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Blue Pill or Red Pill? Top 5 Reasons Why Established Art Institutions should enter the NFT market

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With $2.5 billion in sales in the first half of 2021 and $1.2 billion in July 2021 alone, NFTs have elicited a varying number of responses from traditional art institutions, be they museums, galleries or auction houses. Some have embraced it, such as Sotheby’s first NFT sale with digital creator Pak in April 2021 which garnered $17 million.  Some are just ignoring it as a fad as they find most of the NFT art out there to be unworthy – i.e. not real art. However, most traditional art organizations view NFTs with trepidation – acknowledging NFTs will be a major force in the art world but are unsure how or whether they should play a role. 

There are several benefits to established art institutions getting into NFTs now that are not only monetary, but possibly vital to their relevance in the art world to come.  So, here are the top 5 reasons to embrace NFTs:

5. Expanded Revenue Stream –Art NFTs can contribute to top line revenue via commissions, royalties, fees and commissions on secondary sales. Revenue on secondary sales is unique to NFTs through the use of smart contracts and because every blockchain transaction is transparent. Many of these contracts allow the organization to retain a percentage of ownership or receive a percentage of sales.

4. Fractionalized Ownership – When art establishments retain a percentage of ownership, similar to owning shares in a company, they will be able to share in the future financial success of the work or collection. Moreover, in today’s environment where NFT prices are volatile, offering fractional ownership to collectors can lower their risk and make NFTs more attractive.

3. Expanded Offerings and Customer Base – Adding art NFTs makes for a more comprehensive offering to an organization’s existing customer base. More importantly perhaps is that it can also pull in new collectors, especially those attracted to digital media such as millennials and more progressive collectors ( tech and crypto whales with deep pockets) who are looking to invest and diversify their portfolios.

2. Increased Security vs Traditional Art – When executed correctly, art NFTs can provide a high level of security through root of provenance that can be verified. Both institutions and collectors can then be assured of the authenticity of the works while at the same time mitigating fraud and hacking issues. Once the root of provenance is established, ownership transfers are transparent on the blockchain.

1. Strengthened Role in the Art World – Art institutions play a major role in determining what art is considered worthy and the value of that art. Currently, the art NFT marketplace is the wild wild west. The market needs trusted influencers to help sort through the plethora of NFT art to understand what is “good” or “valuable”. Artists need institutions to vouch for and protect their identity in the NFT Wild Wild West. Playing a role in NFT art enables established art institutions to maximize their influencer status in the future world of art. 

The advent of NFTs represents an inflection point for established art institutions. Institutions that do not engage may cede influence to those that do engage as more of collectors’ dollars switch from traditional to digital art. Hence it’s not a question of whether to adopt NFTs but how to do so in a safe, controlled manner. To learn more about securing NFTs, read Buying Digital Art NFTs – Don’t Fall Victim to Scammers & Hackers or visit

Alfred Tom

Alfred Tom is co-founder/CEO of Wivity and president of Lumian Foundation. He also serves on the board of, an internationally-acclaimed Warhol/Bloomberg-funded contemporary art organization in San Francisco.