Pascal Boyart is a Parisian street artist. In January 2019, in a working-class neighborhood, he painted a mural inspired by Eugène Delacroix’s masterpiece, “Liberty Leading the People.” He gave it a modern twist. Boyart swapped the 19th century French rebels (the ones toppling King Charles X) with the “yellow-jacket” protesters who, depending on whom you ask, were either fighting for justice or inciting riots and burning the city. The French authorities were not pleased. They quickly painted over Boyart’s mural with a coat of harmless gray, blotting his message from existence.
“Today, the physical mural doesn’t exist. But it still exists with NFTs, and with value,” Boyart tells me from Paris. “This is very satisfying.”
Boyart minted a non-fungible token (NFT) version of the mural, dividing it into 100 pieces and selling each one for 0.5 ETH. He would sell more NFTs. Many more. Boyart once had difficulty monetizing his street art – you can’t easily sell graffiti, and few street artists make Banksy-money – but with NFTs he had a way to sell his work directly to his fans. And suddenly this has become quite lucrative. On Feb. 26, his NFT “Contemplations of the Red Jester” sold for 75 ETH, or $112,000 at the time, his largest sale to date.
Boyart has company. Eye-popping NFT sales are everywhere, punctuated by a $6.6 million, 10-second video created by Beeple. Even Christie’s is now auctioning Beeple’s crypto-works. (For the non-art crowd, Beeple is a celebrated digital artist, and Christie’s has been around since before the U.S. Declaration of Independence.)
It’s almost impossible to keep track of the latest NFT developments. To note just a few: The cartoon frog HomerPepe sold for $320,000; Grimes sold an NFT bundle for $6 million; an NFT tweet (a tweet!) from Mark Cuban sold for $952; Lindsay Lohan now mints NFTs; Shawn Mendes hawks NFT guitars; people are selling genesis tweets; and by the time you finished reading this paragraph, perhaps we’ll get news that President Biden is dropping stimulus checks via NFTs.
This is no longer a tiny niche. Over $250 million of NFT volume was traded in 2020, according to a report from NonFungible, and that’s not counting the recent boom. Nor is it counting the $230 million for NBA Top Shot – digital “moments” (basically quick video highlights) that became so instantly popular, the developers were overwhelmed by a 200,000-person queue.
Want to buy an NFT of a LeBron dunk? One just sold for $208,000. Mark Cuban is all over it, and this is happening at lightning speed. Less than two months ago he told CoinDesk he was exploring NFTs (this was news at the time) and now, as he told USA Today, he thinks NFTs “could turn into a top 3 revenue source for the NBA over the next 10 years.”
NFTs can be art. NFTs can be music. NFTs can be collectibles, real estate, sports, fantasy football, gaming, internet ephemera and just about everything shy of thoughts. (It won’t be long.) Maybe this article will be an NFT. I’m waiting for the first wedding proposal NFT. Can NFTs be minted as an NFT? A recent Clubhouse talk of “NFT Performance Art” included a conversation about NFTs and the soul. I only casually dropped in for a few minutes, but that was long enough to hear someone ask, “Is there a way to play rock-paper-scissors with NFTs?”
This begs a few questions. What triggered the NFT mania? Why now? And is this just a fizzy chapter of crypto hype – a bubble destined to pop – or do NFTs provide real value to the creator or the collector? After all, when most people want to see highlights of LeBron throwing tomahawks, they go to YouTube and watch it for free. Why, exactly, are we paying millions of dollars for a virtual bucket of cartoon frogs?
Let’s start with some basics: NFTs are easy to visualize. They’re concrete. A piece of art, a song or even a digital home in a “metaverse” like Decentraland – these are things that non-crypto people can easily grasp, which is a big reason for the crossover appeal.
The only awkward part of explaining NFTs is the name itself, as the clunky acronym “Non-Fungible Token” elicits frowns and confusion. But when you explain that an NFT is basically just something digital that – thanks to blockchain technology – can’t be copied or spoofed, people get it.
Much of crypto is abstract, complex and snarled in a tricky web of tech and coding and economic theory. Try explaining “yield farming” to your grandparents. But NFTs are a bridge to worlds that are fun. They’re also the gateway to massive new audiences.
“A lot of people don’t really don’t care about decentralized finance … But your average person might actually like basketball,” says Mason Nystrom, a research analyst at Messari who studies NFTs. “This allows you to draw in an entire population that might not have previously cared about crypto.”
