NFTs — New Players, Same Game

NFTs — New Players, Same Game

On March 11, 2021, prominent art auction house Christie’s dove into NFT sales with an exchange that sent heads spinning.

For a cool $69,346,250, artist Mike Winkelmann (who uses the alias “Beeple”) became one of the highest selling living artists when he handed over his work, The First 5000 Days, to an anonymous buyer using the alias MetaKovan. Except he didn’t actually hand anything over. The First 5000 Days is an NFT, which is shorthand for a digital artwork sold through cryptocurrency and certified through blockchain technology. 

The First 5000 Days is a digital collage of 5,000 digital artworks, which Beeple made every day for a little over 13 and a half years. From afar, The First 5000 Days is a colorful conglomerate of images arranged along a diagonal gradient from light in the upper left to dark in the lower right corner. Upon closer inspection, the images range from mundane to sarcastic to grotesque. They feature infamous politicians from all points of the political spectrum as well as celebrities and popular cartoon characters (to carefully avoid naming a few, characters rhyming with “Fuzz Nightbeer” and “Ricky Louse” feature prominently in the collage). The images are dripping with postmodern angst and provide a stark portrait of the last 14 years through the eyes of an internet-saturated edgelord. 

It hardly bears saying that The First 5000 Days doesn’t appeal to the greater public as an artwork — beloved cartoon characters in flagrante with polarizing political figures are generally not smiled upon by polite society. Fury is power, though, so when Christies auctioned off The First 5000 Days for nearly 70 million dollars, thus outraging what felt like 70 million people, they firmly cemented NFTs into the art market. The unprecedented and unforeseen fact that 90% of bidders on The First 5000 Days had never participated in an art auction before also meant that NFTs had broken the art market wide open to new players.

Before diving deeper into this phenomenon, NFTs deserve a bit more explanation.

NFT is an acronym for non-fungible token. Non-fungible means that something isn’t interchangeable or replaceable. For example, dollar bills are fungible, or interchangeable: any one is like any other. If someone is owed a dollar, it doesn’t matter which individual bill they receive because all dollar bills have the same worth. Children, however, are very much non-fungible. If someone goes to daycare to pick up their child and another kid trundles up to the minivan, they’re not going to just shrug their shoulders and buckle them in. It matters WHICH child they pick up. Artwork is also non-fungible. A non-fungible token, or NFT, is a digital token that certifies ownership and authenticity for a specific, non-interchangeable digital artwork. 

Technically, the NFT isn’t the art. The NFT is a certificate of authenticity that contains a link to the digital art and certifies that it belongs to someone. The term NFT is, however, colloquially used to refer to digital art that has been bought digitally with a non-fungible token.

NFTs are bought through cryptocurrency and tracked through blockchain technology, which means that there’s a very airtight record of ownership and that they appeal to crypto trading communities. Techy traders and art market barons may be strange bedfellows, but NFTs are gathering them under one big, expensive sheet.  

Mounting evidence suggests that NFTs are shifting the demographics of art market participants.

In summer of 2021, Christies put out a press release stating that 78% of their registered NFT bidders were new to the auction house. Beeple’s historic Christies sale garnered over 40 bidders, only 3 of whom had ever bid through Christie’s before. The auction house also revealed that while the average age for non-digital bidders is 51, NFT bidders average 38 years old. A younger, techier bidding demographic could significantly change the art market’s focus. 

Cracking open the art market to a wider audience is an exciting prospect with potential benefits for people on all sides. For a long time, buyers in the upper echelons of the art market (like most industries) have been overwhelmingly white, male, and mind-numbingly wealthy. Like attracts like, so these buyers tend to favor artwork by wealthy, white, male artists, which expands the economic divide between golden boys from privileged backgrounds and non-white, non-cis male artists who are underrepresented in the big-league art market. NFTs have the potential to disrupt the art market’s existing hegemony and introduce more diverse buyers, thus lifting up diverse artists. 

Shortly after purchasing The First 5000 Days, MetaKovan and his business partner Twobadour unmasked themselves and revealed that they are Vignesh Sundaresan and Anand Venkateswaran, two Indian men living in Singapore. They released a statement saying that their historic purchase was intended to “show Indians and people of color that they too could be patrons, that crypto was an equalizing power between the West and the Rest, and that the global south was rising.” This is an exciting idea which, in an overwhelmingly Western society, ought to be a lot less revolutionary than it is.

Though the American model of a techy crypto investor looks and acts like Mark Zuckerberg, who doesn’t exactly break the demographic mold for art market patrons, NFT buyers on a global scale expand the demographic of who is able to buy art. Theoretically, because NFTs are bought and sold through cryptocurrency, anyone with an internet connection can participate in the NFT marketplace. Class and inaccessibility to the art market are huge thorns in the art world’s side, so NFTs make for an interesting potential solution. However, despite MetaKovan’s statement that their statement symbolizes the thrilling potential of cryptocurrency and NFTs to reconfigure the global economy, as well as the art market, in a more egalitarian way, the truth of the matter is that NFTs haven’t redistributed very much wealth at all. 

Though cryptocurrency is a step toward a globally democratic financial playing field, there’s still a high barrier to entry in crypto trading.

