Navigating and Starting an Art Business in Web3

Receiving payment in a Stablecoin based on their country’s currency can greatly improve the adoption of crypto for artists by providing a secure, stable and easily accessible means of payment.

I held a crypto asset that used a form of passive earning through weekly rewards. Once the value of the cryptocurrencies crashed I lost A LOT of money. However I still was required to pay for the tax of the NFT sales and be put into the highest tax bracket regardless of this massive financial impact.

Another huge problem is the lack of automated invoices when an NFT purchase is made also presents a challenge for artists. This means that artists must manually keep track of sales and create invoices themselves, which can be time-consuming and prone to error. If we are to utilise NFTs and crypto for their benefit of fast settlement time, then we need smart contracts that have a built-in function whereby an invoice can be automatically generated and sent to the artist.

Gas fees for creating or selling NFTs can also be expensive, which can eat into an artist’s profits. Additionally, there is a risk of losing assets by typing in the wrong cryptocurrency address, which can result in a permanent loss of funds.

Another huge problem is the lack of automated invoices when an NFT purchase is made also presents a challenge for artists. This means that artists must manually keep track of sales and create invoices themselves, which can be time-consuming and prone to error. If we are to utilise NFTs and crypto for their benefit of fast settlement time, then we need smart contracts that have a built-in function whereby an invoice can be automatically generated and sent to the artist.

Koinly is a useful website for sorting out the tax owed, but it doesn’t help when you need to connect a specific NFT sale to an invoice if you attach physical items with the sale. You will still need to find the specific sale attributed to the buyer and manually apply it and convert it to the fiat equivalent at the time of sale. I realise that crypto laws vary widely per country so be sure to know what laws apply to your business.

You should also never assume that because it is crypto that you can evade taxes. Everything is recorded on the blockchain, so your entire tax history can be traced.

Turns out that it’s very expensive to innovate in this space.

The lack of regulatory clarity surrounding NFTs means that artists may need to pay a tax specialist or lawyer to navigate the complex tax laws to ensure they are in compliance with the laws. This can add an additional cost to the process and further slow down the process of creating and selling NFTs.

Despite the many benefits of NFTs, artists must contend with a number of difficulties when moving their careers into the Web3 and NFT space. From tax implications to exchange fees and the lack of regulatory clarity, these challenges can make the process of creating and selling NFTs more complex and time-consuming than traditional systems. It is important for an artist to carefully weigh the potential benefits and challenges before making the transition to selling artwork in the NFT space.

I have lost many thousands to tax lawyers who have used my earnings to fund their time to learn how to navigate the law and charging me for the tax advice as there is no where to go.

In addition, one of the main challenges faced by independent artists is the complexity of NFT marketplaces. With a plethora of platforms and a wide range of token standards, it can be difficult for independent artists to navigate and understand the NFT space. This can lead to confusion and uncertainty, making it difficult for independent artists to effectively showcase and sell their work.

My artwork is distributed amongst different blockchains, some have had NFT mints that I have burned but it still appears inside the marketplaces. Overall it just seems incredibly messy and difficult for an art collector to find your entire body of work if you have moved blockchain. I use my website as the central hub where all my NFTs can be discovered but not every artist has a website and it can be costly and requires constant maintenance.

The dominance of PFP projects and AI-generated artwork has made it difficult for independent artists to compete and be recognised in the NFT market. PFP projects and AI-generated artwork have gained a significant following, attracting large amounts of investment and attention. This dominance also leads to a homogenisation of the NFT market, where similar themes and styles are prevalent, making it even more challenging for independent artists to stand out and showcase their unique perspectives and styles.

To address these challenges, NFT marketplaces need to improve their support for independent artists. This can be achieved by providing educational resources and support to help independent artists navigate the NFT space, creating opportunities for independent artists to showcase their work, and promoting a diverse and inclusive NFT market. Additionally, NFT marketplaces can also promote independent artists by highlighting their work and providing them with greater visibility, making it easier for them to connect with potential buyers and collectors.

This is for me an important one. When we think of crypto, we think of anonymity. So you don’t truly know who is buying your artwork. It is the same problem that exists today in the traditional art markets where galleries act as the middlemen and often is the case where the artist never gets to meet or know their buyer.

For me personally, it’s not been easy. While it is nice to explore new technology and enjoy some of the benefits, that does not mean that it comes with some heavy flaws, which will hopefully be ironed out over time.

If we want to see artists prosper on a more long-term basis and not based on the fluctuations of the crypto markets then we need a system that is much more defined, and better structured for business, removing risk and finding better ways to be discovered and connect with buyers.

If you’re an artist that is not too enthusiastic about using new technology or being at the forefront then I am not sure that this is for you – in the short term while there are improvements that need to be made.

Right now for me, it is a love/hate relationship because I love the potential it has but I hate the inefficiencies and risk that it brings. It has sent me on incredible highs from sales and incredible lows from the loss of assets through the volatility and not converting immediately into a fiat or Stablecoin.