NFTs and Crypto Art – The next stage of evolution for the art market?

Until he turned to crypto art, the digital artist Mike Winkelmann – better known by his pseudonym Beeple – had only earned about 100 US dollars for an art print.

Since 2007, he had posted a digital image almost daily on the online platform Beeple on Tumblr . At the beginning of this year, he combined tiny images of these into a collage and created a JPEG file measuring 21,069 by 21,069 pixels. He titled the collage “Everydays: The First 5000 Days” .

He then sold the file at auction. The price was exorbitant.

In March of this year, one NFT works was auctioned at Christie’s for an incredible 69 million US dollars. According to the auction house, this sale positioned him overnight “among the three most valuable living artists” .

The record-breaking NFT sale comes after months of increasingly valuable auctions. In October 2020, Winkelmann sold his first series of NFTs, with each pair costing $66,666.66. In December, he sold a number of works for a total of $3.5 million.

And in March 2021, one of the NFTs, which was originally sold for US$66,666.66, was finally resold for the aforementioned fabulous US$6.6 million.

Many participants in the art market see this as nothing less than the beginning of a new era: a revolution in the art market with enticing new earning potential for artists of all kinds.

“I see this as the next chapter in art history ,” said Winkelmann. “Now there is a way to collect digital art.”

NFTs , or Non-Fungible Tokens, are unique files residing on a blockchain that can verify ownership of a digital artwork. Buyers typically receive (limited) rights to a digital or digitized original work to display the digital artwork they represent. The technology has exploded in recent months—and Winkelmann has been at the forefront of its rapid rise like no other.

“He showed us this collage, and that was my eureka moment, when I knew this was going to be extremely important,” Noah Davis, postwar and contemporary art specialist at Christie’s, told The Verge. “It was just so monumental and so indicative of what NFTs can achieve.”

Nevertheless, many are likely wondering:

How did such a price come about?

A number of factors could explain why Beeple's work has become so valuable.

Firstly, he has built up a large fan base with around 2.5 million followers on social media. And he is known to be incredibly productive: As part of a project called "Everydays," Winkelmann created and published a new digital artwork every single day. The project is now in its 14th year.

At the same time, NFTs have exploded in value over the past few months and are – at least for now – seen by many as the ultimate new way in which digital art will be acquired and traded in the future. For art collectors who firmly believe this, the rising prices are nothing compared to what NFTs will be worth in the future when the rest of the world has finally recognized their value and significance.

Christie’s is also a legitimizing force for both Winkelmann’s art and NFTs as a technology. The 255-year-old auction house has sold some of the most famous paintings in history, from the only known portrait of Shakespeare created during his lifetime to the most recently discovered painting by Leonardo da Vinci .

What is an NFT?

We haven't yet addressed this question in detail, in case you haven't delved deeper into the subject. We've already provided an explanation in an article about crypto art . Nevertheless, we'd like to give a brief introduction again.

With NFTs, you can buy and sell ownership of unique digital/virtual items and track ownership using the blockchain. NFT stands for "non-fungible token" and can technically contain anything digital, including drawings, animated GIFs, songs, or elements in video games. An NFT can be either unique, like a real painting, or a copy of many, like trading cards, but the blockchain tracks who owns the file and verifies ownership unambiguously and transparently for everyone to see.

NFTs have made countless headlines since the beginning of the year. Some crypto art pieces of this kind have sold for millions of dollars, for example, featuring popular memes like Nyan Cat and the "Deal with it" sunglasses , which were auctioned off.

On the negative side, there is also much discussion about the massive electricity consumption and environmental impact of NFTs. Winkelmann said he plans to purchase CO2 compensation for all his NFTs in the future so that their impact is net positive.

The rise of NFTs has faced opposition even outside of environmental debates. Many works of questionable artistic value are sold at hype-driven auctions. There are allegations that works by artists have been stolen and auctioned as authentic.

Those who staked their claims early in the emerging world of crypto art are convinced that the technology is here to stay. Pablo Rodriguez-Fraile , the collector who bought a Beeple for $66,666 and resold it 100 times just four months later, began collecting digital art a year ago and co-founded the Museum of Crypto Art his growing collection . He sees Winkelmann's soaring sales prices as proof that technology is what matters: "I really thought it would be the right catalyst."

The reason for this sale was in no way money.  I really thought it would be the right catalyst to signal confirmation of what's happening in the industry."

said Rodriguez-Fraile.

Christie ’s plans to collaborate with more digital artists to auction NFTs. Given the growing number of smaller marketplaces and the countless NFTs being created daily, he sees Christie’s role as fostering the space in an “extremely thoughtful” way.

We bear more responsibility than ever before in any collectibles category as referees of the items we sell.”,

Davis said.

Rodriguez-Fraile believes that the next wave of artists and collectors will view NFTs as an easy way to buy and sell art.

“I am confident that it is not just hype ,” he said. “It is the catalyst for a generation.”

Besides Christie's and the many smaller NFT platforms, OpenSea established itself as a digital hub for discovering, collecting, buying and selling exceptional crypto art online.

OpenSea – A digital port for all NFT enthusiasts?

This platform is the world's first and largest NFT marketplace on the internet and sees itself as the builder of an open digital economy for art.

A core element of OpenSea's vision is to enable dynamic new economies using open protocols like Ethereum and interoperable standards such as ERC-721 and ERC-1155. They are developing tools that allow consumers to freely trade their assets, creators to publish new digital works, and developers to build comprehensive, integrated marketplaces for their digital assets.

The path to the top led through treacherous waters

In 2017, the world witnessed the birth of CryptoKitties . For the first time, the internet community experienced a decentralized application based on blockchains, but aimed at a mainstream audience.

While CryptoKitties may have felt like a toy to many, it represented a dramatic shift in how we interact with objects in the digital world. Whereas previous digital items resided on corporate servers, blockchain-native items were built on shared, public blockchains owned by no single party. They could be viewed, openly exchanged, and truly owned anywhere, in a way never before possible in the digital world.

Fascinated by the emerging movement, Devin Finzer and Alex Atallah the early adopter communities on Discord and began engaging with users. With the beta launch of OpenSea in December 2017, the first open marketplace for all non-fungible assets on the Ethereum blockchain was born.

OpenSea is the largest general marketplace for user-owned digital items, supporting multiple blockchains, with the broadest categories and best prices for new emerging asset classes.

Joachim Rodriguez y Romero

Owner and Managing Director of Kunstplaza . Publicist, editor, and passionate blogger in the fields of art, design, and creativity since 2011. Graduated with a degree in web design from university (2008). Further developed creative techniques through courses in freehand drawing, expressive painting, and theatre/acting. Profound knowledge of the art market gained through years of journalistic research and numerous collaborations with key players and institutions in the arts and culture sector.

www.kunstplaza.de