Cryptocurrency, like all investing, is confusing, and people without excess time and energy to learn about cryptocurrency are at a disadvantage. Potential participants in the crypto marketplace also must possess some level of expendable income (or passion, or desperation) to invest in crypto currency. Most people buying and selling NFTs earn either under 20,000 USD or over 100,000 USD yearly, and this great divide suggests suggests a stark difference in motive and trading behavior between the groups. While NFT traders from the higher income bracket are making money through significant trades, it seems that traders in the lower income bracket fall into two camps. Some are enthusiasts, who are passionate about tech or art and are participating with their eyes open. The others are really desperate to make a quick buck and are susceptible to great personal loss through NFT trading. 

Unfortunately for desperate NFT traders, the NFT market is incredibly volatile and rife with scams. The stories of breakout crypto-billionaires who amass a fast fortune through making or flipping NFTs are much more thrilling (and therefore widely more disseminated) than the innumerable tales of NFT traders who frantically invest and then lose devastating sums of money.

The NFT market is a glitzy, exciting place in the world of finance, but it’s also dangerous.

While the MetaKovan statement is interesting, it fails to account for a system that rewards the already advantaged and preys on the desperation of the poor. There’s a lot of potential for NFTs and cryptocurrency to improve equity in the art market and the global economy, but so far it hasn’t had that effect. The art market continues to privilege the already privileged, and NFTs have made only a miniscule sliver of digital artists rich. Despite claims that NFTs would revolutionize the art market, the NFT market has fallen into the same pattern as the rest of the art world — a few artworks sell for exorbitant prices, which enrages and excites the public, while the majority of art sales for a majority of artists operate on a totally separate scale. In fact, most NFTs sell for less than $100. By establishing a method of paying digital artists for their work, NFTs pave the way for interesting developments in the art market and art-making methodologies. So far, however, most artists remain unimpressed with the reality of NFTs. For most artists, NFTs aren’t a daily consideration. 

The buzz around NFTs depends on cryptocurrency’s glamorous aura and the fact that it feels like fake money to most people. In a society that lives increasingly online, the line between digital fantasies and real life is blurring, and NFT trading is a tantalizing way for people to feel that they’re part of an online community. The NFT fervor also depends on a Duchampian anti-aesthetic that frustrates traditional expectations that art should be beautiful, meaningful, or have required time and effort in order to be worth a lot of money. Many outlandishly expensive NFTs are mass-produced images of apes, lions, and 8-bit figures cobbled together through software, with a clear emphasis on quantity over quality. Images with rarer features are worth more, but the people making a lot of money on NFTs aren’t concerned with creating beautiful images with individual artistic merit. While of course some artists are making thoughtful work and then selling it as NFTs, the majority of the NFT marketplace is far more focused on finance than on art. The majority of the people buying and flipping NFTs aren’t really interested in art at all. Instead, they use the NFT market as a very fashionable way to make a lot of money. 

It’s old news that the art market is much more about the market than art, and the same is true for the NFT sector of art sales.

For centuries, wealthy art patrons have funded art without regard for the art itself. They wanted to intimidate their enemies, or they wanted to prove their piety (and pay off their sins) by commissioning devotional artwork, or they wanted to look as rich or richer than they were, or they wanted political gain, and the list goes on. All of these motives for buying have endured throughout time and pertain to today’s art market, as well. The people who are spending millions of dollars on artworks of any kind usually aren’t hanging them over their sofas and looking at them in rapture every day. The sad truth is that expensive artwork is usually bought as a tax-advantaged investment and status symbol, then it sits in a high-security Swiss storage facility for years, never to be seen with human eyes for the foreseeable future. 

The NFT market is financially fascinating but by no means is it the most interesting thing happening in the art world. In the NFT market, most traders buy and sell artworks that remain locked in cyberspace, where they’re rarely looked at. NFTs are fiscally valuable, but in their current form they’re ill-suited for romantics who are interested in the ineffable magic that occurs between human eyes and an artwork. Still, NFTs hold immense potential for the future of art and digital art distribution.

All technologies take time to ripen into their most potent form. Both cars and bicycles were initially disregarded as impractical fads that only the super wealthy would ever use. Rather than fading into obscurity, however, these and countless other technologies have settled comfortably into everyday use. In their current state, NFTs are deeply flawed enough that if innovation grinds to a halt, they could very well fade into obscurity. Currently, the NFT market is stretching to bridge the gap between the art world and the world of fintech, and they leave a lot to be desired. Predatory financial behavior, lack of accessibility, and NFTs’ lackluster effect on the greater art-making public are growing pains, but art and technology are nothing if not resilient and unpredictable.

Like the horseless carriage, which developed and improved and became the modern-day car, it’s entirely possible that NFTs could develop and improve into something so deeply ingrained in commerce that we won’t be able to imagine life without them. Integral to this, however, is MetaKovan’s argument that NFTs and cryptocurrency are part of a new, more equitable global economy.

If the NFT market fails to attract the diverse minds that MetaKovan claims it does, then NFTs will become about as relevant as a 19th century horseless carriage trundling down the interstate. 

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