{"id":361183,"date":"2021-11-01T19:49:00","date_gmt":"2021-11-01T16:49:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/beyond-the-nft-hype-creating-lasting-business-models-for-artists\/"},"modified":"2021-11-01T19:49:00","modified_gmt":"2021-11-01T16:49:00","slug":"beyond-the-nft-hype-creating-lasting-business-models-for-artists","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/beyond-the-nft-hype-creating-lasting-business-models-for-artists\/","title":{"rendered":"# Beyond the NFT hype: Creating lasting business models for artists"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a27af20e77f2\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a27af20e77f2\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/beyond-the-nft-hype-creating-lasting-business-models-for-artists\/#A_stream_of_royalties_as_a_lasting_business_model_for_NFTs\" >A stream of royalties as a lasting business model for NFTs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/beyond-the-nft-hype-creating-lasting-business-models-for-artists\/#Challenges_with_NFT_royalties\" >Challenges with NFT royalties<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/beyond-the-nft-hype-creating-lasting-business-models-for-artists\/#Current_NFT_business_models_to_ensure_integrity\" >Current NFT business models to ensure integrity<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Beyond the NFT hype: Creating lasting business models for artists <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMTAvOWEyOWU4MDItMWY4Zi00NWE2LTk3ZGItY2VhZjg0MzJkOGVhLkpQRw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-128018ef>It could be argued that nonfungible tokens, or NFTs, have been a concept since 2012. For instance, the inception of \u201c<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/bitcoil.co.il\/BitcoinX.pdf\">Colored Coins<\/a>\u201d in 2012 may have laid the groundwork for NFTs today, as this project demonstrated how the Bitcoin (BTC) blockchain could be used as a transaction mechanism for real-world assets.<\/p>\n<p>Fast forward to 2017, a time when CryptoKitties became one of the most popular decentralized <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>lications, or DApps, ever built on Ethereum. CryptoKitties was described in 2017 by Ryan Hoover, founder of Product Hunt, as \u201cthe first Ethereum-based decentralized Pokemon-like <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/game\/\" data-internallinksmanager029f6b8e52c=\"7\" title=\"Game\" target=\"_blank\" rel=\"noopener\">game<\/a>, in which users can collect and breed digital kittens.\u201d<\/p>\n<p>Unsurprisingly, as cryptocurrencies gained mainstream adoption, the concept of nonfungible tokens also skyrocketed. NFT sales topped\u00a0$2.5 billion during the first half of 2021, demonstrating the potential of a seemingly new business model for digital creators. Yet as 2021 continues, some in the industry believe that the original intentions behind NFTs have become blurred by the financial gains often associated with these digital collectibles. <\/p>\n<p>John Wolpert, co-founder of TreeTrunk and head of research and development at ConsenSys Mesh, told Cointelegraph that what makes NFTs both exciting and problematic is that people are marketing them with financial terms. \u201cThere is a lot of money that can be made from NFTs, but we need to ask ourselves if we are talking about NFTs as stocks, or if we actually care about the artists and their artwork,\u201d he said. Moreover, while it\u2019s impressive that artists like Mike Winkelmann, also known as Beeple, have\u00a0made millions of dollars from a single NFT sale, Wolpert wonders how long these instances will last:<\/p>\n<blockquote><p>\u201cWhat happens when the million-dollar NFT sells for less than $1,000? There is no evidence to suggest that we are in a pattern that doesn\u2019t have the crowding out effect. This then leads to the question if there is a real, lasting business model beyond the NFT hype?\u201d<\/p><\/blockquote>\n<h2><span class=\"ez-toc-section\" id=\"A_stream_of_royalties_as_a_lasting_business_model_for_NFTs\"><\/span>A stream of royalties as a lasting business model for NFTs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>According to Wolpert, there currently isn\u2019t a permanent business model behind NFTs, as he believes most are financial projects that will likely fade as the hype around nonfungible tokens decreases. Given this, Wolpert believes in a structure based on a multilevel-marketing approach that will ensure a constant stream of revenue for NFT artists globally. <\/p>\n<p>Known as the \u201ctree trunk approach,\u201d Wolpert explained that this will ensure that buyers are selling a revenue stream, while also solving the \u201cdouble-spend\u201d problem that occurs when digital <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a> is reproduced infinitely without any variations. For example, although nonfungible tokens are considered immutable records on a blockchain, Wolpert noted that they can easily be replicated. \u201cIf an NFT is a picture, then I can copy the IPFS of the token and put it on another blockchain. Double spending is alive and well in NFT land.\u201d Yet by making an NFT a \u201ctree trunk,\u201d Wolpert explained that every owner or reseller of the artwork will have a unique, exclusive version that can\u2019t be copied before it\u2019s sold to someone else. <\/p>\n<p>Although not yet launched, Wolpert shared that these are created by using \u201ccrypto lithography,\u201d a mechanism that leverages privacy-centric\u00a0zero-knowledge proofs: \u201cWith zero-knowledge proofs, NFT files are never seen by anyone including the owner, yet one can still prove what an NFT looks like and if images were created based on an original NFT artwork.\u201d Similar to a family tree, Wolpert referred to the original NFT images as the \u201cparent file,\u201d while copies based on the original are known as \u201cchildren files.