How NFTs are fueling a digital art boom

Written by Oscar Holland, CNN

This article has been updated following the auction of Beeple’s “Everydays: The First 5000 days”, which sold for $ 69.3 million.

When graphic designer Mike Winkelmann started producing one design a day in 2007, he was just looking for a way to improve his artistic skills. At best, the resulting “Everydays” project would help him promote his freelance work, which includes creating concert visuals for Justin Bieber and Katy Perry. But selling the digital images was not on his mind.

This week, a 13+ year compilation of artwork, collectively titled “Everydays: The First 5000 days,” sold for $ 69.3 million via Christie’s, placing Winkelmann’s name among some of the artists. most precious living items on the art market.

A multi-million dollar auction for Beeple’s “Everydays: The First 5000 days” closed this week at $ 69.3 million. Credit: Beeple / Christies

“It’s a bit surreal, because (digital imagery) wasn’t really something I imagined, in my lifetime, that I could sell,” Winkelman, who calls himself Beeple, said at a video call from her home in South Carolina. before the sale. “So it (came) out of nowhere. But at the same time, I also really feel like this will be the next chapter in art history.”

Virtual art has been created and has been the subject of discussion for years. But now, thanks to the endorsement of celebrities as diverse as Elon Musk, Lindsay Lohan, and Steve Aoki, the online buzz in art and cryptocurrency circles, and, perhaps more importantly, blockchain technology. , it hasn’t just entered the mainstream – it generates huge sums of money for digital artists and online collectors.
Beeple’s latest sale comes just weeks after his animated piece “Crossroad,” which pictured Donald Trump’s naked, graffiti-strewn body sprawled on the ground, was purchased online for $ 6.6 million. Elsewhere, a digital animation of the “Nyan Cat” meme – a flying cat with a Pop Tart for a body – earned its creator Christopher Torres nearly $ 600,000 in a virtual auction. Musician Grimes meanwhile made $ 6.3 million in under 20 minutes selling a range of collectible digital artwork.

At the center of this explosion of transactions are non-fungible tokens, or NFTs. Acting like virtual signatures, they address concerns that the value of digital art is diminished by the ease with which it can be copied or lost.

While an oil painting can only be displayed in one place and has a definitive owner, a digital image, video or gif can be infinitely duplicated and enjoyed for free on screens around the world. . This has often posed problems for potential collectors, who do not know how to price digital art and fear that it may lose its resale value. But now NFTs offer two things that the physical art market has always depended on: rarity and authenticity.

The rise of “non-fungible” tokens

NFTs are built on blockchain technology, which, just like with Bitcoin, offers secure recording of transactions. This digital ledger serves as incorruptible proof of ownership, meaning that “original” works of art and their owners can still be identified through the blockchain, even if an image or video is widely replicated.

A “fungible” asset is one that can be replaced by an identical one of the same value, such as a dollar bill, while non-fungible assets, such as NFTs, are tied to single goods and are not. not mutually interchangeable.

Like bitcoins, tokens can be kept in a virtual wallet. They can then be sold or traded, often gaining value in the secondary market. This makes NFT artwork similar to physical artwork – or any other real-world asset, according to Duncan Cock Foster, co-founder of Nifty Gateway, the platform behind Beeple’s recent multi-million dollar sales and Grimes.

“We have systems for collecting paintings, and we have systems for collecting sculptures. But until now people haven’t found a good way to collect digital art – and NFTs allow you to do it, “Cock Foster said in a video call, adding that buying tokens is easier and” much more accessible “than traditional art collection.

Related Video: How Has The Internet Changed Art?

On Nifty Gateway, artists set the number of edits for a single artwork by deciding how many accompanying tokens will be made available. This can range from one-offs, where a coin is sold to a single collector, to open-edition “drops”, where tokens are made available for a limited period of time.

The sale of Grimes’ “WarNymph” collection, for example, allowed up to 9,999 purchases of various works of art within seven minutes. Several of the creations were listed for just $ 20 per token, some of which are now selling for thousands of dollars.

By directly connecting artists to collectors, NFTs effectively eliminate galleries and other traditional custodians. Although Cock Foster is not disclosing the size of Nifty Gateway’s cut, he claims it is “much less” than what a gallery would usually take.

For Beeple, this represents a “democratization” of the art market. “Now I have direct access to my audience,” he said. “I don’t need to go through a middleman.”