Nystrom estimates that decentralized finance (DeFi), in total, might have around 1 million to 2 million users. That’s not small. But it’s nothing compared to the 42.7 million people who follow the National Basketball Association on Facebook, many of whom will be curious about NBA Top Shot. Or, as Zack Seward put it on CoinDesk TV, it’s “captivating a lot of interest outside of typical crypto-dork circles.”
And why is all of this happening now, as opposed to 2017 or 2018 when NFTs first debuted? Five quick theories:
2) The crypto bull run has left investors with ETH burning holes in their pockets.
3) Both creators and collectors are stuck at home during the coronavirus pandemic and looking for something to do.
4) The rise in NFTs parallels a broader surge in real-world collectibles (such as the resurgence of baseball cards).
5) Influencers like Cuban have jumped into the space, creating a virtuous cycle that pumps more interest.
But there could be a deeper force at play. “I believe that everyone should be looking at some of the macro trends that are happening with humanity,” says the pseudo-anonymous “Whale Shark,” based in Hong Kong, who claims to be the world’s second-largest collector of NFTs with over 210,000 pieces.
“More and more people are spending their time on their phone, or online … Our lifestyles are moving from physical to digital,” says Shark. Most of us stare at two, three or four screens each day. Especially during the pandemic.
So it’s only natural, says the Whale, that when we want to own things, we’re becoming more comfortable owning them in our digital life, which, more and more, is just life. Then he layers on another dynamic: Even before NFTs, the younger generation of collectors became accustomed to plunking real money into digital-only ecosystems like Fortnite. For them this is old hat, which is one reason the mega-collector says, “I think of NFTs as a no-brainer.”
The potential of blockchain technology to “revolutionize ownership” has long sounded like puffery, but NFTs are doing exactly that. Take the case of Eve Sussman, a renowned mixed-media artist (film, sculpture, photography) whose work appears in venues like the Museum of Modern Art and the Smithsonian.
In 2004, for the Whitney Biennial, she created a 12-minute video called “89 seconds at Alcazár,” which reimagined the scene from Diego Velásquez’s 1656 classic, "Las Meninas." Critics swooned. New York magazine called it a “standout,” a work so revelatory that “you will sense what composition, in art, finally entails.”
Sussman’s video found a second life with NFTs. She worked with a firm called Snark.Art – a blockchain-savvy agency that works with artists, creating innovative formats – to carve the video into a 2,304-piece grid. Collectors could purchase one tiny fragment as an NFT. Each of these “atoms” is only 20 x 20 pixels, and can be viewed as a tiny movie. They called the new form “89 Seconds Atomized.”
So far, this is similar to how Boyart divied up his street art (the yellow vest mural) into 100 pieces. But they didn’t stop with fractional ownership. They added a fascinating twist. If you purchase one of Sussman’s 2,304 atoms, you’re only able to see one microscopic piece of the work, which can’t make a ton of sense out of context.
Enter blockchain. Thanks to the magic of smart contracts (code in NFTs that dictates ownership), you can “request a loan” from all of the other NFT-owners of “89 Seconds Atomized,” and when they loan you all of their pixels you can recreate the piece in all its original glory. “We were thinking, what could ownership look like in the digital sense?” says Misha Libman, a co-founder of Snark.Art, who worked on the collaboration.
“You have quite expensive artwork that’s completely unaffordable to the majority of people. But if you fracture it, and sell each fragment for $100, then you give collectors an opportunity to become part of this community and own a piece of a really famous artwork, and also be an active participant.”
NFTs can take many forms. Sometimes they are just a simulacrum of a physical thing, but they can also be an improvement over the thing itself. They can unlock new creative possibilities. This is perhaps easiest to see with art, as in the case of Boyart’s street murals. Normal paintings are static. Every Kindergartener knows this. Paint can’t move. But with his NFTs, Boyart enlivens the images with motion, audio and augmented reality.
In Boyart’s “Raft of the Medusa,” he animated the NFT so the raft bobs and sways in the water. In “Contemplations of the Red Jester,” dollar bills (or euros) eerily float to the floor as the Jester slumps in his chair, desolate.
