Art World Embraces Non-Fungible Tokens
Just when you thought it was impossible for the art world to get any weirder, this happens: A non-fungible token (or “NFT”) of a digital artwork just sold at Christie's auction for $69 million. Digital artwork? Non-fungible tokens? $69 million?
At least the concept of paying millions of dollars for artwork has become a familiar one. As for the others …
Earlier this month, Mike Winkelmann, a Charleston, SC graphic designer who goes by the adopted art world name of “Beeple," successfully auctioned off the rights to his digital artwork Everydays: The First 5000 Days. Everydays is a collage of Winkelmann’s ... er ... Beeple's earlier art project of posting a different piece of digital art every day for a period of 5,000 days.
Beeple already had achieved a degree of notoriety in the art world and through social media by cultivating a couple of million followers on Instagram and by selling previous works to celebrities, whose ranks included Justin Bieber, Eminem, Katy Perry, deadmau5 and others, albeit at prices closer to $100,000. The exception was a late 2020 sale of a piece known as The Complete MF Collection which sold for $777,777.
But how did Beeple so quickly catapult from a price tag of $777,777 to one of almost $70 million? The answer seems to lie in an understanding of NFT’s and their sudden embrace by investors as a means of acquiring rights to limited edition or unique things like digital artwork. Said investors believe that NFT's are the way things like artistic rights will be owned in the future and so anyone who gets in on them now will be that much farther ahead than other investors.
Essentially, non-fungible tokens (or NFTs) are unique “blockchain-based tokens,” somewhat akin to the technologies that underlie cryptocurrencies like Bitcoin or Etherium. Theoretically, they can be created to represent almost anything, including physical assets, and NFTs have been growing significantly in popularity in recent years because of the potential to represent an ownership stake by means of a permanent digital token. NFTs also provides a means to transfer ownership of digital assets to holders.
Sometimes described as an electronic certificate of authenticity, NFTs already are used to provide ownership rights ranging from baseball bobbleheads to high-end real estate. Many NFTs represent ownership of purely virtual assets, like video game weaponry and special characters) and crypto collectibles, but even the NBA has gotten into NFTs with NBA Top Shot. Top Shot is a marketplace for buying and selling short highlight videos from actual NBA games called “Moments.” These videos can be owned, watched, and sold, much like traditional collectible baseball cards. In just a few months of operation, NBA Top Shot already has amassed over $270 million in sales of “Moments.”