Why Did NFTs Turn the Art World Upside Down in 2021?
The history records might show that 2021 was the year of the NFT, and they’re on track to have another record-breaking year in 2022. Why are NFTs, or non-fungible tokens as they’re more formally known, having such a boom? In this post, we’ll look at the rapid rise of NFTs and how this new digital asset came along at the right place and the right time to upend the art world.
The Rapid Rise of NFTs
Non-fungible tokens went from relative obscurity just a few years ago to being regularly discussed by celebrities on network television, and they’re quickly approaching household name recognition. The popularity of NFTs has grown alongside the popularity of cryptocurrencies. As more people learn about Bitcoin and other cryptocurrencies, the utility of blockchain technology in other areas of life is becoming more broadly understood.
When did the NFT boom begin? It may have all tipped off with an update on the nostalgic hobby of collecting trading cards. In October 2020, the NBA launched TopShot, an online platform allowing investors to buy, sell, and collect game highlights as NFTs, which are like a digitized version of traditional sports trading cards. But NFTs have notably taken hold in the world of art collecting.
Why do people care about NFTs and their impact on the art world? Industry watchers predict that the virtual goods market could reach a valuation of $190 billion by 2025. The versatility of digital assets stored on the blockchain means they can represent a wide range of items that can exist online or offline.
NFTs in the Art World
The art world may have been ripe for adoption of digital assets, but few could have predicted the kind of seismic shift that NFT buying and collecting would unleash. On March 11, 2021, the famed and historic Christie’s Auction House held its first NFT auction, featuring, among others, the digital work of Mike Winkelmann, an American digital artist known professionally as Beeple. One of his more famous pieces, “The First 5000 Days,” sold for a record $69 million at that March 11th auction. An artist who had previously never sold a digital print for more than $100 was suddenly the man behind the third-most-expensive work ever sold by a living artist.
How does that work, exactly? Well, in purchasing an NFT, you aren’t buying the original work itself, rather the right to prove that you own a copy of that work. The certificate of ownership lives on the blockchain, where it can’t be altered. So, let’s imagine you just bought an NFT of some fine digital art. Can you lock it down in a vault where no one else can see it? Not exactly. Owning NFTs doesn’t prevent others from viewing the digital asset, downloading it, or screen-grabbing it. In fact, the more people who interact with said asset, the more potential value it may hold.
In traditional fine art dealing, duplication usually makes the work less valuable, but with NFTs, that is not the case. Still, in case some of the major price tags of NFTs mentioned above have left you with sticker shock, rest assured that most NFTs are within more accessible price points, selling for far less than those which tend to garner headlines.
How can people potentially increase the value of the digital artwork they purchase? People can not only see art but “own” a version in virtual collections. Enter digital “galleries” like Occupy White Walls, which is an art-focused sandbox game that encourages players to build galleries and curate exhibitions using their fine art NFTs. Their landing page boasts that it is home to “over 16,000 art works and counting.” Due to the infinite replicability of digital assets, anyone in Occupy White Walls can own virtual works by Vermeer or Lichtenstein, and users can then “play the game” by constructing buildings to house their favorite works.
But those seeking to transform art into digital assets aren’t limited by digitized versions of classical paintings. Sites like Patreon, ArtFinder, and Shopify have all expanded their business models to include digital asset collection. Twitter now supports NFTs as profile pictures on the social networking platform. For digital collectors, this might be like hanging your most prized piece of art in the entry of your home. Another potential case for the rise of NFTs in the art world, and some might argue the most intrinsically valuable, is their potential to actively support and compensate artists for their labor, especially those who are not independently wealthy.
Criticisms of Art as NFTs
Criticisms of NFTs in the art world are not dissimilar to those leveled at many products in the world of crypto at large. Among the leading criticisms is that NFTs mark a profound ideological shift away from a “free and open” internet to an infrastructure centered around ownership. There are arguments that NFT consumption models replicate the same elitism and scarcity found in traditional markets, contributing to further privatization of the web where only those in the highest socioeconomic brackets have ownership.
Many in the art world are skeptical as to whether an NFT-based business model would have long-term viability. For art in particular, the inherent replicability of NFTs makes for a tricky proposition, especially when copies are nearly identical to one another. After all, the entire pitch of NFTs is that they are supposed to be one of a limited quantity. The value of digital ownership itself is also viewed critically by some, where the legitimacy of the seller may cause added volatility. An NFT purchased through a new gaming startup that runs on the blockchain could reasonably seem more prone to wild fluctuations versus one purchased through Christie’s Auction House.
Although NFTs only recently burst onto the scene in the art world, it’s difficult to say what kind of trajectory the trend will take as the technology is still so new. One thing is certain: NFTs have piqued the interest of art collectors from both the analog and digital spheres. If it so happens that crypto and art collecting are where your particular interests converge, NFTs are certainly something to keep an eye on.