What do NFTs (Non-Fungible Tokens) Mean for the Fine Art World?

Extract from Beeple's Everydays: The First 5000 days
What’s shaking up the art world right now isn’t a newly discovered Old Master or French Impressionist painting. It’s NFTs, aka Non-Fungible Tokens. 

In March, a digital file of American artist Beeple’s “Everydays: The First 5,000 Days” sold at auction through Christie’s for $69.3 million. It was the first NFT sale at Christie’s, and was deemed a huge success. For comparison’s sake, this sale – with the winning bid going to Vignesh Sundaresan – allowed Beeple (also known as Mike Winkelmann) to surpass many artists by creating the third-highest-paid price at auction for a work by a living artist. The only two living artists whose work sold for more are Jeff Koons (for his “Rabbit,” a 3-foot-tall stainless-steel bunny sculpture selling for $91 million in 2019) and David Hockney (in 2018, his “1972 Portrait of an Artist (Pool With Two Figures)” painting went for a cool $90.3 million at auction). While not sold at auction, Jasper Johns’ 1958 “Flag” painting fetched the highest record of all: $110 million, in a private sale in 2010.

Everydays: The First 5000 Days by Beeple

Everydays: The First 5000 Days, Beeple (b. 1981). Sold for $69,346,248, via Christies (March 2021).

To help us to understand the NFT craze, let’s start with the basics. What exactly is an NFT work of art? And why would someone want one? An NFT (short for non-fungible token or Bitcoin 2.0, with “non-fungible” basically meaning a one-time playing card) is literally a digital image, but its financial worth should not be compared to the photos you take on your smartphone and post to social media or share with friends and family. These are units of data stored in a blockchain (a digital ledger); they certify its originality and uniqueness – and that it is not a copy. The owner of an NFT can use the image however they like, under the terms of basic usage, such as republishing online, because they own it. According to NonFungible.com, the world’s largest database of crypto collectibles and blockchain gaming, in its 2019 Non-Fungible Tokens Yearly Report, as of this past spring the value of NFT artwork could be priced at $210 million. NFTs don’t always command as high of prices as “Everydays” did. Another of Beeple’s works—“Crossroad,” a 10-second video of people walking past Donald Trump—attracted just $6.6 million a few weeks before “Everydays” auction. Nifty Gateway handled the “Crossroad” auction. “Gucci Ghost” by Trevor Andrew—a former Olympic-level snowboarder who in 2016 created a capsule collection for Italian luxury clothier Gucci—sold in February for $3,600. The real question is how this new art category will affect future fine-art auctions. Will these headline-grabbing auctions of NFTs draw more attention to the art world or cause bidders to focus their attention on the NFTs more than the works of art at auction? And will the auctions of NFTs go to an NFT-specific market or be orchestrated by some of the world’s premiere auction houses, places like Christie’s and Sotheby’s? With sales at the major houses beginning in earnest, we may not need to wait too long to find out. The May 11 auction of CryptoPunk’s “Larva Labs,” handled by Christie’s, featured nine NFTs, which sold for $16,962,500. CryptoPunks consists of 10,000 unique collectible characters (24 x 24 pixels) stored on the Ethereum blockchain and are, in fact, Ethereum’s first NFTs. The nine NFTs for sale through Christie’s are CryptoPunk 2, CryptoPunk 30, CryptoPunk 58, CryptoPunk 532, CryptoPunk 602, CryptoPunk 603, CryptoPunk 635, CryptoPunk 757 and CryptoPunk 768. Their notoriety is not just for being part of a collection: each is noted for its classification (such as being a “female punk” or a “male punk”) and accessories (such as muttonchops, earrings, bandana or purple lipstick). As you may guess, the aesthetic is edgy over elegant.

9 Cryptopunks: 2, 532, 58, 30, 635, 602, 768, 603 and 757 by Larva Labs

9 Cryptopunks: 2, 532, 58, 30, 635, 602, 768, 603 and 757, Larva Labs (est. 2005). Sold for $16,962,500, via Christie’s.

Then, in early May, it was reported by the San Francisco Chronicle that a piece of art created by the late Jerry Garcia – lead guitarist and vocalist for The Grateful Dead – would be made available as an NFT. Dubbed “Gift,” the Jerry Garcia Foundation is listing the price, which Garcia created in 1990, at $1 million. Bids are being accepted through SuperRare. NFTs are not resigned to digital art. Like with the Beeple’s video clip, other videos are entering the NFT market. In the world of game development, people are snapping up digital plots of land as NFTs. One recent example of a high-price sale was in February, when digital land titles were sold for $1.5 million. Music and film are two other genres people can purchase as NFTs. Due to movie theater and concert venue closures during the COVID-19 pandemic, which increased desires for at-home streaming, it’s expected this will only rise in popularity. Especially since, according to BBC News, most musicians lost two-thirds of their income in 2020. Sales of NFTs can help to keep some film producers and musicians engaged with their careers during this time. Some argue that by buying NFTs you are helping to support these artists and makers financially and investing in their careers. Could NFTs similarly bolster the art world, by introducing a digital form of art that’s more accessible to some, particularly those with tech backgrounds or from a younger audience? As an editorial package of features titled “The Year of Crypto” in TIME’s March 29/April 5, 2021, issue, this may be the case.

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