What Is Tokenized Art? NFT Art on The Blockchain Explained


There is a lot of buzz around tokenized art, so we gathered everything you might want to know about these so-called non-fungible tokens (NFTs). It is actually not so difficult to understand.

Tokenized art is any original artwork issued an unforgeable proof of origin and ownership. An artwork’s history can be publicly inspected and definitively verified via a math-based signature. The artwork’s current owner has a private key matching the published signature later used to transfer ownership.

Still tricky to understand? Let’s retake it from the beginning. There must be a reason why these art pieces sell for millions of dollars.

Young woman, a digital artist, creates digital art on a tablet at home and shows a coin with the inscription NTF - non fungible token.

What does it mean to be tokenized?

To be tokenized is turning a piece of data into a string of characters called a token. Let me explain.

You basically transform sensitive data into non-sensitive data using a blockchain system. Tokenizing data is a way to secure sensitive data by replacing it with an unrelated value of the same length and format. If breached, the token that has replaced the sensitive data has no meaningful value. No key or algorithm will help you derive the original data for a token. Instead, the relationship between the sensitive data and the token is stored in a secure token vault.

This process may remind you a little of encryption. Still, the similarity is only the blockchain technology. The difference is that art tokenization uses a third party, a token vault, to store information that connects the sensitive data to the token.

What is NFT art?

NFT is short for non-fungible token, which means that these digital tokens are non-replaceable. This art can be bought and sold as an NFT on an NFT marketplace where the NFT represents the real-world object. In other words, NFT art is art that has been tokenized. The original piece is the sensitive data, and the NFT is the non-sensitive data.

Even though anyone can view the work of art online for free, the ownership of the art piece is in an NFT format. Transforming art into NFT serves as proof of ownership, and the value is found in trading and in what I like to call “bragging rights.”

Is NFT art only digital artwork?

An NFT is always digital. Just like how files are always digital, so are NFTs digital too. And the artwork tokenized is usually digital art as well. These kinds of digital artforms and NFTs are popular on the market right now:

  • Digital art pieces and collections
  • Videos and sports highlights
  • Music
  • Virtual avatars and video game skins
  • GIFs
  • Digital designer sneakers

Can physical art be tokenized?

Physical art can be tokenized but has not become so common yet. You can create a token for a physical painting and trade the token using blockchain on the NFT market. But as artists have tried this, they have opened their sales for a possible scam. Scammers can easily create a token and sell an NFT under the artist’s name. If you are tokenizing a physical art piece, remember to use a verifier, your own platform, a public announcement, and an Open Dime. Read more about it here.

Cell phone picture of a physical art piece to be uploaded to the NFT marketplace.

Where can I start buying tokenized physical artwork?

Starting your own NFT collection will require some preparation. First, you need to get a digital wallet that stores NFTs and cryptocurrencies. Most NFT is traded using cryptocurrency, so you would need to purchase some of that, depending on what the NFT provider accepts. Keep in mind that transaction fees can occur.

Once prepared, you can start to buy art on these NFT marketplaces:

How much does an NFT cost?

How much an NFT cost varies a lot. The estimated price is very individual since an NFT is unique, and it comes down to if someone is willing to pay for it. Here are some unique examples of recent NFTs and their prices:

  • “Every day: The First 5000 Days,” by the famous digital artist Mike Winklemann, sold for $2.9 million.
  • Nyan Cat was sold for $600,000 in February.
  • Jack Dorsey, a Twitter co-founder, sold his first tweet for more than $2.9 million.
  • A LeBron James highlight NFT sold for more than $200,000

It can be hard to understand why these digital files can be worth so much money. Some say they pay for the artist’s labor, and others like to think they are helping this new art form grow. Another thought is that we have just spent so much of our time online, so it would make sense to invest in it now.

Is tokenized art a security?

Securities are replaceable and tradable financial ways to raise public or private capital. Since NFT art is a non-replaceable token, it can be tricky to use these as security. 

The worth of an NFT is always decided by what people are willing to pay for it at one particular moment. However, if an NFT would even be considered a security, it has to pass a registration under US security laws. And since this industry is growing, we might see changes in these laws and insurance policies around NFTs.

Mandy Chu

Mandy and Mike are digital nomads and avid travelers. Art brings us joy whether in museums, galleries, or our home. Join us as we learn about the art world as down-to-earth admirers, collectors, and investors.

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