NFT and art: is the hype justified in 2024?

Now that the market for non-fungible NFT tokens is showing signs of recovery, this topic is back on the agenda. However, should we seriously count on NFTs?

NFT market environment

Donald Trump's victory in the U.S. presidential election was a powerful growth driver for the "big" cryptocurrency market and the non-fungible token market. In November 2024, NFT trading volume grew to $172 million. The numbers may not look too impressive, but it's worth remembering that the trading volume exceeded 100 million last May. These figures gave grounds for optimism to the majority of experts.

The digital art segment of the NFT market is also recovering — if it occupied only 7.9% of the market at the beginning of the year, by November, it had already taken 22.4%.

However, while there are grounds for optimism, things are far from simple.

New collections are not popular

The statistics published by NFTevening and Storible on NFT collections released in 2024 look frankly dismal:

98% of new (released this year) collections are dead — there was not a single transaction on them for three months (September-November).
In 64% of collections, less than 10 token mines were used.
98% of collections failed to reach 10 secondary market transactions in the first week.
84% of collections had a historical maximum price equal to a mint.
Only 0.2% of collections were profitable.

The key problem is audience fatigue and market oversaturation. When more than three and a half thousand collections are released every month, it is tough to attract attention in any way.

NFT collections don't work for promotion

Considering the above data, it is obvious that it makes no sense for artists to consider releasing NFT collections as a means of "promotion" and brand promotion. Such a collection will most likely die without being noticed by anyone.

Already well-known artists have a much better chance of success in the collection. At the same time, guarantees do not give a promoted name, as the history of the collection "Super Punk World". Although the collection was created by the famous artist Nina Chanel Abney, the audience's adverse reaction forced the creators of CryptoPunks to abandon its release. Nevertheless, the famous name behind the collection allows us to hope for at least a surge of public interest in the tokens at the initial stage.

However, the fact that NFTs cannot utilize the hype around them to promote themselves does not mean that they are useless for artists.

NFT benefits for artists

Much of the benefits that artists can derive from non-fungible tokens are entirely independent of the hype or even the overall NFT market:

Ownership tracking. Blockchain allows for transparent and secure transfer of ownership rights when selling works. While the regulation of tokenized real art objects is complex, it works perfectly with digital works. This is important for many collectors and potential buyers.
Access to a global marketplace. NFTs allow artwork to be sold worldwide, regardless of restrictions or national borders.
Ensuring exclusivity. NFTs are an excellent tool for realizing "limited editions" and digital works in a single copy. And blockchain can provide transparency to prove that "extra" copies do not exist.
Ensuring royalty payments. The artist receives money not only when the initial NFT minute occurs but also when the token is resold on the secondary market — a small commission on each transaction is charged in favor of the creator of the collection.

An additional advantage can be considered the high availability of NFT for release. Art creation is central to the costs of launching an NFT collection. But if the artwork is already available, everything comes down to the cost of directly creating tokens, and in most cases, you can manage for a few hundred dollars.

However, do not forget that non-interchangeable tokens can threaten the artist. Cases of theft of digital works of art for the release of collections have not been isolated for a long time. For example, more than 30 attempts to steal "under NFT" artworks of artist Chris Moschler have been recorded — collection creators tried to link the artist's works available online to tokens without his knowledge.

A practical but limited tool

The above data shows that it is not worth considering non-interchangeable tokens as a "magic wand" that can lead an artist to success. Despite the prospect of market recovery in the foreseeable future, it would be naive to count on serious profits seriously.

However, NFTs retain potential as an additional tool for the established artist to optimize buyer relationships and simplify income generation.

In addition, even artists who are not interested in releasing their collections will benefit from monitoring the NFT market. After all, the NFT market may take over an artist's business without asking for their opinion.