What is a non-fungible token – and why are some digital works of art selling for millions? | Ents & Arts News
“I know you can be under-challenged and overwhelmed, but can you ever just be overwhelmed?”
So in the excellent 1999 comedy, Chastity asks Bianca, 10 Things I Hate About You, and pretty well sums up my feelings the first time I Googled the words “non-fungible token”. Overwhelmed in this case, because what is not fungible? And also: can it ever only be fungible?
It turns out yes there can. Cue tech experts (oh, business and language experts, and probably anyone under 25) call me stupid here, but I’m definitely not alone.
Before 2021, the majority of people had a high probability that the word not fungible would not appear in everyday conversations. But now the time has come is Many and many headlines are about digital artwork, with many pieces selling for bulk.
What is an NFT? Basically, it’s the recent craze in the cryptocurrency world and it’s been exploding in the past few months. When something is fungible, it is interchangeable with another good or asset – non-fungible means that it is not.
In the real world, soccer trading cards and plane tickets are good examples of non-fungible assets. Although two airline tickets may look the same, each has a different destination, seat number, and airline class, which means they cannot be exchanged for the same.
An NFT is a unique digital asset. Skeptics may not be convinced, but there is a reason investors are willing to part with their money.
In March, Christie’s hosted the first sale of a work of art that does not exist in physical form through a major auction house.
It was created by digital artist Beeple and sold for $ 69.3 million (£ 50.3 million). Earlier this week, an online sale of NFTs by digital artist Pak at Sotheby’s totaled $ 16.8 million (£ 12.2 million), including a single pixel image, which sold for $ 1.36 million (£ 987,000) ) was sold.
In either case, no physical object changed hands – the NFTs exist exclusively in digital form, with the blockchain (a digital record) serving as the public ledger to verify ownership status. While critics argue that these works can be copied and shared, experts say that it is no different from the physical world. Copies are not the original.
There have been many other examples of NFT sales over the past few months. You may have heard of it Kings Of Leon is the first band to release an album as NFT, Musician Grimes, who sells a digital art collection for £ 4.3 million, or Twitter founder and CEO Jack Dorsey Selling his first tweet for just over £ 2 million.
A group of cryptocurrency enthusiasts even teamed up to buy an original Banksy for £ 68,000 – and then burned it in a livestream video. The art was then turned into an NFT … which sold for £ 290,000.
So what is it about? Revolutionizing art, investment or both?
I spoke to artist Tim Fowler, Sotheby’s Max Moore, and Ashley Ramos from NFT marketplace Nifty Gateway to find out more.
“The greatest barricade for our generation is to deal with the physical and the digital.”
Leicester’s Tim Fowler has been a full-time artist for about three years, selling his work in the traditional sense – physical paintings that people can hang on their walls. He made the leap into the digital world earlier this year, basing his NFTs on a 2018 performance exhibition where people could watch him create 100 paintings of his signature skulls in a gallery over the course of a week.
He was approached by Sango, who created NFT Crypto Trolls and runs the MetaZoo virtual gallery in the online gaming world Decentraland, and asked if he would like to get involved. The 35-year-old admits he was skeptical at first, but curiosity has gotten over him.
“I asked the same questions that people ask me: what are [buyers] Pay for? Why do people buy it? Does that mean they have legal copyright in the piece they bought to reproduce? As soon as I figured it out, we got the ball rolling. “
Unlike all digital artists, Tim still creates physical pieces and photographs his work to create the NFTs. He decided to use his skull designs as they went with the idea of being collectibles.
“The idea was that we would slowly release 100 of these skulls again and each one would have different mints – another word for issue. So it could be 10 NFTs from one, but others could only have one NFT, which makes them less common The idea is that we’re slowly letting go of those skulls and making people want to collect them … like Pokemon cards, soccer stickers, that sort of thing. “
Tim has made around £ 6,000 selling NFT skulls in the past three weeks. And instead of reducing the value of the physical pieces, the digital world only helped to improve his traditional work. “In a way, it makes this piece, the actual physical piece, more desirable and valuable because there is already a collector’s base for that image,” he says. “It’s like selling a print copy, but you still have the original painting.”
This is something that gamers and cryptocurrency experts have been aware of for a while, he says. Why is it so difficult for some people to understand?
“I think the biggest barricade for the majority of people, especially our generation, is dealing with the physical and the digital,” says Fowler. “When you talk to kids these days, they spend a lot of money on games like Fortnite where they buy clothes … or a sword or whatever.
“The way I see it, a lot of the people who buy the NFTs are from the crypto world. They buy something that they’ll hold onto with the idea that a few years later, ‘I’ll be worth more. It is the same reason they buy bitcoin.
“This is why it confuses a lot of people because they look at it from the world of an art buyer as if we were buying paintings hanging on our wall. But a lot of these people buy it to stay in their world of crypto wallets.”
