Collector Culture

Last March, Christie's sale of an NFT artwork hit the headlines: the work, entitled “The First 5000 Days”, by American artist Beeple, sold for $ 69.3 million and was paid in Ether (ETH), a first for an auction house. Speculative bubble, deception or Messiah of digital art, is this new artistic movement revolutionizing the art market?

Created in 2017, Crypto-Art today represents a market valued at $440 million dollars in the first quarter of 2021. With an 800% increase in 1 year, it is not surprising that many financial players are warning against a visibly volatile market, perceived as purely speculative. However, its concept and its promise of traceability, bring major advances to artists and in particular to the world of collectors.

What is Crypto-Art?

Crypto-Art represents digital art with an NFT (Non-Fungible Token), that is to say a digital certificate created using blockchain technology to link the physical, as well as virtual, object to its owner. It can be a photo, a video, an animation, a tweet, a simple JPEG file. Concretely, by purchasing an NFT, the buyer has in his possession a digital title deed, while the artwork can remain accessible online and even be shared or registered, at the will of the seller or the buyer.

So why spend millions on Crypto-Art, only to have one JPEG file?

Authentication and traceability enhance the digital art market

If an expert can authenticate a Monet or a Picasso by style, or by the artist's signature on a work, the advent of computers and digital art has complicated matters. A simple save or screenshot of the file makes it possible to duplicate a work and distribute it without knowing where the original is located. The world of photography, for example, has always received little value due to a lack of transparency and traceability.

When an NFT fixed to a physical or virtual object, information related to the work and its transactions are encrypted in the blockchain and simultaneously confirmed on a computer network, leaving no chance for any modification of the latter. Thanks to their traceability and their tamper-proof nature, the NFTs help to clean up the market and make digital art unique, thus opening the door to collectors looking for exclusive works.

A revolution in costs

When buying an NFT, the logistics are clearly less burdensome or even non-existent for both the artist and the buyer. The problems of storage and insurance disappear, the NFT work can very well be stored on one’s phone, on a USB key, be displayed physically on a screen or in a virtual gallery. Many virtual museums have already emerged, and Todd Morley, co-founder of Guggenheim Partners has just announced the creation of the largest museum of NFTs, which will be based in New York.

Art as a social vision

Art has, above all, always been a social subject. Elitist or social artistic expression, one can understand or appreciate art without having developed knowledge in the field. While the workmanship and materials of a work may be spectacular, its intrinsic value will never equal its purchase price. We do not sell a work based on its cost price and in the high sphere of art, we buy the right to say "I own this or that work", it is above all a social recognition. From this point of view, crypto-Art fulfils its mission since it really offers a property, encrypted in a tamper-proof system, but for all that, the visual work can be disseminated infinitely and instantly throughout the world without any risk. Many internet platforms already allow collectors to share their collections virtually, participate in a community and claim their possession.

NFTs contribute to the circulation of cryptocurrencies

This is obviously the point on which critics of the NFT are based; these non-fungible tokens have a market value, they are redeemable for Ether, the cryptocurrency of Ethereum. Many platforms like Opensea  allow you to buy items directly in Ethers through virtual wallets like Metamask.

Just like bitcoin or any other financial security, Ether has a very subjective value but can be assessed, according to supply and demand, knowing that this market benefits from a great transparency of transactions; a modification of the value of Ether is predictable. However, it should be noted that cryptocurrency is highly volatile and still difficult to exchange for fiat currency, as a financial institution does not regulate it. You can buy and sell anything in bitcoin as long as both parties agree. Tesla, which initially accepted the purchase of its cars in cryptocurrency, reconsidered its position after learning of the serious ecological consequences induced by the consumption of energy and the emission of carbon represented by the diffusion of cryptocurrency. When the news broke, Bitcoin collapsed.  As crypto-currencies are easily exchangeable with each other, Crypto-Art could be a safe haven for fortunes made up of bitcoin who would like to invest without going through flat currency. In addition, major auction houses like Christie’s and Sotheby’s now accept payment in Ether, which could explain the surge in prices for some NFT works recently sold, associating a rather speculative aspect with the valuation of digital art. For example, Vignesh Sundaresan, who bought (under his pseudonym Metakovan) the digital work of Beeple at 69.3 million euros at the start of the year, is none other than one of the first blockchain investors who created the investment fund for Metapurse virtual objects.

A bubble that will burst?

Financiers urge caution, aware of a market that is currently highly speculative and relatively new. There are no, or few, existing quotes for digital art and, as we have seen, some purchases are being manipulated to promote the circulation of cryptocurrency. If we listen to the words of experts in the art world, NFTs are here to stay and they promise to revolutionise the market with their identification and traceability technology. They offer new artists more possibilities, easier market entry and real social recognition. Crypto-art is undoubtedly an artistic movement that will revolutionise the art market and that will last over time. NFTs bring a technological advance that can be declined in all fields, as we have seen recently with the first NFT Hublot and Jacob & Co. watches. There is therefore no reason for this technology to disappear, however recent speculation on works by unknown artists or on tweets should certainly calm down within a few months to make way for a healthier market that simply responds to the law of supply and demand.

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