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NFTs: big money for artists and a scam for consumers?

Olive Allen, a New York-based visual artist, was one of the first artists to start minting NFTs (non-fungible tokens). Even though she is not grabbing millions like Beeple or Grimes, NFTs help artists like her to jump-start their careers. Yet, there’s a Stanford professor who considers NFTs to be a scam.

Many artists are now embracing the opportunity to earn money outside of the well-oiled machine of the art industry. Just look at what is happening in the music world, with niche artists grabbing millions of dollars just by minting their songs.

Painters like Allen may not be earning millions yet, but NFTs provide an opportunity for them to sell their digital art and even to kick off their careers. Meanwhile, well-known and new NFT platforms are looking for ways to make NFT art more accessible to the masses by, for example, accepting credit cards as payments instead of only trading in cryptocurrencies.

But NFTs are very new, and it’s only natural that people are cautious. Stanford professor Alex Stamos even called NFTs a scam, saying that if you are buying an NFT, you are probably getting ripped off.

Doing NFTs for fun

Allen calls herself one of the pioneers of the crypto movement. She has been creating in the NFTs space since its inception in 2018. During the interview with SuperRare, she said she has always wanted to make things more playful and festive for others and herself. And so Allen does, and earns some money along the way. I asked her what her art is about.

Olive Allen.

“It is about now. I believe that an artist has a duty to depict and comment on the current situation in the world and personal life and its reflection to that broader picture. So all of my art is very current and explores current events, moods, and generational shifts, which is very important for me to convey. I think right now life is happening in technology, so that is why I decided to breach that gap and merge art and tech,” she told CyberNews.

Allen does not take herself too seriously and makes fun, as she emphasized, in a kind manner, of those who are viewing NFTs only through the return and investment potential lens.

“A lot of the time, I do comment on that in a very playful manner. So I am making fun but in a very kind manner,” Allen said. Just after Beeple’s piece was sold for $69M, she minted a collection called Sheeples. There are Fine TrashArt Sheeple, Clubhouse star, Eco-friendly Sheeple. There is also one who has been very afraid to miss out on the most hyped NFTs, but then it came to realization and dropped its wallet.

“The collectors are coming after those Beeple pieces all the time. A lot of Sheeples are in the space indeed,” Allen commented.

Sheeple collection by Olive Allen on Opensea

Indeed, as Hatem Hanchana, COO of Utopia Genesis once told CyberNews, collectors are trying to find the next Banksy, some “cool stuff”, and keep it. As mentioned, Allen started minting before it was cool and hyped. She heard about NFTs at a crypto conference in Asia and realized this might be important. She wanted to be a part of it.

“I thought this was going to be big. I was interested and wanted to explore more,” she said. Allen used to play video games and noticed that people valued in-game items, but there was no way to prove the ownership at the time.

“Blockchain technology was game-changing for that. I did not know the terms back in the day, but I had the feeling that was what was missing, and that is going to be big. I wanted to get involved,” she said.

In a way, NFTs jump-started her career as a painter.

“Even though I have been a painter for as long as I can remember but, in fact, I am just getting my sort of a break in the art world. I am happy that I have the opportunity to do what I love. I am happy that it is getting some attention from the people I admire and respect, from galleries, artworld, art critics. It is very flattering, and for a young artist, it is a blessing. And NFT space gave me that break surprisingly.”

It is not only Allen who benefits from the NFT space. She says she has witnessed many amazing stories of how NFTs are helping artists to sustain a living doing what they love. 

Artists prefer fiat currency over crypto

The problem is that many artists don’t want to have anything to do with cryptocurrencies, Marc Beckman, the cofounder of NFT digital artwork platform Truesy.com, said during the Collision conference.

“All of the artists that I had conversations with prefer fiat currency as a form of payment,” he said. Cryptocurrency is sometimes a barrier for collectors as well, as they want to ride the new wave of digital art but don’t feel comfortable enough to deal with blockchain.

“We are using credit cards as our primary form of payment, thus allowing us to reach huge fan bases of people who collect art, fashion, music. Also, reach people who might not currently own bitcoin and might feel funny or reluctant trading fiat currency into cryptocurrency. Of course, we will accept all forms of cryptocurrency, but for us, our primary payment method will be credit cars so that we can appeal to everyone,” Beckman said.

Based in New York, he is now seeing a rush from the crypto wells. During the past months, investors have made a lot of money in cryptocurrency, and they are securing their assets by purchasing NFTs.

At least in New York, he said, NFTs have become a medium that artists are embracing and will continue to embrace.

“I had a discussion with a fantastic woman who is a very high-profile street artist in Rome. She was so excited about engaging from her 2D representation of artwork into 3D animation. Hopefully, she wants to go into VR as well. The talent level and the quality level of artwork will be at a higher level. It will stretch boundaries in ways that have not been seen before,” he said.

Galleries are embracing NFTs as well, and it should be a natural extension for luxury houses too.

“I think that luxury houses are going to integrate this type of experience and product offering just as seamlessly as they put other brand extensions into their portfolio. It gives them another format of expression and artistry at a very high level with a meaningful revenue generation for the organization,” he said.

Looking at artwork in a NFT marketplace
© Shutterstock

“Most NFTs are scams”

Speaking at a Collision conference, Stanford University adjunct professor – and former chief information security officer at Yahoo and Facebook – Alex Stamos covered topics from legislation around cookies to consumer intelligence, blockchain to hacking, and privacy laws to NFTs. 

It was the latter that caught the eye.

“Most NFTs are scams. If you’re buying an NFT, there is a good chance you’re being ripped off,” said Alex, who is working to improve the security and safety of the internet through his teaching and research at Stanford University.

NFT jpeg assets, for example, are not stored on the blockchain, he pointed out, with the ‘hash’ all that is protected. “The asset has to be stored somewhere else,” he said, noting that the legal system is behind the curve on this. There may not be any laws that say you can’t, for instance, modify the asset by one pixel and sell it over again.

“NFTs are a scam. People are getting ripped off left and right. I’m very much against people buying these.”

What you should know before buying

Simply put, NFTs are like rare collectible baseball cards or action figures that leverage digital scarcity, ledger technology, and exciting new advances in security to give value to what traditionally have been non-physical items.

NFTs, according to the CEO of Multihouse, Michael Tessler, can be a risky investment at the moment. Yet, early adapters may very well see gains similar to those who were early miners or collectors of crypto.

“Those looking to invest should take their time and try to understand the technology. Not every NFT asset will have value. Look for uses of the technology that are sustainable,” he told CyberNews.The hype around NFTs, unsurprisingly, attracted crypto-grifters and scammers. So, alongside some doubts about whether a certain NFT is worth buying comes the fear of purchasing a fake piece of art. In the physical world, the analogy would be buying a replica instead of the original painting. It may provide the same visual experience for some, but it might not just be worth the money you paid.

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