What NFT art actually is (and isn’t)
An NFT is a unique token on a blockchain that points to an artwork and its metadata, establishing provenance and an ownership record you can transfer or sell. It does not automatically give you copyright or commercial rights to the underlying art; those rights depend on the license the creator attaches (for example, Creative Commons CC0 or standardized “Can’t Be Evil” licenses published by a16z crypto).
The 2025 market snapshot
After the 2021 boom and a long cooldown, today’s market shows selective strength with lower average trade sizes. Industry trackers report swings month to month: DappRadar’s mid-2025 reporting highlights alternating jumps and dips in NFT market cap and volume, while several outlets note totals in the low-single-digit billions for 1H 2025. Treat the market as volatile and cyclical, not linear.
Wash trading still distorts some volume statistics. Chainalysis’ 2025 analysis estimates suspected wash trading on select chains accounted for up to $2.57B in activity—another reason to focus on provenance and curation rather than raw volume.
Where to buy: curated vs open marketplaces
Curated venues reduce discovery risk by vetting artists, while open marketplaces maximize breadth and liquidity.
- SuperRare is invite-only for creators (application/curation required), leaning toward 1/1 or small-edition works.
- Foundation positions itself as a more curated art marketplace relative to fully open platforms, though details and fees vary by source.
- Art Blocks specializes in generative, on-chain art; collectors mint unique outputs from an artist’s algorithm.
- Major auction houses (e.g., Sotheby’s) now run regular digital-art sales, which can help on provenance and appraisal comparables.
Open marketplaces (e.g., OpenSea, Magic Eden) list many primary and secondary sales across chains and styles. Understand their fee models and royalty handling before bidding.
What really drives value
- Artist reputation and provenance. Look for verifiable contract addresses on Etherscan and a clean chain of custody. Verified contract source code and an official contract link from the artist/marketplace reduce spoof risk.
- Edition size and scarcity. One-of-ones and tightly capped series tend to command higher premiums, all else equal.
- On-chain vs off-chain storage. If metadata and media live on decentralized storage (IPFS/Arweave) and are “frozen,” you reduce long-term dependency on a single server or platform. IPFS best-practice guides explain pinning and permanence trade-offs; Arweave pursues long-term data durability.
- Clear licensing. CC0 gives the public free re-use rights; other projects use standardized licenses (e.g., a16z’s Can’t Be Evil) that grant specified commercial rights to holders. Read the license—don’t assume.
Environmental note: Ethereum’s 2022 transition to proof-of-stake slashed estimated energy use by ~99.95%, addressing a common concern for Ethereum-based art.
Costs, fees, royalties, and gas
- Marketplace fees: On OpenSea, the standard selling fee is currently 0.5%; other actions (like primary drops or swaps) have different rates. Platforms differ, so check each venue’s current schedule.
- Creator royalties: Since late 2023, several marketplaces made royalties optional or enforceable only in specific setups (e.g., ERC721C on Magic Eden). This reduced many artists’ secondary-sale income and changed investment dynamics.
- Gas fees: You pay network fees to transact. On Ethereum, EIP-1559 introduced a base fee that’s burned and a priority tip; fees vary with demand.
Legal and tax basics for newcomers
- Securities law risk: Some NFT offerings have drawn SEC actions; courts are still testing how the Howey test applies. A 2024 federal case allowed claims that certain DraftKings NFTs could be securities to proceed, underscoring facts-and-circumstances risk.
- Taxes (U.S.): The IRS treats income from digital assets—including NFTs—as taxable; you may need to report sales, swaps, and income events. Keep meticulous records.
- Reporting (UK and beyond): The OECD’s Crypto-Asset Reporting Framework (CARF) is rolling out. The UK has published CARF guidance and says new data-collection requirements for cryptoasset service providers start January 1, 2026. Expect more cross-border reporting over time.
This article is educational, not legal or tax advice. Always consult a qualified professional in your jurisdiction.
Risk radar: scams, wash trading, and storage pitfalls
- Wash trading can inflate volumes and distort price signals; treat “floor” data and spikes with caution.
- Phishing and approval abuse: Never sign unknown transactions. Periodically revoke token/NFT approvals using reputable tools and wallet/explorer features. Learn how token approvals work and how to revoke them.
- Address-poisoning: Double-check addresses from a trusted source rather than copy-pasting from recent activity.
- Metadata centralization: If the artwork URL points to a centralized server and the issuer disappears, your image could break. Prefer IPFS/Arweave with pinned or “frozen” metadata.
- “Frozen” metadata on marketplaces like OpenSea prevents later changes; creators can opt to freeze after verifying content.
Step-by-step: how to buy your first NFT artwork
- Define your thesis. Choose a category (1/1 art, generative, photography) and budget.
- Pick your venue. For vetted discovery, start with curated platforms or auction houses; for breadth and liquidity, use open marketplaces.
- Verify the contract. Follow the official link from the artist/platform; confirm the contract address on Etherscan and that the collection is the one you intend to buy.
- Check storage and license. Prefer decentralized storage and a clear license (e.g., CC0 or Can’t Be Evil variants) aligned with your goals.
- Review fees and royalties. Confirm marketplace fees and whether royalties are enforced for the collection you’re buying.
- Use a hardware wallet and revoke stale approvals periodically. This reduces signing risk and limits permission sprawl.
- Bid or buy now—then track provenance. Keep tx hashes, invoices, and links to auction/lot pages for future appraisal or resale.
Simple starter strategy
- Start with one higher-conviction piece rather than many low-quality mints.
- Prefer artists with consistent practice and exhibition history or strong curatorial backing.
- Avoid chasing spikes; ladder entries and use limit listings to control emotions in thin markets.
- Expect illiquidity; plan to hold long enough for curatorial recognition or body-of-work progress to matter.
FAQs
Do I get copyright when I buy an NFT?
Not by default. Unless the license grants rights, ownership of the token does not equal copyright ownership. Many collections use CC0 or standardized licenses that define what you can and cannot do.
Will royalties pay me as a collector?
Royalties generally pay creators, not collectors. Also, on many marketplaces royalties are optional or enforced only with specific contract standards, so creators may receive less from resales than in 2021–22.
Are NFTs bad for the environment?
Ethereum’s move to proof-of-stake reduced estimated energy usage by ~99.95%, dramatically lowering the environmental footprint of most Ethereum-based NFT transactions.
How do I avoid buying a fake?
Use official links from the artist/platform, check the contract on Etherscan, verify storage/licensing details, and beware of copy-minted collections that recycle someone else’s art.
