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Crypto Art: The Future of the Art Industry?

Back in 1999, David Bowie had the foresight to recognize that the internet was about to cause massive, unexpected shifts in the way humans communicate- and even the way we think. In an interview with Jeremy Paxman on a special edition of the program “BBC Newsnight” from that last year of the last millennium, Bowie predicted that the potential of what the internet could do to society, both good and bad, was, at that point, unimaginable. “I think,” he said, “we’re actually on the cusp of something exhilarating and terrifying.”

We have seen the reverberations echo from the internet boom in the late 90’s and early 2000’s. The internet has become part of our daily interactions, especially now, in the midst of a global pandemic. Our lifeline for social interaction from afar, remote shopping, and, increasingly, even working from home, the internet is deeply interwoven with the fabric of our normal lives. There is one industry, in particular that has seen some strange recent trends related to the power of the web, an industry that can often pride itself on being resistant to the popular tides of trend and pop culture: the art industry.

Long the bastion of the seemingly alternative, the myth of the art industry is that it presents a counterculture “Other” option to the platitudes and mindlessness of mainstream society; that it offers a path towards questioning the norm and out of the blind acceptance of capitalist endeavors. Now, however, the art industry faces a looming identity crisis as it is forced to reckon with the existence of a very bizarre trend. Crypto art. This perfect melding of cutting edge technology, extravagant wealth, sentimentalism, and common marketplace impulses threatens to upend the purported foundations that the art world is built upon.

So let’s dive deeper into this trend, to take a look at what crypto art is, and whether it is indeed destined to become the Next Big Thing in the art world.

What is Crypto Art?

In a nutshell, crypto art is a piece of artwork that exists in the digital sphere. It is treated, traded, and purchased like a physical work of art. The important element of a crypto artwork is its owner verification. In the same way that the value of a painting will skyrocket if experts can verify that it has been signed by a world-renowned artist (think Picasso, Rembrandt, Da Vinci, Monet), a work of crypto art derives its value from its verifiability.

So how can a digital artist sign their crypto artwork? By using a non-fungible token, or NFT. An NFT is a digital token that represents a special, unique identification. That token, with that particular unique ID, is linked to the crypto artwork and cannot be replicated.

An NFT can be attached to any file type: GIF, MP4, JPEG, PDF, even MP3. Having an NFT attached to any particular file is enough evidence to verify who owns the original. The NFT is stored on Blockchain technology, which acts as an accessible, permanent record of who owns which ‘original’ file.

So the value in owning a piece of crypto art is in owning the NFT attached to the original version of the file and stored in a specific Blockchain. This allows artists, musicians, designers, influencers, or anyone with an official, original copy of a digital media file to profit from selling digital media (often at huge markups), which would otherwise be inexpensive or even free to download and copy.

If this sounds like something straight out of a sci-fi dystopia to you, you’re not wrong. Welcome to the future; we’re living in it.

How Crypto Art Has Evolved

Before Blockchain technology was involved, the field of digital art was limited to enthusiasts sharing media over the internet. But the addition of this technology, usually known for hosting Bitcoin, has shifted the industry to one of big spenders and singular tastes.

A crypto art sale now depends upon the NFT legitimacy that designates it as an official copy. As expert Patrick Lum explained in a recent article in “The Guardian,” in this type of sale, every computer connected to a cryptocurrency network takes note of the transaction on a blockchain, a shared ledger, marking the sale in a permanent public record. That mark of authentication is the unalterable certificate that the owner keeps, and what affords them the value of their recent purchase. Crypto art is recorded on its own Blockchain ledger, Ethereum. These records are essentially accessible to anyone who has access to the internet; they can even be checked casually from a smart phone while you wait for your takeout order to be prepared, so the legitimacy of a sale is supported by public access to the information.

This new market allows for digital content producers to connect directly with buyers, cutting out the middlemen of their sometimes hefty financial transactions. Crypto art buyers tend to prefer collectible items- sports memorabilia, entertainment industry treasures, and other items drawing upon a deep sense of nostalgia and sentimental attachment are popular with buyers. Some see crypto art as a way to make a fast profit. According to Erin Griffith, digital art expert of the New York Times, crypto art buyers see the market as an always entertaining blend of investing, day trading, sports memorabilia collecting, and gambling. Many recognize that the power of the industry comes from its emotional draw. There is a raw excitement for buyers interested in investing in a whole new art objects culture. And the knowledge that you own a unique, original copy of something that can be shared broadly provides a certain satisfaction. (As one crypto art merchant put it, “You’re buying a feeling.”) But at what price?

