May 1, 2022
A Non-fungible token (NFT) is a digital asset that represents real-world objects like art, music, in-game items, and videos. As NFTs dominate the digital art discourse, art and cultural organizations have been experimenting and exploring the format. NFT does bring some opportunities and complexities for art institutions, galleries, and museums that try to take advantage of the increased interest in this emerging form.
Due to the pandemic, arts organizations’ income has been dramatically affected. Art managers need to think of ways to change exhibition formats, increase audience participation and engagement and find new revenue streams.
NFTs Create New Curatorial Format and Increase Audience Engagement
On Instagram, the #NFT hashtag has 10.27 million posts, and its popularity has led many museums to consider how to use NFTs to arouse greater visitor interest. Art museums create innovative NFT exhibitions by displaying artworks on large high-resolution screens. Seattle NFT museum (SNFTM), the world’s first NFT-themed museum, explored curatorial format and seized the opportunity to bring digital art and NFT communities together while promoting exposure, dialogues, and education. Through large screens and QR codes to access online portals, viewers can observe digital arts in a physical space and unlock the NFT art experience.
Image 1: The NFT exhibition at the SNFTM. Source: Reuters
In addition, some art galleries integrate NFT and VR/AR to create a Metaverse. Specifically, Weibo Digital Art Gallery created a virtual landing space in 2022, including a three-dimensional street view display. It sets the angle, direction, and borderline that the participants can watch. The participants can scan the objects in reality and put them into virtual exhibitions. Therefore, everyone has the opportunity to create an exhibition area and display various NFT collections. In this way, NFT promotes the virtual form of an exhibition and creates new ways for the audience to interact.
Image 2: The NFT exhibition combined VR technology. Source: CoinYuppie
Moreover, art museums enhance the audience’s participation by using NFTs as a certificate of ownership and a proof of identity, honoring the involvement and experiences of participants. Specifically, the National Museum Liverpool (NML) has created an online exhibition called Crypto-Connections, inviting viewers to choose museum objects based on their personal experiences and connections – their selections and interpretations build the basis of a decentralized gallery online. Also, each participant will receive a token representing an item they selected from the exhibit and their personal story within the exhibition.
Image 3: The selected artworks from the exhibition Crypto-Connections. Source: NML
What is more, Art Basel Miami 2021 is partnering with blockchain platform Tezos to encourage visitors to try to “cast” an NFT artwork on-site. Specifically, the artist Mario Kingemann’s interactive installation offered a chance for visitors to cast their own NFTs on the Tezos platform by taking selfies in front of this installation. Art organizations try to provide a more immersive experience, bringing audiences to think about AI and NFTs.
Image 4: The process of minting an NFT by taking a selfie. Source: Surface
Although NFT art auctions have shown a more balanced contribution ratio between males and females than the traditional art market, gender imbalances still exist. According to ArtTactic’s report in November 2021, the contribution rate of male artists in NFT primary and secondary markets reaches 77%, while female artists only account for 23%. Some galleries try to alleviate gender inequality — SuperchiefGallery NFT is the first gallery in New York dedicated to showcasing NFTs on the ground. The works on display are entirely by female artists, and the organization aims to celebrate the creativity of the black community and female artists in the NFT field. As we can see, the addition of NFTs brings up social issues of concern, creates interest, and initiates dialogue among different races and genders.
Art organizations believe that NFTs will be a good reason to attract audiences to the exhibition. The cases above imply that the addition of blockchain and smart contracts decentralizes the museum and encourages participants to engage in it. At the same time, NFT empowers each artist with their rights and helps them enter a new ecosystem. These artists will have the opportunity to gain more attention and benefits.
NFTs Change the Way in Fundraising
In this day and age, art organizations have started to use NFT as a financial tool for fundraising. As digital arts are incorporated into museum collections, many museums are trying to monetize museum collections by marketing digital paintings that are initially from many world-class artists. They transform and replicate masterpieces as digital twins, certify, and sell them as NFTs. In 2021, Florence’s Galleria degli Uffizi sold a painting of Michelangelo for €140,000. Subsequently, the Italian Ministry of Culture stated that they would issue specific restrictions for public museums to sell unique digital reproductions.
