Before NFT happens, the appreciation form for an artist’s or collector’s work was usually transactional or one-way. For example, purchasing art through a gallery. Collectors rarely have direct access to the artists. In fact, it is often the galleries that try to cut-off on possibilities like this for one reason or another.
NFT offers the two-way connection. Everyone connected to the internet can access NFT collection on various global marketplace platforms. One example, in SuperRare, an ID @colborn is the collector with the largest transaction. He purchased 204 NFT works produced by 17 creators for $166,264, his biggest purchase was worth of $44,226.
In an interview with DailySocial, NFT collectors agreed that ownership and direct support for creators by purchasing their works are NFT’s superior value, which previously did not exist in the physical world. Thus, it is not just any form of investment.
For creators, the NFT also benefits them due to a fair royalty system applies when the work is sold on the secondary market. This had never happened before.
“NFT brings out ownership. In the physical world, every purchase will get a certificate. If it’s lost, it’ll be hard to prove that we are the owner. With NFT, everything is traceable. The future idea for artists and creators in general is the creation of ideal conditions as there has been inequality in the traditional system, where the gallery is bigger than the artist. NFT will set it on the same level, hopefully that’s the case,” Detty Wulandari, a local art and NFT collector said.
Detty herself was a fan of art, long before NFT exist. Various works of art, paintings and sculptures by artists have adorned all the walls of her house. She started learning about NFT autodidactically since April this year, considering that there were not many Indonesian-friendly literatures at that time. The rooms created by users of the Clubhouse social audio platform also help her understanding NFT better.
Due to her high curiosity, she tried various global NFT marketplace platforms. To date, she has used more than 10 platforms to buy NFT. Those include Nifty Gateway, Rarible, SuperRare, OpenSea, KnownOrigin, Mirror, Kalamint, also objkt has captured her attention.
“The UI and display are very influential, especially for new collectors. I’ve tried everything, and personally like OpenSea, it’s easy to use also for purchasing and reselling. It is like an aggregator, all my NFT collections under Ethereum–even the ones outside of OpenSea can be displayed. Unfortunately, it’s not otherwise.”
Detty is not alone, Irzan Raditya, Kata.ai’s Co-founder and CEO, has been very invested in NFT since August 2021. He personally is a collector of real goods, such as superhero comics published by Marvel & DC Comics, and action figures. He said, there are lots of things about NFT he need to learn, considering the fast pace of innovation in the web3 world.
“Currently I am still learning and exploring several NFT collections with various utilities on the roadmap, ranging from pure PFP (Profile Picture), P2E Game (Play2Earn), DeFi (Decentralized Finance), and several collections that guarantees IRL (In Real Life) utility.”
Moselo’s Co-founder and Commissioner, Richard Fang shared the same reason. As the form of fondness of a creator, purchasing the works is part of the support. Moreover, he believes that NFT will be used as membership access and associated with physical goods as well in the future. “So, the potential is quite extensive,” he said.
Market education is necessary
Irzan also mentioned, the local NFT platform has blown a fresh air to mainstream the NFT in Indonesia. He also emphasized that the platform can help educate the wider community about NFT, both by paving the way for creators and IP owners to trade their work. Also, making it easier for collectors to buy a collection using local payment methods, such as bank transfers and e-wallet.
“Hopefully, the adoption will be broad. Also, the price will be more competitive i order to reduce entry barrier,” Feng added.
KaryaKarsa’s Co-Founder and CTO, Aria Rajasa spoken as an NFT collector. He said, the NFT development in Indonesia is still premature, it’s not really different with the global market.
Therefore, even though there are local platforms, he encourages creators not to limit themselves to the scope of their target market because there are many local creators who are successful in the global market. “Maybe in the next 5-10 years it will be more mainstream,” he said.
Aria uses the OpenSea platform to buy NFT that he considered “speaks to me”.
“Some of my favorite creators have their own style of work that I like and that is the reason why I collect their works. It’s fun being a part of the creator’s tribe.”
