How NFT startups are changing the art market

NFTs are changing the art market at a breathtaking pace, which is why startups like Pinsl from Stuttgart want to make NFT trading more accessible and secure. But the hype is also attracting dubious providers.

Vinzent von Witten is a founder through and through. He has been active in the start-up scene for about seven years. He talks about topics like AI or the blockchain quickly and in a structured manner. But when it comes to art, his voice becomes quieter. Then he takes his time, philosophizing about the value of works of art. For a long time, von Witten searched for a way to combine his passions - founding, crypto, tech and art. In April 2021, he found it: He launched the Stuttgart-based start-up Pinsl. This aims to connect the traditional art world with the NFT market.

NFT stands for Non-Fungible Token. They present an object such as a picture in the blockchain. With them, people can own, buy and sell digital files - including mainly artworks. Each NFT is considered unique. People can still download it, but only the buyer is shown as the owner. At best, this should make it much easier to trade artwork. Just creating your own NFT, marketing it and finding a suitable buyer is not that easy. And even as buyers, there can be problems - for example, if they are unsure whether the NFT seller really has the rights to the artwork on offer.

Von Witten used to work as a video producer with Hollywood director and Oscar winner Costa-Gavras, among others, before moving into the start-up world. Since 2015, he has founded several companies of his own. As is often the case, these did not lead to success, but they do teach von Wittem a lot about starting up. He has been active in the crypto scene for a long time: among other things, he helped to set up the Stuttgart Blockchain Future Festival and was responsible for digitalization projects such as a blockchain strategy for management boards at the financial group W&W.

Now he wants to bring order to the wild NFT world with Pinsl. "We are building a user-friendly, reputable and legally compliant platform for fine-art NFTs," von Witten explains. This is expected to be launched in June. Until January 2022, von Witten built the company alone. Then Nils Dürr joined as co-founder. The project's founding partners and first business angels are Johannes Graf Strachwitz and Oliver Rebner from the communications agency 0711, the lawyer Martin Rath and artist Sebastian Priester. Other start-ups such as Artéq from Vienna and Digitalstage.io and Fanzone from Berlin are also focusing on the NFT market, partly for works of art but also for music or collectible pictures for fans. But can this really work, or will the hype soon be over again?

Pinsl wants to give artists "water to swim in"

"Our platform is primarily aimed at traditional players in the art world," says von Witten. His team verifies artists, gallery owners and buyers so that there are no financial, copyright or other problems. "Artists and dealers should and want to focus on the art - not on business and technicalities," von Witten explains. "However, everyone needs water to swim in. That's why we offer the art world a safe framework for NFT trading."

Pinsl wants to take on this complicated part - and also provide a platform where people can exchange and trade. The startup also wants to offer social functions: "This way, artists can also meet new potential buyers." On the one hand, artists can sell so-called "Repro NFTs": scans or photographs of physical artworks as NFTs. On the other, they can sell NFTs of digitally created artwork.

"I came up with the idea for Pinsl because I'm friends with a lot of artists, have been interested in art myself for a long time - and create art with my favorite media," von Witten explains. He already landed a small commercial success in the process: in 2012, for example, London's famous Tate Modern museum included T-shirts with collages by him in its artist store.

Art market expert: Artists should definitely deal with NFTs

Art market expert Arne Freiherr von Neubeck is one who believes in the future of NFTs: "For artists who have mastered the skill of self-promotion, there is a great opportunity due to the greater reach of digital art," he says. However, as someone who has been dealing in art since 2008 and is a major player in the German art market with his company The Global Fine Art, he also knows, "But most artists will fail with it, just as they fail in the analog world."

Von Neubeck believes that "platforms with a boutique character" like Pinsl can definitely play an important role "in enabling artists to place themselves beyond the mass market." But these could only help if they "generate enough traffic." The very large NFT markets, such as Opensea, have a problem: "The platform is huge. You meet millions of users - but at the same time you run the risk of getting lost."

In any case, von Neubeck strongly advises artists to get to grips with the NFT matter: "If I don't deal with it, the train will roll by." The market's current moment, he says, is particularly interesting: "The train is already rolling, but the tracks still need to be laid. That's happening at full speed right now." As is so often the case, the early momentum offers the risk of failure and setbacks on the one hand - but huge opportunities on the other. However, one should not be careless: The processes are not easy to understand, "fraudsters lurk, and volatility is significant."

NFTs will find their way into the art market

According to von Neubeck, the NFT hype turned out to be so big mainly because the art market was under massive pressure due to the pandemic: fairs, presence auctions and cultural events were down. "NFTs stood out as revenue generators," he notes. NFTs were also expected to generate sales for people who had not previously dealt in art: "They introduced a completely new target group to the market. Young people who have come into wealth primarily through crypto investments."

For there are still some uncertainties with NFTs, he said: physical art is usually more constant in its price. And whether the price level of NFTs will remain the same is uncertain, he said: "The market is risky and volatile." The poor environmental record of NFTs could also spoil the party in the long run: already, it has caused many NFT critics. At the same time, however, there is no turning back, according to von Neubeck: "The trend is irreversible. NFTs will find their way into the art market."