It’s true that tricks like this have long been possible with digital art, but none of those older forms had cracked the problem of digital scarcity. NFTs solve that puzzle. And smart contracts can allow the artist to program future changes to the piece. For example, Boyart is now working on an NFT whose layers will change over time. NFT art can be programmed to show different images triggered by real world events, like the weather, or Christmas morning, or who wins an election – all of that is now in play.
NFTs are luring in artists from outside the blockchain world. Take Elizabeth Meggs, a Brooklyn, N.Y.-based artist who typically works with oil paintings. Meggs happens to be a friend of mine, and I was startled when she emailed me out of the blue inquiring about NFTs. Every week she has a Zoom call with other artists from her studio, and more and more they talk about NFTs.
As Marion Maneker observes on ArtNews, “The first unspoken rule of talking about art on Clubhouse is that all conversations eventually lead to obsessing over NFTs.” It makes sense that artists are early adopters. “Artists are often onto wonderful things before the broader population,” says Meggs, such as “renting studios in neighborhoods ahead of the neighborhoods becoming hot.”
Meggs is excited about making her own NFTs, about the creative possibilities they offer, and about their potential to make the art world more inclusive – particularly for women and people of color. She points out that 87% of major American museum collections are from men – 85% from white men. NFTs, in theory, could level the field. They provide a direct link between creator and collector, removing the gateways that have long demonstrated bias.
“I want to make artwork,” says Meggs, “not spend my entire life and psyche fighting a heavily prejudiced system where I have to rely on key-holders – at incredibly biased arts institutions – to open any doors for credibility and success.” She says that “NFTs feel like a wonderful new world that is full of possibility, rather than slamming doors.”
Meggs isn’t naive. She knows crypto, historically, is just as male-skewed as the art world. But she’s hopeful. “I’m urgently encouraging all of the women artists I know to dive right into making NFTs,” she says. “This is an opportunity!” (In a follow-up email, Meggs also noted that many artists are agonizing over the environmental costs of NFTs, conveyed in this blistering post.)
Artists are incentivized by another feature of NFTs: the ability to collect royalties. That’s a gap in today’s world. Let’s say you’re a young artist who sells an oil painting for $1,000. You suspect it’s worth more, but whatever, you need to pay rent. Then you get famous. Thirty years later your painting sells for $30 million. Your royalties in the current world? Nothing. Nada. (It’s different overseas. “Droit de suite, aka Artists Resale Right, provides a resale fee to artists or their heirs … and is common in many countries internationally, especially in Europe. But unfortunately in America we only have a first-sale doctrine,” says Meggs.)
With NFTs, the royalty can be programmed into the piece via smart contract, so you earn a slice of the revenue every time your painting is sold, in perpetuity. When Boyart’s “Contemplations of the Red Jester” sold for 75 ETH – from one art collector to another – he pocketed a 5% cut.
The same concepts apply to music. Just ask “Vandal,” a Canadian hip-hop artist and producer. In 2017, he dropped a track, called “Rap Crypto,” that’s something of a time capsule from the last bull run, with lyrics like “Rap Crypto Y’all Know Bitcoin … See I’m Vandal, the Token Wrapper … Follow me as I go Rambo, to the moon in my brand new Lambo … Could it be that I’m Satoshi Nakamoto?” (The video looks semi-satirical; he’s in on the joke.)
On our Zoom, he wears a red beanie and a gray goatee. When Vandal first heard about CryptoKitties he shrugged them off – “What the heck is this, collectible cats?” – but then he saw the broader potential. He began exploring audio NFTs, he became fascinated by DAOs (decentralized autonomous organizations) and soon he launched DAO Records, which has recruited 100 musicians and released around 50 audio NFTs. (Vandal is quick to point out that he’s not the first artist to mint music-based NFTs, and considers Connie Digital “the OG of audio NFTs.”)
For Vandal, audio NFTs are not just a clever gimmick, a fad or a cute way to make a buck. “The current music industry model is broken,” he says, a problem that dates back to the days of Napster. “Then Apple came along and decided an MP3 is worth 99 cents. Who gave them the right to decide how much music is worth? [That] devalued music quite a bit.” Streaming on Spotify or YouTube is not much better, as “they pay out so little to the artists, and take so much. There’s no sharing. There’s no interaction with the fans,” he says.
