NFTs and the Art Market: How Non-Fungible Tokens are Disrupting the Art World
By now, everyone must have heard about NFTs. In just a few years, Non-Fungible Tokens have evolved from a niche novelty enjoyed by a small group of crypto enthusiasts to a massive global phenomenon embraced by individuals, businesses, celebrities and institutions all around the world.
For some people, NFTs are still just a hustle - a way to gain a quick buck by buying a digital collectible and selling it soon after for a slightly higher price. However, the true power of NFTs is much deeper than that. NFTs are already disrupting multi-billion dollar industries, and nowhere else is it more obvious than in the art world, which has become completely obsessed with virtual collectibles.
Art Basel Goes Digital
This year’s Art Basel in Miami perfectly reflects the motivations and tendencies of today’s art world. From digital artists and influencers through VCs and CEOs, up to esteemed art critics and representatives of tech giants like Samsung, the attention of the creative sector is now firmly focused on NFTs and the wonderful new possibilities they provide.
From exhibitions and conferences to wild parties, Miami Art Week 2021 is full of NFT-themed events. If someone still had any doubts, Art Basel proved beyond doubt that NFTs are not just a passing online fad - they are a tremendously impactful and significant cultural phenomenon, which has already surpassed the world of social media and successfully invaded IRL spaces.
It’s almost hard to believe that NFTs started as simple pixel art characters. Originally, Non-Funbile Tokens were considered a novelty, and even seasoned blockchain investors didn’t believe that NFTs could one day become valuable.
CryptoPunks, the first NFT collection in history, were at first distributed free of charge - since nobody really thought that they would be valuable one day, anyone with an Ethereum wallet could receive one for free. Nowadays, NFTs can be worth millions of dollars.
Beeple Leads the Way
It’s hard to underestimate the importance of the event that took place on March 11th, 2021 - a day that will very likely be mentioned in future art history textbooks. On that day, a digital collage titled “Everydays: The First 5,000 Days” created by digital artist Mike Winkelmann, better known as Beeple, was sold in the prestigious auction house Christie’s for over $69 million.
Although Beeple became the third most valuable living artist - surpassed only by David Hockney and Jeff Koons - the price of the NFT he sold is not the only thing that deserves attention. Perhaps even more important is the fact that “Everdays” was not only the first NFT, but also the first purely digital artwork sold at Christie’s.
Before NFTs, digital art was almost always a non-profit endeavour. Artists were unable to successfully monetize their talent and be rewarded for their work. Collectors, on the other hand, weren’t able to invest in digital artworks as easily as in traditional works of art like paintings or sculptures. Out of necessity, digital art existed on the verge of the traditional art world, almost completely neglected by institutions and collectors.
NFTs have completely changed this situation by empowering the artists with the ability to create works of digital art which include an immutable certificate of ownership and provable rarity. For the first time in history, digital artworks have become truly unique - and it soon turned out that they can be very valuable as well.
It’s hard to underestimate how massively popular NFTs have become. According to Google Trends, the term “NFT” has already surpassed other crypto-related searches such as “blockchain” and “Ethereum”.
In other words, NFTs are not only digitizing the art world - they are also making it more democratic and more inclusive. Thanks to NFTs, the art market is losing the stigma of being something that’s strictly high brow and elitist. From art critics to retail collectors, everyone enjoys NFTs equally.
CryptoPunks - From Novelty to Real Art
Let’s get back to CryptoPunks. Someone who doesn’t follow the world of NFTs could think that the original NFT collection has long been forgotten, surpassed by more recent digital collectibles created by artists with more renown.
However, nothing could be further from the truth. The original NFT collection is still holding strong, now more famous and more valuable than ever, being a testimony to the fact NFT collections can have long-lasting popularity.
As mentioned before, CryptoPunks were at first distributed for free. They soon started to be sold as well, but the prices originally ranged from $1 to $20 or $30 at most, which was considered a quite expensive price at the time.
If you were one of the crypto enthusiasts who received a free CryptoPunk back in 2017, you’ve been extremely lucky. Nowadays, CryptoPunks are some of the most valuable NFTs.
In February 2021, CryptoPunk 6965 sold for over $1.5 million. Few months later, two different CryptoPunks sold for over $7.5 million each. Finally, the current record for the most expensive CryptoPunk was set in June 2021, when CryptoPunk 7523 nicknamed “COVID Alien” was sold at the prestigious Sotheby’s auction house for the astonishing price of $11.75 million.
What’s In the Future for NFTs?
The NFT market is expanding at an incredible pace, already estimated to be a multi-billion dollar industry and expected to reach a $1 trillion market cap in the near future. But the most impressive thing about NFTs are not numbers - it’s the fact that NFTs themselves are constantly evolving.
Early NFTs were quite simple, as they were almost always 2D static images. Nowadays, NFTs are getting much more complex and more interactive.
Everything from music to videos is being tokenized as NFTs, and some digital collectibles have become the backbones of entire virtual worlds. And with the advent of technologies such as AR (Augmented Reality), XR (Extended Reality) and metaverse, who knows how much more fascinating Non-Fungible Tokens can get?