Meanwhile, Detty mentioned about the essential of market education. In fact, she still finds many people who misunderstood the jargons used by NFT players using the phrase “auto cuan” and other similar words. “It’s a misunderstanding, it doesn’t mean that people who buy it are definitely rich, or the creators can automatically sell out. Education is very important.”
Detty also expects the current local platform will always prioritize decentralization spirit as promoted by NFT. This means that everyhing is at the same level, unlike the previous concept that suppressed artists/creators. In other words, the rules for commissions and so on need to be as fair as possible and not for one-party only benefit.
“If the marketplace is new but the orientation is purely business-oriented, it will eventually put pressure on artists. It’s such a bummer because it’s not going to be okay in the long run.”
Detty’s statement is true about investing in NFT. An interesting report by Chainalysis shows that there is no guarantee on NFT investment.
OpenSea’s transaction data shows that only 28.5% of NFT bought during minting and then sold on the platform makes a profit. Moreover, buying NFT on the secondary market from other users and reselling it, however, makes a profit 65.1% of the time.
The advantage of selling NFT basically depends on the existence of the community and word of mouth strategy. Almost all successful NFT projects are fully supported by fans who make reviews on Discord and Twitter as a form of promotion. It occurs because it has been designed that way.
Creators typically start promoting a new project long before the first asset is released, gathering a dedicated fanbase that helps promote the project from the beginning. Furthermore, he will reward those dedicated followers by adding them to a whitelist which allows them to buy new NFTs at significant lower price than other users during the minting period.
Whitelisting isn’t just a nominal reward — it’s a guarantee of a much better investment return. OpenSea data shows that users who whitelist and then sell their newly minted NFTs earn 75.7% profit, compared to only 20.8% for users who do so without being whitelisted.
In addition, data shows that it is nearly impossible to achieve huge returns for scoring purchases without being whitelisted. The chart below categorizes newly minted NFT sales into buckets based on the ROI achieved by collectors, expressed in multiples of initial investment, with whitelisted collectors buying during printing compared to those who did not whitelist.
NFT Outlook
Detty continued, as she explained previously, in the physical world, the gallery seldom provide communication between collectors and creators. There are even those who cut off the relationship between the collector and the creator, no direct contact. All processes are carried out in secret, some are even anonymous.
However, NFT creates a new habit as collectors and creators can open up and directly communicate with each other, considering the collectors directly purchased from wallets that are connected to creators. “This is very different, NFT collectors are happy to announce the work they’ve bought. This is good for the artist too as it provides communication. For example, when a collector wants to sell it again on the secondary market. Usually, if it is an only piece, there will be a discussion about the selling price. We can ask their opinion to make it more equal.”
Irzan also said that the relationship between the collector or the community of an NFT collection is more than just a buyer, but can be considered as a believer of the creator. For creators who have an eternal royalty system, NFT allows them to have passive income along with selling their collections on the secondary market.
“In a way, NFT is “community-first business.” Everything will be based on the community because they are the creators’ key to success, not just another customer, but also a believer. How creators can work and create value for them. The key is one: make the lives of your community better. Because when a creator can help improve the standard of living of his community, then success will be easier to achieve.”
Irzan said an example, a real example can be seen through the Play-to-Earn (P2E) game Axie Infinity which is based on blockchain and NFT. They help residents in the Philippines earn an income by playing games. As a result, their monthly income is higher than the minimum wage in their country.
The second example, one of the Bored Ape Yacht Club (BAYC) blue chip NFT collections offer an initial price of one NFT with only 0.08 ETH or around $300 when they launched 10,000 collection in April 2021. To date, the asset’s lowest price has skyrocketed to 45 ETH, or about $190,000, increased by 300 times in seven months.
“Eventually, in my opinion, through the rise of NFT, we are arriving at a tectonic shift how blockchain and cryptocurrency technology can reach the wider community, and NFT is not only present as a collection, but also provides opportunities for equitable distribution of people’s living standards in the era of decentralized economy both for creators as well as collectors/communities,” he said.
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Original article is in Indonesian, translated by Kristin Siagian
