News
Cryptocurrency

NFTs: a new disruptor in the art market?

Interest is growing in Non-Fungible Tokens, which represent digital works and proof of ownership

Kenny Schachter sold five editions of his That’s All Folks with NFTs—and earns a commission each time they are resold

In October last year, Christie’s included a work by Robert Alice in its post-war and contemporary art sale. Although looking rather like a vinyl LP, the circular gold leaf and acrylic on canvas piece, up close, consists of over a quarter of a million digits of code, with 32 gold-encrusted ones hidden among them. The 2019 work, called Block 21 (42.36433° N, -71.26189° E) leapfrogged its $12,000 to $18,000 estimate to sell for $131,250, and was accompanied by a NFT (Non-Fungible Token), a digital version that automatically resets itself to the time zone of the owner’s location. This was the first time a major auction house had sold one of these digital tokens.

Meanwhile, the artist, writer, dealer and art-world gadfly Kenny Schachter has also been producing NFTs, recently offering three digital works on the Nifty platform. One is his take on Donald Trump’s defeat: titled That’s All Folks, it is a digital work based on the end title of a Looney Tunes film. Schachter offered an edition of five for $500 each, all sold, and they have since been traded a number of times; one had received a bid of $1,111 at the time of writing. On each resale Schachter receives a small commission. “All the art I make is digital, in the form of videos or images—now I’m chomping at the bit to sell more works this way,” Schachter says. “I am convinced that the field will mushroom in the coming two or three years.”

Robert Alice’s Block 21 (42.36433° N, -71.26189° E) (2019) was the first work to be sold by a major auction house with an NFT © Christie’s

NFTs for dummies

So, what are NFTs? Are they the future of the art market, as some have claimed? Or just another here-today, gone-tomorrow speculative phenomenon?

The “fungible” in Non-Fungible Token describes something that is identical to something else. So one gram of gold or a GlaxoSmithKline share, for example, is the same as any other.

When you buy an NFT, you are buying a token and the work of art linked to it. The transaction is registered on the blockchain, a decentralised database. The work can be unique (as in the Alice piece), or in editions (as in the Schachter ones) but each token is unique to that work. The purchase of the NFT, registered on the blockchain, provides a permanent record of that purchase and provides proof of ownership.

You can display it on your computer or TV, print it out, or resell it. While anyone can print out or display an image from the internet, that image does not belong to them and they cannot trade it, so NFTs protect the artist’s authorship and make a secondary market possible.

Payment is generally made in cryptocurrency; no doubt stimulated by the boom in cryptocurrencies, the market for NFTs is growing: in December 2020, nearly $9m worth of NFT-based art was sold, according to the cryptocurrency news website Be[in]Crypto, more than three times the value of sales the previous month.

“Balls deep” in cute kittens

Those from a more traditional art background will be horrified by most of the “art” offered as NFTs. Garish, jaggedly drawn faces, cartoonish figures, cute kittens… the images are often derived from video games, comics or fantasy movies. “Like something on the back of a van,” Schachter says, but he notes that NFT “art” is attracting an entirely new audience of buyers.

The artists themselves are hardly traditional—Beeple, for instance, one of the best-selling NFT artists, introduces a “drop” (a flash sale when new works are released) with a statement that starts: “hahahah, ok so we’re going balls deep on this motherfucker...”

Meanwhile, other players in the digital field are getting interested. Verisart, for instance, which registers art and its provenance and ownership on the blockchain, is providing certificates for NFTs, with the work’s image and details, current owner key, URL, secure QR code and a unique blockchain address. “The growth in the NFT market has been phenomenal and we’re delighted to have verified some of the leading artists in this emerging new art market,” says Verisart’s chief executive and founder Robert Norton.

So, is this just a flash in the pan or a more permanent arrival on the art market? Neither the low value of the market—probably little over $13.6m in total, hardly massive—nor the quality of art offered indicate it will threaten the traditional trade any time soon. But as Norton points out, street art was initially disregarded—and now a Banksy print could set you back over a million.

Appeared in The Art Newspaper, 331 February 2021