Basically, it’s as much about investing as it is about art, he says. And for the artists themselves, unlike often when physical works are resold, they later receive royalties.
“I sell a skull for $ 200, and because everything is on the blockchain, everything is monitored, so basically I get royalties for everything that I later sell. So if someone does this piece for you, for example Grand to sell again, 10 grand, whatever, I would always get 10% of it if it was sold for every single piece, which means I get that remaining income after the piece is sold myself.
“In the physical world, that’s not the case … so the artist is holding money with it.”
‘I Seeing NFTs as an Art Form ”
Max Moore, co-director of contemporary art daily sales at Sotheby’s in New York, also admits he wasn’t initially sure about NFTs. But last year he started exploring the world and was hooked up with Pak in early 2021.
The sale of Paks Fungible Collection resulted in 3,080 individual purchases of 23,598 “Open Edition” dice units for $ 14,026,000 in three days of sales. Two “one-of-one” digital graphics, The Switch and The Pixel, sold for $ 1.44 million and $ 1.36 million with 10 and 12 bidders, respectively.
“I have honestly watched the NFT market with skepticism since 2018,” he says. “I was originally introduced to the collection of works called CryptoPunks and for me they didn’t really speak to anything visually, I think there was something conceptually about them. But at the time I didn’t pay much attention.
“Fortunately, I was brought into contact with Pak by chance in early January. I was still really there to learn something. I had neither the intention nor the plans then to bring this to a big stage at Sotheby’s, but through these conversations With Pak I began to realize and see that there was a real creative process behind their work, the way they approached it, each type of piece had a specific purpose, a specific meaning, the last and also was bound to this in the future.
“For me, it was an understanding that this artist was bringing out true genius and creativity, and I quickly realized that there was something here.”
One of the main questions about NFT art is why people are willing to spend huge amounts of money – millions in some cases – on art that cannot be displayed in the traditional sense and shared online.
Max says it took time to understand too, but he realized that NFT art lovers see it that way too. “They had the same reaction to the work of art, they had the same connection with the work of art,” he says. “They didn’t need that physical connection to a physical object. It wasn’t my job to say that just because I didn’t connect with it, because it was different for me, that this couldn’t be the same relationship that I was having.
“I quickly realized that there was a whole world, a whole market of individuals who have absolutely no interest in physical, material objects, like we do, and are completely excited about digital assets. They are usually a younger population . I would say that made their fortune with cryptocurrencies and believed in it from the start. They are early adopters from 2012 to 2015 who decided on the idea that digital assets should be anchored in our future society. “
Max says he hopes those who bought the Pak factories will keep them.
“”I hope that collectors will remain collectors and not immediately start turning the work around. I think there has to be some training from a collectors perspective for this market to fully take shape and grow, and it can’t just be a subset of the audience that really responds to the artwork – and there are a lot of actors out there who are just here for a financial gain. I think that needs to be strengthened. But hopefully an outcome like this can steer the conversation in that direction. “
“You could take a picture of the Mona Lisa. It doesn’t mean you own it. ‘
Ashley Ramos is a senior producer at Nifty Gateway who worked with Sotheby’s on the Pak sales and also hosted the Grimes sales. The platform has sold more than £ 72 million in “unique, identifiable and secure digital art” since it went live a year ago in March 2020.
Even their zoom background is an NFT (pictured in the Instagram post below) by designer and 3D artist Frank Guzzone, showing how the artwork can be physically displayed on television screens, in case a collector so wishes.
“I would argue that a lot of people have always loved experiential art, not just something physical or tangible, but experiential art as well,” she says. “Some would say that [Japanese contemporary artist] Yayoi Kusama is a good example of this. Your infinity rooms are experiences, they are not things that you can take home and hang on the wall. Or the Mark Rothko room in the Tate Modern, that’s an experience. People love going to museums just to absorb the art, not to take home.
“”[But] I think the common misconception is that you can’t display these around your home, and you can … you can display them [NFTs] in your home and you can bring that experience home if you want. But I think the vast majority of our consumers, digital native consumers, are that they aren’t so much there to go as what they give back. And that’s exactly what we see, these record numbers. Our collectors come to the table in a really big way to support the art and artists on our platform. And if nothing is achieved at all, except that that is just a really nice thing. “
How does Nifty Gateway respond to the argument that the works can be easily copied? Well, it’s clearly a question that you hear a lot.
“You could take a picture of the Mona Lisa, “says Ashley.” That doesn’t mean you own it. And I think the reason everyone knows you don’t own the Mona Lisa just because you snap a picture of it is because it has social value for who it belongs to and that is respected. I think within the respected NFT community you know who owns it from their profiles on Nifty Gateway …
“It could be seen as a problem – but no more than a problem than someone who goes to the Louvre and takes a picture of one of these pieces and then says, ‘I own this. This is mine’.”