Mainer’s digital art gallery raised $ 9 million on latest crypto craze

Jonathan Perkins of Portland runs one of the leading online marketplaces for non-fungible tokens, digital collectibles fueling a new financial craze and social change in the way people value what they buy.

Many see it as a bubble, but his company SuperRare said on Tuesday it had attracted $ 9 million in venture capital from billionaire investors, including Dallas Mavericks owner Mark Cuban. The tokens, known as NFT, exploded in popularity in February, when Christie’s Auction House sold a digital collage by artist Beeple for a record $ 69.3 million.

NFTs have been around since 2015, but their entry into the mainstream by Christie’s helped spike trading volume in the three major NFT markets, from $ 12 million in December to $ 342 million in February, according to DappRadar’s Industry Report. NFTs can include sports videos, digital coupons, and visual artwork, such as a collaboration between Canadian disc jockey Deadmau5 and augmented reality artist Sutu.

“It’s world news if a piece of art sells for that price,” Perkins, SuperRare director of products, said of Christie’s sale. “It really spilled gasoline on the thing.”

Perkins, 38, grew up in Penobscot and attended George Stevens Academy in Blue Hill before moving to California, where he earned a degree in digital media from San Francisco State University. He then moved to New York City, where he worked as a software developer before launching SuperRare in 2017 at a Brooklyn cafe with his cousins, John and Charles Crain. He then returned to live in Maine, where he has family.

SuperRare is a marketplace where collectors can buy, sell or trade digital art. NFTs have a unique code associated with an item that certifies that someone is its sole owner, thus creating a rarity on the Internet. While others may see a work of art, sporting event, or other digital item, there is only one owner. This rarity makes some NFTs, like the Beeple mosaic, so expensive.

Digital art is a new medium in the global market for all types of art, which stood at $ 67 billion in 2018, according to Statista. Perkins sees digital art as a sustainable business that tracks activities like ordering taxis, shopping for clothes, and buying homes online.

Once digitized, these markets usually get bigger, he said. Digital art is also more accessible, he said, as anyone with an internet connection can become a collector, which he sees as a huge opportunity.

“Even if we were to capture a few percent of the market, it’s still a multi-million dollar business,” Perkins said.

Buyers currently have to use cryptocurrency to purchase NFT art from the SuperRare Marketplace, which runs on a network called Ethereum. The network uses blockchain technology, which stores information in a way that is difficult to modify or hack.

However, blockchain networks have drawn criticism from environmentalists because they employ people who compete to “mine” the cryptocurrency to validate it. This involves doing a lot of calculations at each mine site and using a lot of electricity.

The annual power consumption of Bitcoin, the most popular cryptocurrency, is comparable to that of the Philippines, according to Digiconomist. Perkins said Ethereum is brewing new technology that extends validation to any user with a minimum cryptocurrency balance, a process that would be less energy intensive.

SuperRare, ranked the fourth NFT market in the world by ItsBlockchain, saw sales jump from $ 8,000 per month last year to $ 27 million in March. He sold his most expensive piece of art, an animated GIF by artist XCOPY, for $ 1.7 million last week. The company has more than 1,000 artists and 3,000 active collectors in its market, Perkins said. It has 20 employees scattered around the world and could double that number next year with the new investment.

An animated GIF from artist XCOPY that sold for $ 1.7 million last week. Credit: Courtesy of SuperRare

For a first sale of an artwork, SuperRare collects a 3% transaction fee from the buyer and a 15% commission on the sale, while the artist gets 85%. On secondary sales, the buyer gets 90 percent and the artist receives a 10 percent royalty. In March, that meant the $ 27 million in sales transactions grossed the company $ 3 million.

Paying so much for nothing tangible baffles those who wonder if DTV is a fad. Former Christie’s auctioneer Charles Allsopp told the BBC that “the idea of ​​buying something that isn’t there is just weird.”

Cuban, the famous investor, calls it a matter of perspective. In a January blog post, he said that “alumni” think something has to be tangible to be of value, but they are slowly finding that this isn’t always the case.

“They reluctantly realized that digital music had value over CDs,” he wrote. “The new generation that grew up in a digital world knew all their lives that what was most precious to them was digital. “

The Singaporean crypto-investor who bought the Beeple coin said he would have paid even more as it represents 13 years of daily work. Beeple’s digital collage contains 5,000 unique works created in 5,000 days.

The investor, Vignesh Sundaresan, known as Metakovan, founded Metapurse, the largest NFT fund in the world. He said the Beeple digital collage is the most treasured work of art for this generation and is worth $ 1 billion.

“The techniques are repeatable and the skills are surpassable, but the only thing you can’t digitally hack is time,” he said of his purchase.

But even Beeple, real name Mike Windelmann, thinks the market is overheated. The day before Christie’s record-breaking sale, he told the BBC that “we could be in this bubble right now”.

Perkins agreed, saying the digital art market is overexploited and the NFTs of YouTube stars and celebrities that are trending today won’t necessarily have lasting value. But he believes that genuine performers and those who trade great moments in the sport like the NBA’s Top Shot videos will have lasting value.

Dapper Labs, the company behind the NBA’s Top Shot videos of basketball’s best moments, said on Tuesday it had raised $ 305 million from investors, including basketball legend Michael Jordan. Top Shot accounted for almost 70% of NFT trading volume in February.

In February, a man named Jesse Schwarz paid $ 208,000 for the most expensive video moment of a massive LeBron James dunk against the Sacramento Kings. That same clip is on YouTube to watch for free, but Schwarz owns the moment and he bragged about it on Instagram.

“Dropped $ 208,000 on a video of @kingjames soaking.” If you slide to the end, you can watch it (for free), ”he wrote.

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