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How NFTs are Disrupting the Art World

How NFTs are Disrupting the Art World

The physical art world—from auction houses, galleries, museums to artists—wants a part of the NFT universe

Illustration by Nilanjan Das Illustration by Nilanjan Das

In December 2021 when London-based Art Review, one of the world’s leading international contemporary art magazines released its much-coveted Power 100 list—the annual ranking of the most influential people in the field—the art world went into a tizzy. That’s because the latest list is not topped by an artist, a gallery, a curator or even a museum. It is topped by a bit of code that has taken the art world by storm—NFT or non-fungible token.

An NFT represents a digital work of art that is completely unique and whose authenticity can be verified through blockchain technology. A non-fungible token means it is not interchangeable or replaceable and is non-identical to any other token in the world, making it 100 per cent original and unique.

While NFTs have been around since 2014, it was in 2021 when they really created a buzz in the art world. It all started when in March, Christie’s sold an NFT called Everydays: The First 5000 Days by digital artist Mike Winkelmann, better known as Beeple, for $69 million. Christie’s had been thinking of making NFTs available to the larger art world but felt that both the artist and the work had to be perfect. “Given the combination of Beeple’s leadership within digital art, strong pre-existing market and tremendous artistic ingenuity, we knew that he was the artist that we wanted to work with. However, it took a little more time to decide on the right work... Beeple came to us with the idea of offering The First 5000 Days, we immediately knew that this was the only option... The mere fact that he is able to represent 13 years of artistic evolution into a single image speaks to the limitless nature of digital art,” says Alexandra Kindermann, Senior Communications Director, Christie’s EMEA. Christie’s went on to sell a 100 NFTs for $150 million in 2021.

The First 5000 Days was sold by Christie’s for $69 million in March 2021, marking the auction house’s foray into the NFT space
The First 5000 Days was sold by Christie’s for $69 million in March 2021, marking the auction house’s foray into the NFT space

“With staggering prices achieved for Beeple’s work in the last year, the art market has discovered a new generation of collectors, while artists around the world have discovered a way to market their art that bypasses the old art-dealer system,” says the Art Review. This new generation of collectors is younger—the average NFT buyer is 42, 12 years younger than a collector of traditional art, according to Christie’s. Moreover, 75 per cent of the NFT buyers were new to Christie’s, enabling the auction house to reach a wider audience.

NFTs are disrupting the art world by changing the way art is traded. Creators of digital artworks can sell directly to collectors through platforms such as OpenSea and Foundation, cutting out dealers and galleries. Little wonder auction houses are keen on being a part of this big revolution. In October, Sotheby’s, which sold a $100 million worth of NFTs in 2021, launched Sotheby’s Metaverse—a proprietary, custom NFT marketplace. This will evolve to include a full suite of marketplace features including primary offerings, dynamic auctions, open editions and capabilities to mint generative artworks.

“Currently, we live in a world driven by the idea that access denotes ownership, and that things need to be scarce to be valuable. However, with NFTs the inverse is true. Just because an NFT—that anyone can view digitally—is widely accessible, this does not mean that the artwork depreciates in value. This creates a more equitable arrangement for the artist, collector, and consumer which is very exciting,” says Michael Bouhanna, Co-head of Sotheby’s Digital Art Sales.

Auction house Sotheby’s, which sold NFTs worth $100 million in 2021, has launched Sotheby’s Metaverse—a proprietary, custom NFT marketplac
Auction house Sotheby’s, which sold NFTs worth $100 million in 2021, has launched Sotheby’s Metaverse—a proprietary, custom NFT

Even museums, the custodians of traditional art, are jumping in. The British Museum has tied up with French start-up LaCollection to produce NFT versions of some of its artworks. It has turned 20 artworks of English painter William Turner into NFTs, which will soon go up for sale and auction on the start-up’s website.

NFTs have also made an appearance at art shows such as Art Basel, Miami. This year’s India Art Fair too will showcase NFTs. “The fair is a perfect place to reflect on and give shape to current art world trends... we will have a selection of NFTs presented by Terrain.art, showing works by artists like Amrit Pal Singh and Laya Mathikshara,” says Jaya Asokan, Fair Director, India Art Fair.

With NFTs being all pervasive, even art world bigwigs such as British artist Damien Hirst and American street artist Brian Donelly, better known as Kaws, have signed up.

“I think that we are at the very beginning of this fast-growing market... I believe that when we’ll be able to hang a digital work as a painting, this medium will become way more accessible by our current audience that is very attached to the physical experience of the art,” says Bouhanna.

As per a report by market tracker DappRadar, in 2021, the NFT space generated over $23 billion in trading volume (this includes all NFTs, not just related to art). NFTs are a powerful trend in the crypto space, with people starting to view them as a way to diversify their holdings.

But there is also a raging debate on whether NFTs are a bubble. After all, there is a possibility of excess supply. While each individual object is unique or in limited supply, potentially unlimited amount of NFTs can be created. From Hollywood to Bollywood to sports stars, everyone is jumping on to the bandwagon but not all of these NFTs will hold their value.

There’s also uncertainty about valuation. For traditional art, one is aware of the price hierarchy of artists because of decades of information from galleries, auction houses, etc. But a lot of the NFTs being sold are by artists who don’t have a sales history.

As the Art Review says: “It’s hard to predict the long-term upset this bit of code will cause. But in 2021, all the old assumptions of the art market and art culture have been thrown into chaotic, creative uncertainty.”

@smitabw