GM readers (that’s good morning in the NFT community)! After a lot of hard work behind the scenes, we’re proud to say our new curated platform, Bluethumb Digital, is live. Our first collection launched in February, featuring some of Australia’s top digital artists alongside fan favourites from Bluethumb venturing into the metaverse for the first time. Since then, we’ve been working hard on improving the site and adding new and exciting art for you all to enjoy!
Jumping into the NFT space for the first time comes with a whole lot of jargon and technical concepts to understand, so where do we begin?
Let’s jump right in:
- Why did Bluethumb go into NFTs?
- What are NFTs?
- Blockchain technology – how does it work?
- Digital art vs NFTs: what’s the difference?
- How do you create NFTs?
- How do I buy NFTs?
- What is an allowlist?
- What about the environmental impact of NFTs?
1. Why did Bluethumb go into NFTs?
Bluethumb has spent over a decade supporting Aussie artists, leading the way to make selling and collecting art as accessible as possible. The next step in our journey is Bluethumb Digital, an NFT platform focussing on Australia’s digital artists.
“For years we’ve wanted to add digital art to Bluethumb,” says Co-Founder George Hartley. “Some of the most interesting new art in the last few years has been in digital and video and we actually have hundreds of artists already on Bluethumb who do some digital work. The problem is we haven’t been able to work out how to sell it and now NFTs have solved that for us (continued below).
“The explosion of NFTs in the last 18 months has been amazing to watch. OpenSea didn’t exist as a company two years ago. It is now the world’s largest art company by sales,” he points out. “There are obvious questions with the fast rise of NFTs around how much is driven by speculation and how much is collectors. But having been a crypto-user since 2015 and having started to collect NFTs last year, with the joy of collecting and discovering brilliant new digital art and the explosion of amazing new talent, I’m confident that NFTs will make up an important part of contemporary art going forward.”
“Whenever we plan something new for Bluethumb the only question is: does this benefit our artists? Bluethumb Digital does and will into the future. I’m excited about the new art that we will be introducing to our collecting community.”
As we’ve done for traditional art, Bluethumb Digital will continue in the same spirit: making the collection of NFT art easier than ever for everyone (no need to be a crypto-millionaire)! Also, we’ll still continue to be Australia’s top destination for all art and artists.
You can read more about our mission to help more Aussie artists go full-time on their art careers over on our site.
2. What are NFTs?
NFTs (or non-fungible tokens) are used to prove the possession of unique items. To put this in art world terms, you can think of them as similar to a certificate of authenticity that serves as provenance and proof of ownership for digital goods. Unique – or “non-fungible” – refers to assets which have distinctive characteristics, and therefore cannot be interchanged or have equivalent substitutes.
It’s good to get an idea of how cryptocurrencies work to understand the mechanics behind NFTs. These are an assortment of digital currencies that utilise cryptography as a sort of complex security code. Unlike dollars or cents, cryptocurrencies are not maintained or issued by a single entity such as a bank, but rather, their value is overseen and maintained by users (a decentralised network).
3. Blockchain Technology – How Does it Work?
Blockchain is the technology that powers – or enables – the day-to-day functioning of cryptocurrencies. Often associated with the keyword “public ledger”, it’s helpful to think of it as a database of transactions. When each transaction is generated, information is stored in a “block”, then added permanently to the “chain”, or the record of all previous exchanges. A couple of key features are thought to be unique to Blockchain technology:
1) transparency, as transactions are publicly viewable in real-time; and,
2) security, due to the linear, chronological way data is stored.
Transactions cannot be modified without the majority of users in the network agreeing. For people who want to do further reading, we recommend Investopedia’s article on blockchain technology.
The two most popular cryptocurrencies today are Bitcoin and Ethereum. Fun fact: anything other than Bitcoin, the original cryptocurrency, is referred to as an alternative coin or altcoin (yes, this includes the much publicised dogecoin).
4. Digital Art vs NFTs: What’s the Difference?
The former can be thought of as art made or displayed through the use of digital technology, including 3D animation, image scans and online music. NFTs are different in the sense that they employ blockchain technology so that the provenance of online assets such as artworks can be validated. An NFT acts as a digital certificate of authenticity.
You might ask: in an online world where multiple versions of one file can exist at the same time, what do NFTs have to offer?
