How the NFT boom is changing the art market
Last year’s Beeple auction at Christies was the first time a crypto artwork was sold through NFT’s at public auction. NFT, short for non-fungible token, provides a means of digital authentication of monetary trade though a blockchain, a digitally distributed public ledger of cypto transactions. Beeple’s digital work made an astonishing $69.3 million causing the NFT bubble to truly expand, and it has continued to do so ever since.
The crypto boom is unprecedented as it has been the most drastic change to the way we view, experience, and trade art in centuries alongside the invention of the printing press in the 1400’s and then the camera in the 1800’s.
The rapid development of this means of producing and selling art reflects the current dispersal of wealth. It is those who are in the technology industry that have the disposable income to be spending on art, and these buyers are finding their way into the art world through the medium that they are accustomed to. The value in crypto artworks and the accompanying NFT’s is seen by those who understand and appreciate the technology behind their creation and trade.
In recent months there has been an interesting shift in the art market for the tech buyer. Crypto collectors, such as Justin Sun who is the CEO of Hong-Kong based Cryptocurrency platform Tron, entered the art world through the NFT. Yet they have now begun to find themselves at art fairs, galleries, and auctions. This emersion of the tech buyer into the world of physical art has begun to bring together two differing dimensions of the market. This is highlighted in Mr. Sun’s recent acquisition of Giacometti’s Le Nez (1947), for $78 million from the Sotheby’s auction of the Macklowe collection. After the purchase, Sun announced his new NFT investment fund through which he would tokenise the blue-chip works he has collected, which also include a Picasso and a Warhol.
The Tech buyer is also bringing in a new attitude to the acquisition of art works. Traditionally trade in art has been a very private affair, but the collectors from a background of the technology industry are making public their purchases. This is pushing the art market into the knowledge and domain of the general public through social media. Ryan Zurrer for example, took to twitter as soon as he gained possession of the NFT for Beeple’s Everydays Raw to show his appreciation for the artist, but also the price he paid though the addition of a link to the website OpenSea. This publication of purchase price by the buyer themselves is unusual in the traditional art market, showing that the new players in the market are not conforming to the established customs of the art world.
However, on the opposite side to this transparency, the world of NFT’s is proving to be rife with fraud cases and no established regulation is in place. Currently it is easy for anyone to ‘mint’ a digital file into an NFT. With the blockchain system being established on the bases of anonymous buyers and producers the sale of stolen artworks is rife, and regulations are going to be hard to implement meaning fraud to both consumers and produces will continue unless there is a drastic change to the structure of the crypto art system and market.
The future of the NFT is uncertain. What is certain though is the impact it is going to continue to have on the more traditional art market. The shift in the collector base for works of art is going to change what is valued and how it is shared with the world.