Philadelphia artists use blockchain and NFTs to sell their art

Want to try to make some money? It may be time to create or buy or sell NFTs. Many Philadelphia-area entrepreneurs do this. But before you get started, there are few things you need to know.

An NFT, which stands for Non-Fungible Token, is a one-of-a-kind digital asset that can be created from just about anything that can be scanned, copied or photographed and then uploaded to a computer. When your digital asset – like a photo or video – has its own NFT, you are telling the world that it is unique and can be bought and sold like any work of art; a work can be copied but there is only one original. A token is stored on the blockchain, a digital ledger where each transaction must be verified by multiple sources.

Thanks to the blockchain, a huge digital art market has suddenly materialized in recent years. How huge? The market now stands at $40 billion, according to new research, and is expected to double in size over the next few years.

NFTs are now sold by celebrities like Snoop Dogg, Ellen DeGeneres, and Eminem. But more importantly, digital art marketplaces like OpenSea (which was recently valued at $13 billion) and Foundation have created huge opportunities for countless entrepreneurs looking to sell their digital art to clients who don’t never even existed a few years ago.

READ MORE: Picasso’s heirs launch digital artwork to ride the ‘crypto’ wave

“NFTs give small-scale artists the opportunity to sell their work for thousands, if not millions, of dollars, and it’s gaining momentum and popularity with collectors,” says Aaron Ricketts, a Philadelphia-based visual artist who uses sales of his NFT art to fund his photography and film projects.

Ricketts isn’t the only Philadelphia-based artist making money from NFTs. Chris Hytha, a recent graduate of Drexel University, has used his degree in photography and architecture to create unique photos of Philadelphia townhouses and other area buildings that sell for thousands.

And Josh Pellegrini has supplemented the money he earns from his production studio by becoming a digital art collector where he claims to have earned “30 times” his money since his debut and has used proceeds from his NFT sales to pay back their student loans.

NFTs are creating a new breed of entrepreneurs and it’s all very attractive. But be aware that the world of digital art carries enormous risks. The OpenSea hack last weekend, where digital artworks were stolen at a loss by their owners, underscores the security issues facing the fledgling industry.

Buying and selling NFTs requires digital currencies like Bitcoin and Ethereum, which can be very volatile. There is a lot of hype and misleading information that can lead to a bad investment.

So what does a digital artist or entrepreneur need to know before getting started?

For starters, it’s important to be patient and immerse yourself in the industry before you start spending money. Pellegrini has spent countless hours on Twitter spaces and Discord listening to conversations and getting to know players. He followed the social media accounts of people active in the business, watched what they were up to, and asked lots of questions.

He also shared ideas in person with other artists from the popular PHL Shooters photography group he leads. “People have all these ideas, but the reality is that you have to get into the community first and see what’s going on,” Pellegrini says. “If you’re not in the community, I don’t know how you would really get there”

Next, you need to familiarize yourself with the main markets and how they work. Sites like OpenSea and Foundation (where Pellegrini and Ricketts sell their photography, animation, and video) will allow you to create your own account, connect your digital wallet or purchase digital currency, upload your artwork, and complete the process. obtaining a unique token. assigned to it on the blockchain. You’ll be able to store your artwork and then track royalties on the sale of your product, which Hytha says can be very important.

“The secondary market can be just as huge for an artist,” says Hytha. “I was very satisfied with the secondary royalties. Ten percent of my secondary sales come back to me, which becomes an important source of passive income. »

Finally, you need to decide if you want to make money selling digital art or trading cryptocurrencies…or both. A single unit of Ether now costs around $2,700 as I write this Bitcoin is around $38,000. But Ether was worth around $4,600 as recently as November and Bitcoin was worth around $68,000 at the same time.

So get ready for the wild and wild west. I recommend immediately converting your digital currencies into dollars when you make a sale. Hytha says he was responsible enough to collect what he owes in taxes. But whatever he is able to leave in cryptocurrency, he does – without betting the farm.

“I’m just excited about it,” he said. “And hey, if it drops to zero, that’s fun. I want to be in there, for when Ether hits 10 or 20 thousand by the end of 2030 or something!”

Finally – and this comes from me, accountant – pay attention to your taxes. There is a growing movement towards more regulation of currencies and digital assets, but at the moment rules are scarce. Major platforms are not required to send tax filing documents like most financial services companies do when you buy or sell a stock. Which means that if you trade in this area, you need to pay close attention to the gains – or losses – and correctly calculate any taxes you owe.

And remember, it’s not just about artwork transactions, but about all the potential profits generated by the ups and downs of the cryptocurrencies you use. Keep good records and document your transactions.

There is a bright future for digital art and for entrepreneurs who recognize its value. But equally important is that the growing world of NFT has also created a new way for artists to express themselves…and earn money.

“The beauty of NFT is that it empowers artists again,” says Ricketts. “It gave us greater financial and narrative control over our work.”

Gene Marks is a Chartered Accountant and owner of Marks Group, a technology and financial management consultancy firm in Bala Cynwyd.

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