Image 5: Michelangelo’s Doni Tondo. Source: Artnet
Besides, NFTs can be retailed innovatively, such as in museum collections and gift stores. In fact, MoMA’s Photography Department has been in early discussions about incorporating NFTs into their gifts. For example, you can buy an umbrella at the gift shop with a Monet painting, but you can also buy an NFT as proof of participation in the exhibition. Also, museums may consider accepting cryptocurrencies as admission fees, donations, or endowment funds.
In addition, some organizations use NFTs as a fundraising method to solve social problems effectively. For instance, the cryptocurrency industry has eagerly supported Ukraine against Russia’s unprovoked invasion. On the one hand, many NGOs began to raise funds for Ukraine. On the other hand, the Ukrainian government officially entered the cryptocurrency industry to obtain financial support to enhance the potential of the Ukrainian Armed Forces. The Ukrainian MetaHistory NFT Museum raised over $650,000 by selling NFT artworks documenting the war to restore the museums and theaters in Ukraine.
Potential Risks and Things to Consider
Are NFTs worth it? Although NFTs have been very popular in recent years, many critics still worry about whether NFTs will be a fad. From my perspective, the critics’ concerns are reasonable. NFT has the features of uncertainty and instability, and it lacks a legal system to monitor the whole market. There are risks of fraud and money laundering in the NFT market. Therefore, art organizations need to think about the risks and dangers.
First of all, arts organizations need to think about the management of digital assets if they decide to adopt NFTs in fundraising. As NFTs became popular, the number of charitable gifts by digital tokens increased. Art museums need to consider the ways to buy and hold crypto assets. Specifically, as an unstable coin, cryptocurrency’s overall value will fluctuate according to the market, and the actual value cannot be guaranteed. If art museums decide to accept cryptocurrencies, they must undertake the risks.
According to Bloomberg, the largest U.S. donor Fidelity’s Philanthropic Powerhouse, received $331 million of digital assets in 2021, implying that donors could avoid partial taxes on non-cash investments. Arts organizations need to rethink how to promote fundraising and explore the management of digital assets.
Image 6: A New Philanthropic Powerhouse. Source: Fidelity Charitable
Moreover, art museums need professional knowledge of NFTs and technical support if they decide to apply this emerging form. They need to ask themselves: do we have the personnel and infrastructure to process and preserve the NFT artworks? Do we have difficulty finding trusted technology partners? Are there any copyright issues for us to consider? The opacity of unregulated cryptocurrencies has always been a big problem due to the lack of a regulatory system. Infringement, counterfeiting, plagiarism, and fraud are widespread. If there is a chain breach, chain override, or hacking on a public chain, museums will face huge asset losses. These problems are so severe that several major NFT marketplaces have recently halted their NFT transactions.
Last but not least, art museums also need to consider if the encryption’s nature affects the organization’s overall development and if NFT’s features connect to the form and theme of the museum collection. Currently, many audiences have questioned the digitalization of masterpieces as an unethical form because it lacks the deceased artist’s consent. Also, traditionalists who appreciate on-site art would object to the display of NFTs in museums. They believe that art museums should still focus on traditional art in a physical space. Indeed, museums are often publicly funded entities, and NFTs challenge the existing values of some museums. When traditional museums tried to use virtual exhibitions to reach online audiences during the epidemic, NFT encrypted art seemed to do the opposite. Based on the differences between NFTs and traditional art forms, art managers need to consider whether the addition of NFTs aligns with their core mission and future development strategies.
Generally, it’s an exciting fusion of technology and art. NFTs change the direction of museums and bring many potential issues. To apply the new art form, museums need to make strategic changes across various departments – curation, legal, marketing, development, etc., and each sector will face new challenges to digital artwork and NFTs. Based on all this, will NFT art bring benefits to art museums? The answer may be both Yes and No.
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