The insider:

So you bought an NFT…now what?!

NFTs are here to stay, they say. But what even are NFTs and why should art collectors care? We asked crypto expert & legal advisor Karin Lorez - and she had some juicy facts and insights for us!

“NFTs can provide easy, digital access to art and make works more affordable".

ARTLEMON: Karin, how many NFTs do you have in your wallet?

KARIN: I own six or seven NFTs, some I bought and some I got for free.

ARTLEMON: How did you choose those NFTs?

KARIN: One is from a DAO project that I’m an advisor for, an artist made this NFT for all DAO members. Another one is from Yves Saint Laurent Beauté that the brand dropped as a goodie for their Instagram followers. My latest NFT was dropped by Marina Abramovic.

ARTLEMON: Performance legend Marina Abramovic dropped an NFT?

KARIN: Yes, she took a video project and divided it into 6500 second-long film stills that she calls frames. She minted those unique frames as NFTs on the Tezos blockchain for 150 British pounds.

ARTLEMON: Amazing, I love Marina Abramovic. But before we get carried away: what is an NFT again?

KARIN: NFT is short for non-fungible token. A token is a crypto asset, like a bitcoin. But a bitcoin is fungible, meaning one bitcoin can be exchanged for another bitcoin. But NFTs are non-fungible, meaning unique. A bit like a painting where one cannot simply be exchanged for another.

ARTLEMON: And that’s interesting for the art world because now digital creations, if minted as an NFT, can be as unique as a painting and thus sold similarly.

KARIN: That’s the opportunity NFTs have for artists, it’s a new way to get paid for their creative digital work, because the NFT buyer can purchase the work as a unique piece, as the only or numbered copy.

ARTLEMON: Where do artists sell these NFTs to buyers?

KARIN: Mostly on NFT marketplaces like OpenSea, SuperRare, Nifty Gateway or Objkt, an NFT platform that runs on Tezos, a blockchain that aims to be more ecologically sustainable and its NFTs more affordable than on other platforms.

ARTLEMON: So the artists can just sell their NFTs themselves, without any gallery or other gatekeepers promoting them, like in the traditional art industry?

KARIN: If an artist creates good quality and can market their NFTs well, they have the opportunity to sell directly, giving maybe a 2,5-10% platform fee instead of an up to 50% gallery fee.

ARTLEMON: Sounds like NFTs have a lot of opportunities for artists!

KARIN: NFTs can also facilitate creator earnings with each purchase, meaning when the collector re-sells the NFT on the marketplace, the creator gets up to 10% of the sales earnings. In the traditional art world, artists usually get nothing from the secondary market sales, for example at auctions.

ARTLEMON: Cool. But why should we as art lovers and collectors care about NFTs?

KARIN: NFTs can provide easy, digital access to and affordability of art, although not all NFTs are cheap… (laughs). But there are a lot of cheap NFTs that provide a starting point for collectors. I also think that collecting per se gets a new awareness.

ARTLEMON: How do you mean that?

KARIN: At what point are you an art collector? It can sometimes take a long time. With NFTs, you can become a collector with a few clicks.

ARTLEMON: Speaking of starting point, how do you recommend us NFT rookies to get started?

KARIN: I recommend starting out easy and playful. Maybe there’s an artist like Marina Abramovic that you like, or a cool project that involves NFTs. Get your first NFT from something you find interesting, without paying much. Test a purchase so you get a feel for how it’s done technically and how you feel after you’ve purchased your first NFT!

ARTLEMON: Is the technical part complicated?

KARIN: It might take a few minutes but it’s doable for everyone. NFTs are usually purchased in crypto currencies but many platforms now offer credit card payment, so you don’t need a crypto wallet. You need a wallet to buy an NFT, the most famous one is called MetaMask that you can download for free. The rest is usually described on the platform where you purchase the NFT.

ARTLEMON: And what do I do with the NFT after I buy it?

KARIN: Different options. You can either just keep it in your wallet or add it to your OpenSea account for yourself and others to see what you collected. Some collectors also showcase their NFTs on Instagram or at home with a digital frame or TV. Of course you can also resell your NFT, particularly if you consider it an investment and the hype around the NFT is at a peak.

ARTLEMON: Do NFTs have no function other than “just” owning and maybe speculating?

KARIN: It depends what you buy when you buy an NFT. Did you receive a digital art piece or the permission to resell that NFT? Are you allowed to display that art work publicly in a museum or only in your private space? Have you received a license to distribute the content as for example postcards and mugs and receive royalties from selling those mugs? The more limited the rights you have purchased, the less you should be paying for an NFT.

ARTLEMON: Because with less rights I can do and earn less with my NFT, that makes sense. But how do I know what I really buy when I buy an NFT?

KARIN: There is still rather little info available on the purchase platforms about what the collector buys and thus often remains a legal grey zone. There is not yet a standard of what an NFT represents that could be passed on to the buyers. Some NFT platforms clarify the buyers’ rights in their sales terms & conditions as “if not specified otherwise” by the seller.

ARTLEMON: So it’s smart to read what’s on offer or reach out to the NFT seller and confirm the license rights?

KARIN: Yes. And do your own research (DYOR) before you buy an NFT to also avoid scams.

ARTLEMON: What scams?

KARIN: There are a lot of NFT projects that aren’t by the people they say they are. There are also stolen art works that get minted as NFTs. But you can avoid those by googling the projects and sellers and chatting to the always helpful NFT communities.

ARTLEMON: Sounds like a plan. Can’t wait to get started with my first NFT. Thank you Karin for all your helpful advice!

Dr. Karin Lorez is an entrepreneur, founder of Lorez Legal, a forward-thinking, boutique legal advisory firm specializing in financial market, cryptocurrency and blockchain regulation and founding partner of Scale Compliance, a compliance service provider for crypto companies. Karin is also the author of the Swiss Crypto Guide.

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