The NFT market is estimated to be worth $80 billion by 2025. Creators will play a big role in this market. NFTs provide a bette mechanism for creators to monetise their content.
The creator mints a set of NFTs for their community. The NFTs could be sold in a single collection, or with multiple collections (e.g. for tiered access). An NFT holder gets access to exclusive content from the creator. This could be membership to a network, a weekly newsletter, early access to future collections or videos. The NFT could enable the creator to earn a percentage of all future sales — one of the advantages of using NFTs over fiat.
But many creators are against using NFTs to sell their creations. I’ve spent the last few days trying to understand their reservations. I talk about the key ones below and how they can be addressed in web3.
Their artwork may be stolen
Artists like Devin Kurtz and Zilch have had their art stolen. Historical pieces have been turned into NFTs by strangers, who’ve then made money off the NFTs. This is a problem in web3 and there is no straightforward solution.
The inability to verify the content behind an NFT is the main issue at play. There is really nothing stopping me from uploading a photograph taken by someone else and minting it as an NFT. These cases are mainly being handled retrospectively at the moment — i.e. a creator gets in touch with a platform like Opensea if someone has minted an NFT with their content. We need better solutions for authenticity and verified ownership.
This can be addressed in two ways:
- Centralised version: Platforms like Opensea offer verification on accounts. But critics argue that this is the anti-thesis of web3: centralisation.
- Protocols: there’s room for a protocol to verify ownership of content. If someone uploads a jpeg, you could pay to have it by verified by a decentralised network. In a world where verification exists, verified sellers could fetch a higher price and be able to set off the costs of verification.
The gas fees when minting an NFT on Ethereum can be prohibitively expensive. For a creator who is exploring web3 this is definitely a blocker. Exploring new technology comes with enough burden. Additional costs don’t really help the cause.
Thankfully, this is the problem that’s getting the most attention. Layer 1’s like Solana and Layer 2’s Polygon are paving the way for cheaper transactions. For example, the volume of NFTs sold on Opensea and based on the Polygon blockchain has increased from 17.5 million in July 2021 → 79.2 million in January 2022.
Monthly transaction volume of Polygon NFTs on Opensea
They want to protect the environment
Many creators believe that the blockchain consumes a lot of energy. They do not want to play a part in making this worse by using NFTs or tokens for their creations.
Energy consumption on the blockchain has its nuances - best explained by Nic Carter’s essay. As above, transactions that are cheaper use less energy.
The curse of abundance
NFTs have lowered the barrier to entry for art. Anyone can mint an NFT by uploading a JPEG on Opensea. The demand for NFTs is also off the charts. This means that we’ll see more supply. Creators, and more specifically artists, aren’t used to commoditised supply.
With NFTs, it is easy to “create” — you need to upload a JPEG and mint your NFT. Or at least so it seems. But this is not completely true. A valuable NFT takes time and effort of a different kind. Bored Apes command a high price not because of the creation alone, but because of the community that it allows you to be a part of. Starting, nurturing and growing a community is more effort that you might think.
NFTs will cater to broad range of creators — photographers using NFTs to sell pieces, community first creators and musicians to name a few. My view is that the NFT market will reach an equilibrium where, on average, the value of an NFT is a function of the creator’s creativity and their effort. This effort might be split between creating a community and creating content; most creators are used to the latter.
Poor user experience
It’s still difficult, convoluted and complex for a creator to move into NFTs. The jargon and tech speak doesn’t make it easy. The number of scams and rug pulls leads to anxiety for for creators and their consumers.
We need to solve this too; otherwise, creators and their followers will lose faith in web3. We’ll need to focus on education and technology to solve this. Education requires mechanisms for creators and their followers to enter web3 in a safe manner. They need information that is easy to digest and trust worth. DAOs like Odyssey are trying to solve this. On the technology side, some problems are easy to solve — for example, hardware wallets to prevent fraud and theft. Other problems like rug pulls are more difficult — you need to verify the creator of an NFT which is at odds with the pseudonymity that web3 promotes.
There’s a lot to worry about if you’re a creator who is new to web3 and NFTs. If you’ve been treated badly as a creator, it’s even harder. But I’m an optimist and I believe we’re early in this space. There are lots of good people around who are always willing to come forward and help. I’m hopeful that NFTs will provide better outcomes for creators and their most loyal fans. In the meantime, if you know of a creator who’s apprehensive - hear them out, sympathise and help them get into web3 in a safe manner. It’s the best you can do.