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What’s Stopping Museums From Following The NFT Trend?
Non-fungible token or NFT is the rage of the art world at the moment. Artists around the world have found a new digital means to monetize their work and maximize their reach. These non-fungible tokens are created using blockchain technology and are attached to a piece of art ranging from a painting, a photograph, video, music, among others.
The world recently witnessed a sale of a whopping $69 million for an NFT (non-fungible token) that was created by digital artist Beeple, creating ripples in the world of art. Well, more such multimillion-dollar sales are expected to happen in the coming days, indicating that NFTs are here to stay.
While NFTs witnessed a rise in popularity, museums, on the other hand, saw financial downfalls, as the number of visitors and donations declined due to the COVID-19 pandemic. Many museums even resorted to selling treasured artwork to keep the budget in check.
While there have been many instances where museums have issued their own tokens, can NFTs rake in the revenue required to keep the museums running? It has been over six months since the world saw the NFT disruption; however, a majority of museums are yet to jump the wagon. Let's find out why.
NFT is a complex technology
People who run museums excel at encompassing art and education. NFT is a different ball game altogether, it's different from art and is more inclined towards cryptocurrency than typical artworks such as sculptures or paintings. The main difference between NFTs and cryptocurrencies such as Bitcoin and Ethereum is that NFTs are unique and can't be interchanged like their counterparts.
Knowing how to handle and evaluate NFT and quickly auctioning them is something that might not come naturally to people who handle museums. Besides, NFTs are bought and sold alongside cryptocurrency, which is not the go-to transaction method for many organizations. Moreover, the legal complications involving crypto transactions could be one reason for museums to avoid the NFT fad.
NFTs Do Not Guarantee Big Payoff
The connection between owning a piece of art and an NFT associated with that artwork isn't straightforward. NFT is a separate asset derived from artwork and can be minted and sold without having to retain ownership of the actual artwork. It means that the owner of the art won't necessarily make big money from the affiliated NFT.
The financial value of a non-fungible token is subjective and depends on what a buyer is willing to pay for it. Creators who retain control over their work can mint NFTs affiliated with them. Once the artwork goes to the museum, its value becomes less clear. So, even if a museum holds valuable artwork, there's no guarantee it will fetch big money.
NFTs Could Be Risky
While the whopping sales numbers might get your attention, there are numerous cases of NFTs losing their worth. Similar to cryptocurrencies, NFTs have a volatile nature, and betting big on them could end in huge losses.
There have been cases where NFTs witnessed a dramatic downfall. Depending heavily on NFTs to generate revenue could be risky. Also, it's still uncertain whether NFTs will fit the bill for art museums, as they aren't physical or works of art.
NFTs Are Meant To Support Artists
One of the reasons the NFT market affiliated with art has surged in demand is because buyers see buying and holding NFTs are a way to financially support the artist. There's a possibility that NFT buyers are less likely to shell out money if they find a middleman in the fray, as their funds might not directly reach the artist.
That said, NFTs are still new to the world, and it remains to be seen whether they can boost museums financially rather than making a new space for virtual museums. Even banks that saw crypto-currency with skepticism have understood its role in the coming days. We might see NFTs get to that level in the world of art.