\u201d There can even be \u201cgrandchildren files\u201d if enough copies are generated. <\/p>\n<p>Any artist would be able to go through the verification process. According to Wolpert, such a tool is important because in the digital world, if the 1s and 0s of a piece of art are revealed, it can easily be copied. As a result of this, someone else can claim they have the original piece. <\/p>\n<h2><span class=\"ez-toc-section\" id=\"Challenges_with_NFT_royalties\"><\/span>Challenges with NFT royalties<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>In terms of revenue, Wolpert mentioned that TreeTrunk NFTs could be sold on secondary marketplaces like OpenSea, explaining that each reseller \u2014 including the original creator \u2014 will receive royalties when an NFT is sold. \u201cNow there is a tree-like revenue stream where the original artist serves as the trunk,\u201d said Wolpert. Yet while the concept behind TreeTrunk NFTs is intriguing, a number of challenges may occur. Specifically, the idea of providing buyer royalties may result in legal issues. <\/p>\n<p>Brett Harrison, president of cryptocurrency exchange FTX.US, told Cointelegraph that while the FTX NFT marketplace allows creators to receive royalties from secondary sales, complexity arises when an artist makes an NFT resemble an investment product. As such, Harrison remarked that FTX will not endorse an NFT that could have securities oversight: \u201cWe think that if an NFT is distributing a portion of secondary royalties to all of the holders, then it looks more like an investment contract.\u201d<\/p>\n<p><strong><em>Related:\u00a0Trick or treat: Will Halloween NFTs be hauntingly good or too spooky for crypto?<\/em><\/strong><\/p>\n<p>Although FTX\u2019s NFT marketplace has chosen not to support buyer royalties, it\u2019s important to point out that regulations still remain unclear. In March, Hester Peirce, a commissioner of the Securities and Exchange Commission who is also known as \u201cCrypto Mom,\u201d\u00a0warned that issuers of fractionalized nonfungible tokens and NFT index baskets could be distributing investment products. <\/p>\n<p>However, it\u2019s still too early to determine whether NFTs will immediately become securities. Dan Simerman, head of financial relations at the Iota Foundation, told Cointelegraph that what is most likely needed now is a lightweight framework that is as robust as current securities laws but does not hamper innovation:\u00a0<\/p>\n<blockquote><p>\u201cWith blockchain <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a>, it\u2019s possible that all digital \u2018things\u2019 will be able to earn yield and royalties, so we probably need to reframe what it even means to be a security or to earn royalties at all.\u201d<\/p><\/blockquote>\n<h2><span class=\"ez-toc-section\" id=\"Current_NFT_business_models_to_ensure_integrity\"><\/span>Current NFT business models to ensure integrity <span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Royalties aside, ensuring the integrity of NFTs is an important problem to solve before determining the structure of a lasting business model. While TreeTrunk NFTs leverage zero-knowledge proofs based on the Baseline Protocol standard to provide authenticity, other marketplaces are taking different approaches. <\/p>\n<p>For example, Harrison explained that FTX\u2019s NFT marketplace is taking specific measures to ensure that NFTs trading on the platform are authentic:\u00a0\u201cWhen NFTs are generated, they come with a set of creator addresses that ensure the original creator can verify their work by signing a transaction on Solana, for instance.\u201d He added: \u201cUnless you are a creator and have control over another creator\u2019s wallet, then you can\u2019t authenticate as that user. No one can impersonate another user\u2019s wallet.\u201d<\/p>\n<p>Although this is the case, Harrison is aware that people can still make copies of JPG images. In an attempt to solve this problem, Emily Poplawski, chief operating officer of Metaplex Studios \u2014 an NFT storefront solution \u2014 told Cointelegraph that some platforms are using human verification for NFTs. For instance, Poplawski remarked that the DigitalEyes NFT marketplace for Solana allows NFTs to be verified with a blue checkmark, similar to Twitter. However, Poplawski noted that these solutions are still not perfect and are prone to mistakes:<\/p>\n<blockquote><p>\u201cThe business model of NFTs is still early and we\u2019re seeing a lot of experimentation. It\u2019s currently been a game-changer for thousands, though. Stories in our community where people are quitting their jobs as gas station attendants, paying off student loans, or writing $100,000 checks to charity are quite common in this brave new world of financial empowerment made possible through decentralization.\u201d<\/p><\/blockquote>\n<p><template data-name=\"subscription_form\" data-type=\"nifty_newsletter\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/beyond-the-nft-hype-creating-lasting-business-models-for-artists\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Beyond the NFT hype: Creating lasting business models for artists &#8221; It could be argued that nonfungible tokens, or NFTs, have been a concept since 2012. For instance, the inception of \u201cColored Coins\u201d in 2012 may have laid the groundwork for NFTs today, as this project demonstrated how the Bitcoin (BTC) blockchain could be&#8230;<\/p>\n","protected":false},"author":1,"featured_media":361184,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMTAvOWEyOWU4MDItMWY4Zi00NWE2LTk3ZGItY2VhZjg0MzJkOGVhLkpQRw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[79806,75885,95118,74355,116,55649,117],"class_list":["post-361183","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-analysis","tag-enterprise","tag-nft","tag-adoption","tag-art","tag-artists","tag-business"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/361183","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=361183"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/361183\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/361184"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=361183"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=361183"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=361183"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}