NFTs and the Digitalisation of the Art World
Non-fungible tokens, or NFTs, have recently appeared in popular news headlines because of their appeal in the art world as a way to effectively purchase art through an online medium. In short, when an artwork enters the market, it is assigned a unique NFT, thereby guaranteeing its authenticity. Unlike Bitcoins, for example, NFTs are not fungible, meaning that each one is unique and unable to be traded for another. However, like Bitcoins, NFTs are entirely digital and have a unique hold over “anything digital, (such as drawings, music)”, memes, podcasts, video clips, and the digital art world.
The increasing popularity of NFTs stems from the recent “normalisation of cryptocurrency, combined with advances in blockchain technology, a sense of consumer FOMO […] and an evolving understanding of how ownership works on the open internet”. An NFT works by creating a file on a blockchain where the digital work cannot be “copy and pasted, edited, [or] deleted”. While buying an NFT allows the consumer to gain ownership over the work, it does not, however, stop the work from being viewed, downloaded, and shared across the Internet.
NFTs and their blockchains should create a safe marketplace for the artist and the consumer by verifying the authenticity of the work through blockchain technology while allowing the consumer to gain ownership over the digital work as if it were a physical piece. Unlike physical works, which can be sold with little profit for the artist, NFTs have the potential to allow the buyer to directly support the artist. This in turn could allow the art world to become more profitable with the artist gaining full monetary value for his or her work.
On 11 March 2021, Christie’s became the “first major auction house to offer a purely digital work” and sell it for over USD 69.3 million (approximately GBP 49.8 million). The work, "Everydays: The First 5000 Days", is a collage of digital works created by the artist Beeple over the course of 5000 days, or 13-and-a-half-years. It was made in collaboration with major artists such as Katy Perry and Childish Gambino as well as companies such as Louis Vuitton and Nike.
During this auction, Christie’s made “two industry firsts”: the first work defined by a unique NFT to make “a guarantee of its authenticity”, and the first work to accept bids through Ether, a form of cryptocurrency. The NFT for Christie’s was issued through MakersPlace, a digital art market where virtual bids for NFTs are currently taking place and are available to all.
While Christie’s was the first auction house to sell digital work, other digital works have similarly been sold through NFTs, allowing countless other buyers the opportunity to hold digital bragging rights over a virtual work. Just recently, the Nyan Cat GIF went up for auction, and the artist Grimes sold a series of videos for over USD 6 million (about GBP 4.3 million).
The art world is changing not only because of the rapid influx of NFTs but as a result of the very works being sold. Physical pieces, while prone to theft and issues of authenticity, shy away from the blockchain technology of digital works, where “collectors and artists alike [… can] verify the rightful owner and authenticity of digital works”. This raises numerous questions: will there still be physical museums, or will digital museums rank superior? Will artists be encouraged to produce more digital works or will NFTs simply be a fad? The money raised through NFT auctions directly supports the artist but what about the consumer’s bragging rights? While endless questions go unanswered, one thing is for certain: a lot of money is at stake, and art, arguably, never loses its value even if the medium changes.