NFTs and the Contemporary Art Market

If you’re anything like me, the terms non-fungible token, cryptocurrency, and blockchain make your eyes glaze over, as each one becomes more elusive than the last. Surely, this world-sweeping, cutting-edge form of trade is not so byzantine as its jargon indicates, seeing that so many amateur investors have already benefited so greatly from its power?

In layman’s terms, a non-fungible token (NFT) is a digital asset much like Bitcoin or other forms of cryptocurrency that indicates a certain address on a certified blockchain, an ever-growing digital receipt detailing the object’s transaction history. However, unlike a US dollar or Bitcoin, which are both fungible in that they are mutually equal in value and maintain their worth when exchanged, an NFT is entirely unique to itself and therefore is used to identify a unique object. In essence, no NFT is equal to another in its utility or form.

So, how do we ascribe value to intangible modes of currency, which are simply long strands of data, when real assets already exist in our physical world? Who dictates this value? And how does art tie into any of this?

On 11 March 2021, Mike Winklemann, the artist otherwise known as Beeple, sold an NFT of his entirely digital collection of work entitled Everydays: The First 5000 Days for $69 million through the greatly distinguished auction house, Christie’s. This NFT sale was the first of its kind under the 255-year-old institution and established Beeple as the third highest selling artist in the world, just trailing behind Jeff Koons and David Hockney. The monumental sale ushered in the digital marriage between both traditional and emerging art worlds, authenticating the new medium of NFTs in the fine arts.

Beeple’s piece is the amalgamation of 5000 digital images, made from start to finish each day over the course of fifteen years. Is nearly $70 million worth those years of effort? Possibly. What if those images were available for free online?

The Ontology of NFTs

What differentiates Beeple’s work from that of his high-selling peers is its accessibility to the general public via his personal website.

Traditionally, ownership of an artwork would come with more tangible benefits, such as the overseeing of its display, or decisions to loan to museums. This control over a piece of original art is a way to appreciate the monetary value of the piece, and to present items that collectors have acquired after great amounts of work and research. In this way, NFTs have created an entirely new dimension to the contemporary art market, redefining the concepts of value, authenticity, and ownership of original artwork. In this online format, where the buyer receives little to no control over their NFT asset, the illusion of ownership and exclusivity become key constituents in the power of an NFT. This is supported by Hope Stephens of the Guilfordian, who believes that the value of NFTs is their function as collectors items in the form of a .JPG file.

NFTs have greatly impacted preexisting modes of art dealership and presentation in galleries and auction houses alike, which had formerly relied on traditional forms of currency and craft. With recent surges in crypto token value, and the growing public interest in digital art, NFTs have begun to be recognized in the international art market as viable forms of trade. In the case of Beeple’s Everydays, the cryptocurrency Ether was noted as a payment option for the sale. However, due to the volatility of decentralized cryptocurrencies, the art market is not likely to accept it in earnest just yet.

It may seem absurd to attach such exorbitant amounts of money to NFTs and digital media, yet when we observe the state of the contemporary art world at large, this is not so outlandish. The value of concept has proven itself to be more essential than the material in many scenarios — take for instance the recent sale of Italian artist Salvatore Garau’s “immaterial sculpture” for 15,000 euros (equivalent to $18,300 USD). Io Sono, the formless artwork in question, is not described as “nothing,” but instead a “vacuum.” The value of the piece is, of course, not in its material quality, but its lack thereof.

These works emphasize the illusion of ownership through the illusion of existence itself. In a profound explanation by Garau, he states:

“The vacuum is nothing more than a space full of energy, and even if we empty it and there is nothing left, according to the Heisenberg uncertainty principle, that ‘nothing’ has a weight […] Therefore, it has energy that is condensed and transformed into particles, that is, into us,” says Garau.

Despite the philosophical truths of his work and their propensity to evoke the meditative attention of audiences, it is difficult to rationalize the purchase of a void.

Even in tangible cases, such as David Hockney’s iPad illustration Untitled №21, from The Yosemite Suite which sold for $69,300 USD, technology-based art is questioned for its material quality and visual lifelessness. When Hockney’s iPad illustration entitled Hearth was featured on the cover of The New Yorker in December of 2020, many considered whether its success was simply a spectacle due to the artist’s popularity and its unimpressive execution.

When postulating the future of NFTs, we might consider their existence in a similar light; are these truly admirable works, worthy of thousands, or a convoluted display of technological advancement?

The Future of NFTs and Conservation

The lasting value of NFT art is uncertain, and when considering the amalgamation of Beeple’s Everydays, it might simply come down to the content itself. Ben Davis, Artnet News National art critic, states in his review of the work:

“In reverse chronological order, the most recent, most well-known, and most successful Beeple is the digital satirist, making what amount to gross-out cartoons commenting on incipient tech dystopia and political outrages […] I’ve said that the Trump-is-a-Poopy-Head/Cheeto Mussolini genre of art that flourished in this time period is going to have the shelf life of Taco Bell leftovers.”

In essence, while the format of this contemporary art is noteworthy and will likely pervade public consciousness for years to come, it is still necessary that the work itself, the content and concepts, are timeless. It remains possible, however, that Beeple’s Everydays will live on to be a zeitgeist of the early 21st century in both medium and subject matter.

Furthermore, we must consider the techniques of conservation when contemplating the future of NFTs. While much remains unclear as technology continues to develop and meet the demands of a growing market, we might make hypotheses based on the existing methods of production.

One cannot discuss the pros and cons of NFT exchange without understanding the environmental impact of its energy consumption. Shocking reports have found that the amount of electricity required to host the sale of Beeple’s $6.6-million USD Crossroad was about the same as a “European Union resident’s entire energy consumption for five and a half years,” according to Benjamin Sutton of Artsy. In the case of mining for Bitcoin, whose energy usage is similarly monumental, the decentralized (and thus non monitored) nature of cryptocurrency cannot track whether or not their energy comes from renewable resources or fossil fuels. This poses a serious question of sustainability for the art world with the potential ramifications of using such a wasteful medium of art production.

Emerging Artists, Critics, and Dealers

For the artist, NFTs may be an empowering mode of trade.

Singaporean photographer Ernest Wu explains that independent artists are able to partake in NFT marketplaces directly, without need for gallery systems that impose fees for the selling and promoting of the artist’s work. For artists who specialize in immaterial artistry such as sound design, 3-D animation, and digital illustration, NFTs are a way of making profit off of mediums that were formerly unconventional to be sold in the art market.

Additionally, whereas artists were once only compensated for an artwork at the initial point of sale, NFTs allow for an artist to receive a percentage of each transaction thereafter through resale royalties outlined at the artist’s discretion. This is a highly coveted benefit of the crypto-art market, which has drawn many content creators.

Finally, NFTs have the ability to serve as a form of authenticity for an intangible object, unlike its physical counterparts. This means that an artist’s work is able to be 100% traceable, a very tantalizing aspect for dealers and patrons alike.

Despite its relatively recent origins and uncertain future, the NFT market has left a notable mark on contemporary art as it stands today. Regardless of one’s personal opinions towards the trade, it is clear that the rise of internet-based art is rapidly gaining acknowledgment from long established institutions. In a world beginning to emerge from the crisis of pandemic, reliance on digital media has been more pervasive than ever in order to connect with one another and create a semblance of reality. It is only natural that the creative output of artists reflects on an increasingly digitized world. As technology continues to develop, hopefully with the intention of creating a sustainable future, consciousness will follow suit, reflecting on the ebbs and flows of the contemporary stage in both culture and art.