On March 11, 2021, a digital artist named Mike Winkelmann — known online as Beeple — sold a single digital artwork at Christie's auction house for $69.3 million. The work, "Everydays: The First 5000 Days," was a collage of 5,000 images that Beeple had created and posted online every single day for over thirteen years. The buyer did not receive a painting, a print, or any physical object. They received an NFT — a non-fungible token — a unique digital certificate recorded on a blockchain that says, essentially, "you own this." The sale made Beeple the third most expensive living artist in the world, behind only Jeff Koons and David Hockney, and catapulted NFTs from a niche crypto curiosity into a global cultural phenomenon.
Two years later, the NFT art market had collapsed by over 90 percent. Tokens that sold for millions were trading for thousands. Entire platforms shut down. Critics who had warned that NFTs were a speculative bubble felt vindicated. Yet NFTs did not disappear entirely — they evolved, and the questions they raised about digital art, ownership, and the future of creative work remain as relevant as ever.
This article explains what NFTs actually are, how they changed the art world (at least temporarily), what went wrong, and what lasting impact they may have on how artists create and sell work.
What Is an NFT?
NFT stands for non-fungible token. To understand what that means, start with the word "fungible." Something is fungible if one unit is interchangeable with another. A dollar bill is fungible — any dollar bill can replace any other dollar bill. Bitcoin is fungible — one Bitcoin equals one Bitcoin.
A non-fungible token is a unique digital certificate that cannot be replaced by another. Each NFT has a distinct identity recorded on a blockchain — a decentralized digital ledger that records transactions across thousands of computers. The blockchain makes the NFT's ownership history transparent and (theoretically) tamper-proof. When you buy an NFT, you are buying the token — the certificate of ownership — not the digital file itself. The image, video, or audio file associated with the NFT can still be copied, downloaded, and shared by anyone. What you own is the verified record that says you are the official owner.
Think of it like buying an original painting versus downloading a photograph of that painting. Anyone can download the photo, but only you own the painting. An NFT attempts to create a similar distinction for digital works — except instead of a physical object, the "original" is a token on a blockchain.
How NFTs Changed the Art World
Direct Artist-to-Collector Sales
Before NFTs, digital artists faced a fundamental economic problem: digital files can be copied infinitely at zero cost. There was no concept of an "original" digital artwork, which meant there was no scarcity, which meant there was no traditional market. NFTs solved this by creating artificial scarcity — a unique token that functions as a certificate of authenticity and ownership.
This enabled digital artists to sell their work directly to collectors through NFT marketplaces like OpenSea, Foundation, and SuperRare, bypassing the traditional gallery system entirely. For artists who had spent years building audiences online without any way to monetize their digital work, this was revolutionary.
Royalties on Secondary Sales
One of the most artist-friendly features of NFTs was programmable royalties. Artists could embed a royalty percentage (typically 5–10 percent) into the smart contract governing their NFT, ensuring they received a cut every time the work was resold. In the traditional art market, artists receive nothing when their work is resold — a painting that sells for $1,000 and later resells for $1 million generates zero additional income for the artist. NFT royalties promised to fix this imbalance.
In practice, royalty enforcement proved difficult. Many marketplaces stopped enforcing creator royalties under competitive pressure, undermining one of NFTs' most promising features.
New Artistic Forms
NFTs enabled art forms that had no previous market mechanism:
Generative art — Algorithmically created works where each token produces a unique output. Projects like Art Blocks allowed collectors to mint unique pieces generated by code in real time.
Dynamic NFTs — Artworks that change based on external data, time, or owner interaction.
Music and video — Musicians and filmmakers used NFTs to sell work directly to fans.
Collaborative and community art — Projects where thousands of individual NFTs formed a collective artwork or community.
Blockchain technology, which underpins NFTs, creates a decentralized ledger that records ownership and transaction history. Photo by Shubham Dhage on Unsplash
The NFT Boom and Bust
The 2021 Explosion
The NFT art market exploded in early 2021. Beeple's Christie's sale was the catalyst, but the frenzy was fueled by a combination of pandemic-era boredom, cryptocurrency wealth looking for places to spend, celebrity endorsements, and genuine excitement about a new creative medium. Monthly NFT trading volumes reached billions of dollars. CryptoPunks — simple pixel art avatars created in 2017 — sold for millions. Bored Ape Yacht Club profile pictures became status symbols among crypto enthusiasts and celebrities.
