NFTs: The Future of the Art Market?
Featured Image: Still of Elon Musk’s First NFT
NFTs, or non-fungible tokens, are not as complex as they sound. Basically, an NFT provides blockchain-backed “proof of ownership” on an item that the token is attached to. NFTs confirm an item’s ownership by recording the details on a digital ledger known as a blockchain, which is public and stored on computers across the internet, making it effectively impossible to lose or destroy. These items can quite virtually be anything, from music albums to video clips. An increasing number of artists, art critics and art collectors are embracing the craze. NFT sales have earned artists millions, and it increasingly looks like they’ll transform the art world the same way that streaming transformed how we consume music.
“I have a feeling it’s only going to get a lot bigger!” Trevor Jones, an artist with an educational background in fine arts with a focus on drawing and painting, told Insider in an interview. “Ride that crypto wave!” Jones’ recent work, the Bitcoin Angel, is an open edition auctioned last month at Nifty Gateway NFT marketplace for $777. Buyers had 7 minutes to acquire the work, after which time the sale would close and determine the final amount of editions on the market. Eventually, 4157 editions were bought, breaking Nifty Gateway’s record at the time for open editions. With a strong secondary market for Jones’ work and despite the large edition number, Bitcoin Angel resale value is now in the $5,000 range – which has happened in less than a month!
The market for Jones’ work is only one indicator of how strong buyers currently feel about investing in tokenised art. On March 15th, Elon Musk tweeted his first NFT of a new electronic music track claiming that he’s selling a song about NFTs as an NFT. Meanwhile, the American billionaire entrepreneur Mark Cuban has secured @NFT handle on Instagram, eyeing the newsonomics potential of the torpedoing market for digital collectibles. This comes after earlier this month Cuban invested into an NFT platform Mintable.
What’s more is that last week, a piece of digital artwork by Mike Winkelmann, known as Beeple, sold for nearly $70 million. Christie’s, a 225-year-old auction house that used to only sell physical art, auctioned this entirely digital piece that sold for an eye-watering $69,346,250. “If everybody wants it, well, then it has value,” Beeple told Insider magazine. Christie’s said the purchase makes Beeple’s piece the third-most valuable artwork ever sold by a living artist, behind works by Jeff Koons and David Hockney.
In fact, artists and celebrities of all kinds are cashing in on the NFT wave. Singer Grimes has sold $6 million worth of digital art and Chris Torres, the artist behind Nyan Cat, sold his meme for $590,000. Clips of NBA star LeBron James dunking are selling for as much as $225,000 and Lindsey Lohan sold an image of her face, and Aphex Twin sold a new unique piece of artwork in the form of an NFT for $128,000. Needless to say, it’s clear that NFTs have opened up art to people who potentially have never even been to a gallery.
The latest Art Basel and UBS Art Market report points out that 2020 marked the first time the share of e-commerce in the art market has exceeded that of general retail. Aggregate online sales reached a record high of $12.4 billion, doubling in value from 2019. This data excludes the digital collectibles market, which already reached 400$ million by March 2021, almost doubling the total sales in 2020.
The reason for the sudden interest in NFTs could be chalked down to it the same bullish markets that are driving up the price of Bitcoin and other cryptocurrencies. While the government could eventually regulate the space, it’s unlikely to happen anytime soon. Will the NFT bubble eventually burst? Possibly. The NFT market is mostly speculative and we will probably see some wild price swings that we’ve seen with its cryptocousins. For instance, Bitcoin goes for around $50,000 today. A year ago, it was worth less than a fifth of that.
Whether the insanely high prices will drop or not, it’s undeniable that NFTs are a great way to reduce fraud in the art world, which of course, is of primary concern and interest for artists. So it’s safe to say, NFTs are here to stay.