popular NFT collections, such as crypto kittens, crypto punks, and Decentraland land plots, were sold for insanely high prices. According to DappRadar (2021), a service that records the buying and selling of NFTs, the trading volume of NFTs reached a record high of $22 billion in 2021. This success can be attributed to mainstream businesses entering the NFT industry. As today’s hottest digital assets, non-fungible tokens have taken the arts and investment worlds by storm. Some claim that NFTs are the future of artwork and that the next Vincent van Gogh will be a computer programmer. Many see NFTs as viable, profitable investments tailored for younger, digitally savvy buyers. Detractors wonder if NFTs are a short-term novelty. Through a theoretical approach, this paper investigates the scenarios and the possible criticalities of the NFTs’ spread in the specific sector of art business.