Chains of 000’s

With the coronavirus pandemic shutting down the usual state of affairs in retail, certain demographics have been amassing wealth, with nowhere interesting to invest it. Enter crypto art. Bored and spending more time online, wealthy investors have recently dropped jaw-dropping amounts on pieces of crypto art. The infamous Nyan Cat, a meme created ten years ago, depicts a digitally animated flying cat. Its body is a pink Poptart, it scuffles along a starry blue background, leaving rainbows in its wake. Last month, in February, the original crypto art file of this meme was purchased at auction by an anonymous buyer for about $580,000. The bidding wars for ownership rights of original digital media files and digital memorabilia can be highly competitive, driving prices up to steep totals.

This month, crypto art has garnered even higher price points. Several weeks ago, a sports trading card that depicts quarterback Tom Brady sold for $1.3 million. The original JPG file of a digital artwork entitled “Everydays– The First 5000 Days” by digital artist Mike Winkelmann, better known by his artist name, “Beeple”, was auctioned off at Christie’s this month. After opening the bids with a starting price of just $100, the bidding war that ensued drove the price point into the millions. After over 180 bids, the file was sold for a record $69.3 million, the third highest amount garnered by a living artist for any artwork at auction, digital or physical, just after works by David Hockney and Jeff Koons. Featuring a collage of all the artworks Beeple has been posting online daily since 2007, the original file was ‘minted’ as an NFT. It was the first time that Christie’s, the famous auction house and art world institution, accepted cryptocurrency as payment for a sale.

Performance art groups like “Burnt Banksy” have embraced the crypto art trend. This month, “Burnt Banksy” sold a non-fungible token that contains a digital copy of a limited-edition print by Banksy from 2006. The group, who define themselves as “tech and art enthusiasts”, declared that they had set the original print on fire; the art burning ceremony is available to witness online. The digital NFT-verified version of the print is now the only version that exists, making it valuable for collectors. Once the group put the NFT’s up for sale, the digital copy earned nearly $382,000- a price over three times higher than the estimated worth of the original physical print. The anonymous online buyer then immediately listed the digital piece for sale.

In a charity auction hosted by a new crypto art sales platform, Cryptograph, celebrities were invited to create unique digital artworks for auction. Actor Ashton Kutcher, of “Punk’d” fame, mimicked the “Burnt Banksy” group by doodling stars on a piece of paper, then filming himself burning the drawing by his pool. The only copy of this crypto art piece that still remains is the digital file, which is listed on Cryptograph for $4,000. The piece is entitled “The Eye of the Beholder”.

Musicians are jumping on the crypto art bandwagon this month as well. Rock band Kings of Leon just released the first-ever NFT format album. Available as a series of tokens, the album, “When You See Yourself”, can be purchased with special extra features for $50 and above- a reasonable investment in comparison to the recent art world extravaganzas.

A Lasting Trend- Or A Passing Craze?

Some experts warn that the NFT sensation of recent months is bound to crash. The value of crypto art has reached record heights recently, but this skews the data for the entire art market, presenting trends that are out of sync with the rest of the industry. The values of NFT’s and crypto art are also in question; this recent spike does not indicate lasting stability for the industry. Not to mention the fact that these transactions are often paid for by cryptocurrencies, which are also in constant flux.

The current buzz around NFT’s could cool down by this time next year. The prices of cryptocurrency could once again dip. Once the lifestyle restrictions caused by the pandemic are lifted, investors may prefer to spend their money elsewhere.

But for some diehard believers, crypto art is here to stay. Like other recent innovations that seemed like passing fads, from cell phones to AirBnb, crypto art could become the norm for big investors and digital media creators looking to connect directly with interested buyers. NFT’s could become this generation’s legacy gift; a valuable treasure to pass down to our progeny.

Or it could fizzle out. Only time and investors’ ever-changing marketplace desires will tell. In the meantime, as this emerging industry continues to generate buzz, it looks like it will continue to be a niche market for online enthusiasts. Still, while it may not overtake the entirety of the art world, the aesthetics and issues of this digital genre are sure to create a lasting impact on artists- and art buyers- for years to come.

Author: Yasmin D,

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