And there is another benefit for digital artists: They can continue to make money on their work, even after it has been sold. NFTs can allow creators to receive a discount on all future transactions – on Nifty Gateway it’s usually set at 10% – breaking the age-old model that artists don’t directly benefit when works sold gain in value. during their lifetime. (For example, when a painting by David Hockney sold for $ 90.3 million in 2018, setting an auction record for a living artist, the British artist did not receive a single penny from the Its dealer had sold it for only $ 18,000 in 1972.)
Beeple (born 1981), EVERY DAY: FIRST 5000 DAYS, 2021. Non-fungible token (jpg).  21,069 x 21,069 pixels (319,168,313 bytes).  Struck on February 16, 2021. Estimate: Unknown.  Offered as a standalone bundle as part of First Open |  Online from February 25 to March 11

One of the digital images that Beeple produced daily from 2007. Credit: Beeple / Christies

So while Beeple made less than $ 67,000 when he originally sold his “Crossroad” animation, he pocketed an additional $ 660,000 when the original buyer sold it.

“Royalties are definitely something that makes this much more sustainable and fair for all parties,” said the designer.

New Collector Breed

The collector behind the $ 6.6 million “Crossroad” sale, Pablo Rodriguez-Fraile, said supporting creators is one of the unique benefits of investing in NFTs. While there is money to be made and a lot of speculation is occurring in the crypto art market, the 32-year-old said collecting digital works isn’t just about money. .

“I try to examine the lives and careers of creators. I like to connect with them and meet them… Fraile on the phone, adding that he is drawn to ‘masterfully executed’ works.

Beyond “Crossroad,” Rodriguez-Fraile said he has collected hundreds – perhaps thousands – of NFT artwork, selling only a handful so far.

Beeple's art often plays with pop culture icons in grotesque and unexpected ways.

Beeple’s art often plays with pop culture icons in grotesque and unexpected ways. Credit: Beeple / Christies

While the Miami-based collector was previously interested in blockchain and cryptocurrencies, without NFTs, he said he would not be involved in buying art. His experience, like Beeple’s, suggests that tokens empower a new generation of artists and collectors rather than taking a slice of the existing art market.

“The analogy I like to make is Uber,” Cock Foster said. “When they were trying to forecast the size of the Uber market, they looked at the amount of money people spent on black cars (private car services). But because it’s so much easier to call an Uber than it is to call a black car, the actual market ended up being much bigger than that. I really think we are seeing something similar with NFTs.

“They drastically lower the barriers to collection,” added Cock Foster, whose platform operates under the ambitious slogan, “We won’t rest until a billion people collect NFT”.

Future prospects

Nifty Gateway may be a long way from its goal of one billion collectors, but the growth of the platform nonetheless reflects a growing interest in crypto art. As of March 2020, the site recorded monthly transactions of $ 30,000; last month, that figure reached $ 75 million, according to Cock Foster.

This leap largely coincides with another major force in the art world: Covid-19. With galleries and auction houses shutting down around the world – and people spending more time browsing the web or shopping online – NFTs have offered a new outlet for art lovers.

According to Beeple, this is why interest in tokens has exploded in recent months, even though the technology has been available since 2017.

“You keep hearing that Covid got things done for 10 years, and I honestly think that’s a big part of it,” he said. “Everyone has been sitting at home for the past year or so – so while I think it was inevitable, it really accelerated.”

The use of NFTs now extends far beyond the art world. DJ and musician Deadmau5 has used the tokens to sell digital goods, while Kings of Leon’s new album is released as NFT. Nike has even reportedly filed a patent for coin-operated shoes bearing the “CryptoKicks” trademark.

This rapid growth has raised fears of an NFT bubble – one that could burst when the world emerges from the restrictions of the pandemic era. While collector Rodriguez-Fraile believes “NFTs are here to stay,” he admitted that “we might be going through a period of hype… and I think the overall ecosystem might slow down a bit when it comes to pricing. “.

For Cock Foster, however, the return to normalcy presents opportunities rather than threats, not least because galleries offer avenues for exploring digital art beyond a computer screen.

“Digital art is very, very immersive,” he said, adding that exhibiting art is always important to online collectors. “So I think we can build some really cool physical experiences.”

This article has been updated to reflect the final amount generated by Grimes’ NFT drop.

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