NFTs solve all of these problems, says Vandal. The artists can price their music however they choose. “The NFT is a direct link to the fan … You can give them whatever you want to offer.” It’s a way to build loyalty, grow the community, and wean yourself from the platforms (and labels) that are beyond your control. This helps explain the newfound interest in NFTs from artists like Kings of Leon, who recently announced plans to release an album as an NFT. You can bundle the NFTs with real-world perks. As Rolling Stone first reported, the most exclusive NFTs will include a “golden ticket” so token holders are guaranteed “four front-row seats to any Kings of Leon concert during each tour for life.”
Kings of Leon isn’t the only group looking into NFT ticketing. “It’s a beautiful use case,” says Carolin Wend, co-founder of Mintbase, a Lisbon-based NFT platform. She explains that ticket-based NFTs (TNFTs?) give the organizers of events, like a music festival, the ability to easily split revenue among the partners.
Let’s say you’re a festival promoter. You can tell the DJ, “You’ll get 5% of every ticket sold,” and then the reggae band gets 5%. The landlord gets 10%. And so on. The payments would be immediate, transparent and all confirmed and verifiable on a blockchain. “It’s so exciting, it really liberates people,” says Wend. “It allows people in the creative economy to have a fair income.”
It will likely be some time before the likes of Coachella or Ultra fully embrace the idea of NFT tickets, just as it’s unlikely that NFTs will fully “disrupt” the traditional art world anytime soon. For perspective, Misha Libman, of Snark.Art, says the art market itself is around $60 billion in annual sales. “Digital art is less than half a percent of that at the moment,” he says. “It’s almost non-existent in the traditional market.”
To get the temperature of the traditional art world, I spoke with a man who embodies tradition and who art enthusiasts will recognize as the "Antiques Roadshow" appraiser on PBS. Nicholas Lowry is known for his bold plaid suits and handlebar mustache, and as the principal auctioneer of Swann Auction Galleries, New York’s oldest indigenous auction house.
“The funny thing is, NFTs sprang on my radar all at once from six different places,” says Lowry. Suddenly, everyone began telling him about NFTs. They kept forwarding him articles. “If this were a marketing campaign, or an ad campaign for a car or a clothing brand, they would have somehow hit the jackpot,” he says, clearly amused. “I thought, holy s**t, the whole world is talking about this.”
So is he ready to jump on the trend? Lowry pauses. “We are not a cutting-edge technological company,” he says. “I don’t want to be the first one to do it, but I also don’t want to be the last one to do it.”
He is in “wait and see” mode. Maybe it’s the future, but maybe it’s just something of a fad. “When it’s not the Elon Musks who are buying the stuff, we’ll see if it still has legs.”
My very first NFT
One reason for the boom in the market is that now it’s easy to whip up your own NFTs. “Today, anybody can take a photograph of their plant, mint it and then immediately list it on an exchange and try to sell it,” says Libman.
So I decided to try just that.
I recently moved into a new place in Denver, and because I’m a single guy I didn’t have anything to put on the walls. So I picked some of my favorite travel photos to blow up and frame, and I settled on a 30” by 50” shot of a glacier, from Iceland, to anchor my largest wall.
Maybe I could sell this image as an NFT? If I thought it has enough real-life value to hang on a gigantic wall as a piece of art, maybe others will feel the same? I also wanted to get a first-hand taste of how this really worked.
I quickly create an account on OpenSea. The on-boarding process is easy and quick, just as advertised. When prompted to list my starting price for an auction, the lowest the site will let me enter is 0.4 ETH, or $540 at the time, an astonishingly high figure which I found hilarious. (You can either list it for a lower set price or start an auction, and this was the auction’s minimum starting point. It’s also entirely possible that I did it wrong.) But then again, maybe $540 for this NFT photo, why not? So much of cryptocurrency is premised on the notion that if people believe it has value, then it has value. Even Dogecoin now has value. Maybe some sucker would believe my photo has 0.4 ETH worth of value, so they would buy it and then, voila, it would?
Before posting my listing there’s just one tiny hitch. I need to pay a one-time gas fee to OpenSea that sets up the Ethereum smart contract for all of my future sales. At the time, this fee was $91. Soaring gas fees are a widespread problem in the space, and it’s one reason some NFT platforms are using different blockchains (NBA Top Shot uses Flow, for example).
“Normal people would never spend $50 to mint an NFT,” says Wend, which is why Mintbase is switching to a blockchain platform called NEAR. “I believe that Ethereum has been a great test ground for many people, but it’s not the future,” she says. “It’s simply too expensive and bloated.” (Ethereum advocates, of course, have their eyes on Ethereum 2.0.)
