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What are those NFTs that are breaking through digital art?

Thanks to a work of art in the form of a non-fungible token, the American Beeple is one of the top three most expensive living artists. Madness or a deserved breakthrough for digital art?

After a two-week auction, the digital artwork ‘Everyday: the First 5,000 Days’ was sold at the auction house Christie’s Thursday for almost 70 million dollars. Mike Winkelmann, known by the stage name Beeple, has already worked with major brands and well-known musicians, but it was unexpected to be on the same stage as the artists Jeff Koons and David Hockney.

Everyday: the First 5,000 Days by Beeple
© via REUTERS

“The work is sent directly from Beeple to the buyer, accompanied by a unique non-fungible token, encrypted with the artist’s forgery signature and uniquely identified on the blockchain,” said Christie’s. The auction house also accepted payment in the digital currency ether for the first time.

What is a non-fungible token?

Non-fungible tokens (NFTs) have been around since 2017 and can take all kinds of forms. For Beeple it is about digital video or image, sometimes with a physical object, verified with a digital signature on a blockchain. Non-fungible means that it is a unique digital piece. Blockchain is a system for recording data without central authority, making forgery almost impossible.

NFTs can have very different characteristics. Some NFTs are a kind of digital collection cards, where no rights are transferred. The auction at Christie’s does involve the transfer of a work of art.

‘Just like in physical reality, with an NFT you can also publish an edition of, for example, 200 copies’, says Koos Weel, art market expert at the online marketplace Catawiki and independent art consultant.

Non-fungible tokens

NFTs have been around for several years and have become all the rage in recent months. The climax, whether provisional or not, was an auction of Christie’s, which reached an amount of 69 million dollars. Observers are wary of excessive speculation, but consider it an important development for the digital art market.

Why use an NFT as an artist?

Thanks to the NFT, a digital artist can make his work unique and authentic. The infinite reproducibility of digital works makes them difficult for the classical art trade. The NFT can offer a solution for this. ‘The die was cast for digital art’, says Jan Mangeleer, lawyer and consultant with a special focus on the digital world and payments. ‘The question was not whether it was going to happen, but who was going to kick off when.’

An NFT is a flexible way to attach conditions to a sale. With a ‘resale right’, the artist can receive part of the proceeds if owners resell the work. ‘That is one of the most interesting aspects of the whole phenomenon,’ says Weel. ‘As an artist, you decide how your work is traded,’ says Mangeleer.

Why buy an NFT?

CryptoKitties.
© CryptoKitties

NFTs can be an investment much like a digital currency. With the necessary risks. In 2017, there was speculation in CryptoKitties, images of cats certified on blockchain. In 2018, the market collapsed along with a slump in digital currencies.

Advantages can be linked to an NFT. The rock band Kings of Leon issued tokens that give buyers ‘for life’ a front row seat.

Isn’t the technology too difficult?

It is not more difficult than installing an extension of the Chrome browser and following a step-by-step guide. Marketplaces such as OpenSea have every interest in taking beginners by the hand.

Why does an auction house or gallery participate?

The traditional art world sees NFTs as a way to connect with younger clients. It is striking that Christie’s also gives a breakdown of the 33 bidders by age in his press release. Baby boomers (1946-1964) make up 3 percent, Gen X (1965-1980) 33 percent, millennials (1981-1996) 58 percent and Gen Z (1997-2012) 6 percent.

Galleries and auction houses also benefit from the fact that digital art can be traded like physical works. Moreover, for purely digital art there are much less or no storage, preservation and transport costs.

How susceptible to fraud are NFTs?

The blockchain provides full traceability and in principle cannot be manipulated. But a fraudster can always package someone else’s work like his. Knocking and prosecuting the fraudster is not always possible in an international context. The intervention of a house like Christie’s is an extra protection.

Is Beeple’s work really worth 70 million?

‘A digital artist like Beeple had a completely different position on the art market ten years ago. The importance of the digital has become so much greater, ‘says Weel. The art expert believes that the traditional art market has grossly underestimated the importance of phenomena such as video games. Digital artists are becoming important players. ‘Just as the Impressionists could claim their place in the art trade and academies due to their large following in society.’

Still, the mania is ‘not super healthy for the market’, says Weel. ‘Beeple is a flag bearer for the future of digital art, but there are other digital artists that I am much more impressed with.’

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