To use an analogy, artists on Bluethumb can choose to release reproduction prints or multiple editions of their artworks, but the idea is that only one numbered edition is in the hands of one owner at any one time. It’s much more difficult to control how files are shared on the internet when it comes to digital art, as well as to truly stake one’s claim on said artwork.
However, NFTs make it possible to own and sell digital art in a way that’s completely new. Plus, everyone is able to see that you own it (e.g. bragging rights!) because of the transparency that the blockchain brings. Yes, maybe someone else was able to download a copy of Snoop Dogg’s art, but it’s not authentic, and everyone can look at the blockchain to check it for themselves.
One more cool feature is artists can get royalties with each sale, even secondary ones.
Now, onto the next section: how are NFTs created?
5. Minting: How are NFTs Created?
Minting describes the way NFTs are added to the blockchain, which is commonly done on the Ethereum network. This is a technical process that requires the deployment of smart contracts. In essence, smart contracts are an automated set of commands to execute the transaction. Smart contracts require some coding and get a bit technical, so NFT platforms like Bluethumb Digital can step in and help to do the minting for you. Artists, we’ve got you!
There are normally costs associated with minting, such as commission fees, a percentage of royalties, and “gas fees”, which are the transaction fees needed to add the NFT to the blockchain. This is typically charged in the token or currency released by the specific blockchain. There are also methods of minting whereby buyers mint and pay gas fees at the point of sale.
NFT artwork files aren’t always stored on the Blockchain (though they can be through services like IPFS), but rather the token or block is.
6. How Do I Buy NFTs?
You’ll need to have a crypto wallet set up to buy, store and even swap NFTs and cryptocurrencies. There’re a few different types of wallets you can use, but for beginners, many recommend using digital wallets for security and ease of use. These should be compatible with the token or currency you’re looking to buy. For example, Metamask is recommended for its compatibility with most Ethereum-based NFT platforms, like Bluethumb Digital.
You can think of crypto wallets as something akin to digital banking apps. These will allow you to transact with various platforms and cryptocurrencies, (and most importantly) build a cornucopia of NFT art!
On Bluethumb Digital we accept a number of wallets, including Metamask, Wallet Connect and Bitski. Take a look at our FAQs here for the full list. We also plan to introduce easier credit card payment options in future!
7. What is an Allowlist?
Much like exhibition openings in the real world, NFT art collections are usually released in drops. If you’re on the allowlist it means you get early access and first dibs on artworks ahead of everyone else! The good thing about NFT allowlists is that anybody can be on them. However, you do have to have a wallet set up and provide your public ETH address in order to get on the allowlist. This system is a way to reduce gas fees and failed transactions by limiting the number of people trying to buy from the same collection at the same time.
This may all sound quite complicated, but we promise it’s not as tricky as it sounds. If you don’t have one already, you can set a wallet one up in 5 minutes using MetaMask (click here to set yours up).
8. What about the Environmental Impact of NFTs?
The environmental impact of blockchain technology is a common concern when it comes to NFTs. But why does this occur, and how does Bluethumb Digital fit into this?
Ethereum uses a concept called proof-of-work, where user consensus validates each transaction. Simply put, users or miners in the network receive an incentive – the gas fees we talked about earlier – to complete and process each transaction via a complex mathematical puzzle. This requires significantly large amounts of energy and increases as more miners join the network.
The downside of this is, according to Ethereum, “proof-of-work consumes 73.2 TWh annually, the energy equivalent of a medium-sized country like Austria.” When site traffic is high then, it makes sense that miners would choose to prioritise transactions with higher fees, and more would join in the mining process, increasing the use of energy and environmental footprint of NFTs.
However, the good news is Ethereum is switching to a more environmentally sustainable operational system later this year. Additionally, an increasing number of environmentally friendly alternatives are emerging which use better consensus models such as proof-of-stake, which are much more energy efficient than proof-of-work.
While the space continues to evolve, we put a lot of importance on making sure Bluethumb Digital’s launch was carbon neutral. We’ve partnered with climate organisation Trace to ensure that our product is certifiably carbon neutral, with a portion of our proceeds going towards carbon offset initiatives such as the Mount Sandy Conservation project.
There’s a lot of exciting developments in store for Bluethumb Digital and much to learn, but our capable team is committed to making NFTs and crypto an accessible space for everyone.