The Crash
By 2022, the market was in freefall. The broader cryptocurrency crash, triggered by the collapse of the Terra/Luna stablecoin and the FTX exchange, wiped out much of the speculative capital that had been driving NFT purchases. Trading volumes dropped over 90 percent from their peaks. Many NFT projects lost virtually all their value. The Bored Ape Yacht Club floor price dropped from over $400,000 to under $50,000.
Legitimate Criticisms
The NFT boom attracted legitimate criticism on several fronts:
Environmental impact — Early NFTs on the Ethereum blockchain required enormous energy consumption due to the proof-of-work consensus mechanism. Ethereum's switch to proof-of-stake in September 2022 reduced energy consumption by over 99 percent, but the environmental damage had already harmed NFTs' reputation.
Speculation over art — Much of the NFT market was driven by speculative trading rather than genuine appreciation of art. Many buyers were flipping tokens for profit, not collecting art.
Scams and theft — The unregulated market was plagued by scams, rug pulls (where project creators disappeared with investors' money), and stolen art uploaded as NFTs without the original artist's consent.
Ownership confusion — Many buyers did not understand that owning an NFT does not necessarily confer copyright, reproduction rights, or even exclusive access to the associated digital file.
What Survived the Crash
Despite the market collapse, some developments from the NFT era have lasting significance:
Digital art gained legitimacy — Major auction houses (Christie's, Sotheby's, Phillips) now regularly sell digital art. Museums are acquiring digital works. The conversation about digital art as "real art" has shifted permanently.
Generative art flourished — Platforms like Art Blocks demonstrated that code-based art could produce genuinely beautiful and conceptually interesting work. Artists like Tyler Hobbs ("Fidenza") and Dmitri Cherniak ("Ringers") created works that art critics took seriously.
Artist empowerment tools — The infrastructure built during the NFT boom — platforms, smart contracts, digital wallets — provides tools that artists can use regardless of whether they sell NFTs specifically.
Institutional engagement — Museums and cultural institutions began seriously engaging with questions about digital preservation, digital ownership, and the display of digital art — questions that will only become more pressing as more art is created digitally.
NFTs and Art History
The NFT phenomenon, for all its excesses, fits into a longer art historical pattern. Every time a new technology emerges, artists find ways to use it, and the art world initially resists before gradually incorporating it.
Photography was dismissed as "not art" for decades. Video art was ignored by galleries until the 1990s. AI-generated art is currently at the center of heated debates about authorship and creativity. NFTs follow the same trajectory — an initial wave of hype and skepticism, followed by a more nuanced integration into existing art world structures.
The deeper question NFTs raised — how do we assign value, ownership, and authenticity to digital objects? — is not going away. As more of our culture moves online, the need for mechanisms to support and compensate digital creators will only grow. NFTs may or may not be the answer, but they were the first serious attempt to solve the problem at scale.
How to Approach NFT Art
If you are interested in exploring NFT art, here are some starting points:
Focus on the art, not the token — Ask the same questions you would ask about any artwork: Is this visually interesting? Does it make me think or feel something? Is the artist doing something genuinely new?
Explore generative art — Platforms like Art Blocks, fxhash, and Prohibition showcase code-based art that produces unique outputs. This is where some of the most innovative digital art is happening.
Visit digital art exhibitions — Many museums now feature digital and NFT art. The Museum of Modern Art, the Centre Pompidou, and dedicated spaces like the Fotografiska Museum have all shown NFT-related work.
Be skeptical of hype — Apply the same critical judgment you would to any art purchase. A high price does not equal high quality. Scarcity does not equal significance.
Final Thoughts
NFTs were the art world's most dramatic collision with technology since the invention of photography. The boom was excessive, the bust was painful, and many people lost money on speculative purchases that had little to do with art. But the underlying questions — how do we value digital creativity? how do we compensate digital artists? how do we preserve digital culture? — are not speculative questions. They are urgent, practical questions that the art world, and society more broadly, will need to answer.
The artists who will matter in the long run are those who used NFT technology to create genuinely compelling work — not those who rode a speculative wave. As with every medium, the technology is just a tool. What matters is what artists do with it.
Want to explore more about the intersection of art and technology? Read about digital art as a creative frontier, or explore the debate about whether AI art is still art. The relationship between creativity and technology is one of the defining conversations of our time.
