The Crypto Art Market and NFTs - Fleeting Bubble or Here to Stay?Art Wise
Crypto art and specifically NFTs (non-fungible tokens) have been overwhelming the news since February 2021. Spearheaded by international celebrities like Grimes (Canadian artist and musician) and actress Lindsay Lohan participating in digital art auctions, the crypto art market’s popularity is snowballing. The media feeding frenzy around celebrity crypto art auctions is instrumental in shining light on the mind-boggling potential of the crypto art market. While it is challenging to accurately determine the exact size of the market, sales of crypto art have comfortably crossed US $300 million as of March 2021. In this article, we’ve broken down the pioneering crypto art phenomenon into its basic atomic structures, so one can better understand what led to the crypto art boom and the interesting possibilities it has unleashed.
An NFT by Grimes from the ‘WarNymph’ series – a collection of 10 NFT artworks that altogether sold for over US $5.8 million in under 20 minutes
What is an NFT?
An NFT (non-fungible token), is a unique cryptographically generated token, that is linked to a digital asset to represent the ownership over it. NFTs, by authenticating and making digital artworks unique, created a profitable market around digital art, which wasn’t monetizable because of its very nature of being publicly available. The artist attaches a file of the digital artwork (like an image, video, mp3, or such) to an NFT - which is then put up for sale in a cryptocurrency marketplace. The NFT can be treated as a unique identification token assigned to the digital artwork, which stores the details of its provenance in a secure database using blockchain technology. Though the digital file attached can be replicated all over the internet, the NFT artwork is still authentic as its provenance can be traced back to the original artist who created that NFT. Therefore, NFTs represent ownership of digital assets so that artists can sell their unique digital art, while the content itself remains open and freely accessible as a public good.
Since NFTs represent unique artworks, they have unique values based on the worth of the digital file they carry. The value of an NFT is decided by its owner’s quote, and further by auction sales, making NFTs compatible for trading in the dynamic art market. In a nutshell, NFTs tokenize digital artworks, allowing them to be branded and marketed as scarce, tradable digital assets - surging their valuations extraordinarily.
Apart from the latest wave of digital art, NFTs are prominently used in several digitally addressable markets like gaming, music and collectibles. The most popular cryptocurrency offering NFTs is Ethereum, while others like Bitcoin are expected to join the bandwagon.
Early Movers – NFTs in Art
Banksy’s satirical artwork “Morons (White)”
Injective Protocol, a blockchain company, reportedly bought the famous street artist, Banksy’s original artwork titled “Morons (White)” for a whopping US $95,000. In March 2021, the artwork was set alight ceremonially on Twitter livestream. Just days after the artwork was physically burned, the exclusive digital version of the artwork was sold as an NFT for 228.69 ETH (approx. US $380,000, at the time of purchase) in an OpenSea sale. This brave stunt attempts to bridge the gap between the traditional art world and the trending world of digital art. It also bookmarks the 21st century’s unique experience of art as an interaction between the art and cryptocurrency communities.
Banksy’s artwork “Morons (White)” being burnt on Twitter livestream
The world-renowned auction house Christie’s tapped into the crypto art boom by listing Mike Winkelmann's digital collage of his artworks since 2007, titled “Everydays: The First 5000 Days”. It made history as the first purely digital art sale by a traditional auction house, and as the first auction where Christie’s agreed to accept payment in cryptocurrency. The NFT by Mike Winkelmann (or Beeple, as the artist is popularly called), realized an astounding price of US $69.3 million at the auction concluded on March 11, 2021.
Beeple’s NFT titled “Everydays: The First 5000 Days”
Trevor Jones, a Canadian artist with an academic training in fine art, has been exploring the intersection between art and technology. He begins his NFT works as traditional “physical” paintings and eventually digitalizes them. In February 2021, he sold 4,157 pieces of his open edition ‘Bitcoin Angel’ in just seven minutes for US $777 each, totalling over US $3.2 million.
Trevor Jones' Open Edition "Bitcoin Angel" NFT; source: trevorjonesart.com
Short-Term Craze or Long-Term Change?
This multimillion-dollar hype around NFTs might not necessarily be intended to reinvent art or the concept of property. If one can look beyond the superficial publicity, the sudden boom and news-making auctions might be a self-serving propaganda by crypto-savvy investors. Some argue that the top-tier investors who amassed fortunes with cryptocurrency windfalls, could now be spending some of this wealth to advertise and trend blockchain technology, so the money steadily influxes into the system.
With gravely polarised reportage, it is hard to determine if the sudden popularity of crypto art is constructed or organic. But the flourishing of crypto art certainly proves to be productive, as it ensures global access to locally known artists, decentralised digital auctions and trackable sales that minimize third-party fraudulence.
NFTs in India
While Indian artists like Delhi-based Amrit Pal Singh and Siraj Hassan from Chennai have thrived in the crypto art space, the NFT market’s boom seems to be tempered in India – owing to the niche market of cryptocurrency and the relatively young laws governing digital property.
From left to right - Daft Punk Toy Face II NFT, Frida Toy Face NFT, and Daft Punk Toy Face I NFT by Amrit Pal Singh, which sold for 8, 3.9 and 7 ETH respectively in Feb 2021; source: amritpaldesign.com
In a revealing interview, Amrit Pal Singh, who held an immensely successful NFT auction in February 2021, threw light on his experience with the crypto art market. The crypto art scene in India, according to Amrit, is largely a community-driven movement opening up exciting possibilities for artists. As artists have the freedom to represent their work by minting their own NFTs, crypto art is a relatively decentralised market. Furthering the market democratisation, every sale is transparent on the blockchain network – and NFTs tip the scales in favour of creatives by fetching artists hefty royalties every time the artwork changes hands. Though the NFT auction sales are the tip of the iceberg, building a body of work with consistent social media engagement establishes a stake in the game for NFT artists, says Amrit.
NFTs are backed by a meticulous setup of blockchain networks, which are run by exhausting massive amounts of energy. Addressing the energy inefficiency problem, and if it could threaten the adoption of NFTs, Amrit believes, that with the age of internet pushing for technology-first innovations, it does not seem practical to limit new technologies. The way forward, in a rapidly digitalising world, would rather be to dynamically adapt these ground-breaking technologies to sustainable energy standards. Because the crypto art market is still nascent, Amrit believes it will be throbbing with cycles of saturation and surge, and evolving constantly.
While only time can reveal whether the NFT boom will be sustained or not, one can be certain that, rightfully so, it will be milked for all its worth by cryptocurrency investors, digital artists and collectors.