The posting of my stupid photo has suddenly become a pricey bit of fact-checking, but I swallowed and went ahead with the transaction. When my new NFT is minted I watch it appear in the stream of new OpenSea listings. They appear every second, an assembly line of pixelated trinkets, like crypto toys made by Satoshi’s little elves. It provides a real-time glimpse into the staggering growth of this space.
The NFT marketplace was right about at least one thing: My lousy photo was worth nowhere near 0.4 ETH. It didn’t sell in the auction. So I re-listed it for 0.01 ETH, or $16. As of publication, it has still not sold.
Let’s switch to the buyers. Why exactly are people forking over thousands of dollars for low-res art that’s not quite as advanced as Pac-Man? I had assumed there were two possible reasons: People truly appreciated the digital art for its own aesthetic pleasure, or they thought it would make them money.
Then I learned of a third explanation. I spoke with Jamie Burke, the CEO of Outlier Ventures, a blockchain investment firm – venture capital, accelerator programs, that kind of thing – headquartered in London. Burke moonlights as a prolific collector of NFTs, and he knows the community well. He started an invite-only Discord channel called “100XARt,” which is something of a who’s who of the biggest NFT collectors, and they worked to create an art district in Decentraland. Burke’s theory on why people buy NFTs? The status of belonging to a community.
“You can think of NFTs as a form of social currency,” says Burke. In certain crypto circles, they’re proof that you get it. You belong. When Burke first saw the early highly pixilated NFT art, such as CryptoPunks, he didn’t love the aesthetic. He found it too self-referential. He even said to himself, “This is not something I would want on my wall.”
After he talked to more collectors in the community, he quickly realized the NFTs had little to do with the content itself. The mere fact of ownership is what matters. “To own a CryptoPunk is to claim that you were into the first form of NFTs, and that you understood [it] before everybody else.” It is, quite literally, a digital badge of honor.
This reminds Burke of the reason people bought LP albums back in the day. Sure, maybe part of the reason you bought the album is that warm and crackly romance of the sound, but you also bought it as a beloved artifact. And the artifact gave you status within your record-loving community.
“Think about what the internet did. Digital music destroyed all of that,” he says. “Music became something you just streamed and consumed … The idea of owning music was lost.” So while NFTs might be a radical new technology, in a sense they are tapping into something primal and old, into what Burke calls “a real human longing.”
Or in a less charitable take, splurging on NFTs is a way to flaunt your crypto wealth. Just ask the guy (and it’s almost certainly a guy) who goes by “GMoney.ETH” on Twitter. This person paid a cool 140 ETH (around $150,000 at the time) for a 24 X 24 pixelated CryptoPunk, one of the original and most iconic forms of crypto art. They look like Atari graphics from 1983. (For those interested in the origins of CryptoPunks, you’ll find an engrossing deep dive from Jessica Klein and BreakerMag.)
As GMoney explains in a Twitter thread, after he spent more time in the online crypto community, he realized that “it’s almost like being part of some exclusive club, being a CP [CryptoPunk] owner.” Then he gets to the quick of it: “When someone buys a Rolex in the real world, they don't spend thousands of dollars [because] of the watch’s utility value. A simple $5 watch could perform the same utility. It is to ‘flex’ their status, to convey, ‘Hey look, I’m well off, I can afford this expensive watch.’”
GMoney bought his version of a Rolex, but unlike a glitzy watch – which could be a cheap knockoff – his CryptoPunk’s authenticity can be verified on the blockchain. Then again, it’s a near lock the Rolex will still hold value in a decade. The jury’s still out on CryptoPunks.
But even if the speculative bubble pops, it seems fair to say NFTs offer something of value – even if that value is just emotional – to both artists like Boyart and to collectors like Burke. They can be a means to create, to play, to communicate, to organize, to view beauty. “When you look at the bull run of 2017, what drove things was the media news stories of people getting rich. That was one-dimensional. It fizzled out,” says Burke. When people stopped making money, people left. With NFTs, he says, “It’s not just about the money. It’s much more sustainable.”
And there are many, of course, who will grumble and say that most of these NFTs – the pixelated frogs, the memes, the crypto irony – are simply “not art.” Maybe that’s true. But as NFT advocates like to argue, people said the same thing about Andy Warhol’s can of tomato soup.
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