The art world joined the cryptocurrency world last year thanks to a new tool, NFTs. Would this be an opportunity to invest in a business with a bright future like a canvas or a sculpture by a master?
Bill Bonner warned us about a year ago: NFTs (non-replaceable tokens) It is one of the new fads in the market. Since then, they have conquered many areas: sports, video games, cinema, fashion and even social networks.
Jack Dorsey, founder of Twitter, sold his first message posted on the social network on March 21, 2006 for $2.9 million using NFT technology. It was also sold last year in the form of the first SMS text message in history, the first page published on Wikipedia or even the source code in the origin of the web.
No wonder, then, that the contemporary art world, always in search of originality and excess, has taken over.
NFTs, a way to create scarcity
First of all, let’s remember what NFTs are. Translated into French Irreplaceable icons They become “irreplaceable tokens”. Admittedly, that doesn’t really enlighten us!
In fact, it is nothing more or less than a tamper-proof certificate proving the authenticity and distinctiveness of what you buy – usually a digital file – thanks to blockchain. While one Euro can be exchanged for another with the same value, or one Bitcoin is equal to another Bitcoin, the NFT is unique and cannot be exchanged for another NFT. The euro and bitcoin are exchangeable – that is, interchangeable – when the NFT is not.
Digital technology allows endless reproduction of the same file: the person who took it can send it to as many people as they like, and they can, in turn, send the document to their relationships.
In the end, tens, hundreds, or millions of people are likely to upload the same photo. There is nothing that distinguishes the original from its copies and all copies have the same value, generally zero. This is a problem for artists who use digital.
Let’s take the example of “video art”, which emerged in the 1960s with the Korean Baek Nam Joon who, with the help of Japanese Shoya Abe, invented one of the first video compositing machines that allowed him to color, distort, and modify photographed images. It became democratized in the 1980s when photographic and editing equipment became more accessible, today’s video art no longer uses reels or cassette tapes, but rather uses hard disks or memory cards and relies on the latest digital technology.
Video art has now entered contemporary art museums and among top collectors such as François Pinault. In the Art Index ranking of the most important artists in contemporary art, four video artists appear in the top ten: Bruce Neumann, Cindy Sherman, William Kentridge and Bibilotti Rist.
However, if he had “stars,” video art never made it to the records of contemporary painting or sculpture. Works by famous artists can be sold for 4 or 5 million euros in galleries or contemporary art fairs.
On the other hand, video art is almost absent from auctions, where astronomical odds and prices are made. why ? This is mainly because potential buyers are afraid that the work can be reproduced and that there are a large number of copies. Thus, according to Artprice, video art accounts for only 0.3% of art market revenue, all areas combined (2017 number).
What applies to video art applies to all digital arts, a category of contemporary art whose processes and works use many digital technologies for creativity, but also as a medium.
So the arrival of NFT technologies is a real revolution for digital art. “NFT-based art is poised to become the truly next disruptive force in the art market,” says contemporary art scholar Noah Davis of Christie’s. It allows, in fact, to create a scarcity where, before, there was doubt in the public. Whoever says scarcity says expensive!
As artist Beeple says, “Artists have been using data storage and software to create and distribute artwork on the Internet for over twenty years, but there was no real way to own and collect it. With NFT, a new chapter in the history of digital art opens” (adapted from reverberationMarch 20, 2021).
Contemporary art market panicked
This explains why the same Beeple saw one of his works, Every day: the first 5,000 daysa digital collage of 5000 drawings made between 1Verse May 2017 and January 7, 2021, to be sold by Christie’s in March 2021 for $69.3 million.
Within a few moments, Beeple, who was virtually unknown until then, was pushed onto the podium of the most expensive living artists alongside David Hockney and Jeff Koons!
A record sale, in fact, has little to do with the work itself – a series of drawings that, for those who have seen it, have nothing remarkable about it – but is based entirely on the associated NFT.
This “token” contains, in fact, permanent and inviolable information about the author and owner of the work, but also contains technical and financial details that guarantee its traceability and authenticity. A token that also makes it possible to provide a resale right to the artist that is pre-installed and paid automatically at the time of successive resales in blockchain.
We understand that the 2021 edition of Art Basel Miami, held last December, was able to set aside space for NFTs. or thatart review, which publishes a list of the most influential people in the art world every year, propelled the NFTs to the top of its rankings for 2021! Or that, last Friday, January 14, a NFT . Museum It opened in Seattle.
However, NFTs are still marginal in the art world. At Artprice, in 2021, there were 265 auctions of Art NFTs for $227 million, or 1.5% of auction proceeds. Sophisticated art in the world.” nonfungible.com estimates the market at over $1 billion in 2021. What is certain is that NFTs have boosted the online art market where they already account for a third of the amounts traded.
Art…everything in virtual reality
You will understand, if you want to buy NFT certified digital artwork, you will have to go online.
What is certain is that you will not find them at auction in France, and they are intended for the sale of physical goods. Many internet platforms have specialized, such as KnownOrigin, SuperRare, OpenSea, Rarible, etc.
Sotheby’s and Christie’s have also created their own platform. They allow you to buy, but also to resell. In fact, owners share with NFT, “on average, after 63 days” (reverberation01/11/2022).
You’ll also need to keep a cryptocurrency wallet, as transactions are almost exclusively done this way, largely using Ethereum.
You will also realize that you will have to spend huge amounts of money, since the exchanges are highly speculative and promoted by billionaires in the world. technology who often hide behind pseudonyms. The market has become beyond the reach of ordinary human beings. Perhaps it will be thanks to the collapse that some “experts” predict in the near future?
Be that as it may, pitfalls are not absent from NFTs. Works offered for sale under the artists’ signature without their consent; Others have been hacked; Tokens have been stolen.
There are also dummy transactions sometimes (wash trade) where the investor resells one of his currencies … to himself to inflate its value artificially. Moreover, nothing prevents an artist from making several copies of the same work and selling each one as unique: they will all have effectively a different symbol. Each business will be unique, but there will be many that are “unique” in some way.
Finally – and perhaps not the least disadvantage of NFTs in the eyes of art lovers – you will have to design your work on digital media. It can only be hung on the walls of your living room by a screen.