The third most expensive piece of art sold by a living artist is not what one might expect. It is not a painting or a sculpture or any other piece of fine art that one might be thinking of. It is instead just a JPEG and a hyperlink. It was created by the digital artist who goes by the name of ‘Beeple’ and the man who bought it expects it to be worth a billion dollars someday. This is what it looks like.
The artist runs a project called ‘Everydays’, which is essentially a series of digital composition that the artist creates and shares, you guessed it, every day. The piece that sold for $69 million – which is what brought Beeple into the highest echelons of contemporary art, at least financially, is merely just a collage of the first 5000 days of the ‘Everydays’ series, aptly titled, ‘Everydays: The First 5000 Days’.
This piece of digital art was sold in the form of a ‘non-fungible token’ or NFT
Fungible tokens are things that can be easily exchanged like money. You can give someone Rs. 500 in exchange for four Rs. 100 notes but you cannot exchange an NFT like a piece of artwork for something else because art has certain unique properties. The reason why NFTs are becoming so popular is because of how they determine ownership rights. It is based on the blockchain where transactions are permanent and irreversible. An artist can create an NFT by simply uploading their artwork to a website like Rarible and choose to put it on sale. They then mention a minimum price for their artwork and the percentage of royalties they would like on future sales and the artwork gets listed as an NFT on the website.
Consumers can then go and purchase it. To do so, they need to own Ethereum since most NFTs are created on the Ether platform. The thing about NFTs that’s got everyone excited is the fact that it leaves no room for doubt on who the owner is. This is because everything is recorded on the blockchain and can not be tampered with. So the man who purchased Beeple’s artwork, the collage shown above, is now the undisputed owner of that piece. This is important in the world of digital art where artwork can be replicated.
NFTs also help distribute royalties fairly using smart contracts. Smart contracts are basically self-executing contracts where the terms of agreement are written into the lines of code itself. The information is stored on the blockchain as well making it a permanent record. The art industry has always struggled with the distribution of royalties with many artists having been routinely taken advantage of, especially during the early stages of their careers. NFTs are helping democratise the art space in a way that has never been possible before.
Not everyone shares the same enthusiasm for NFTs within the art world, however. If you take a look at Beeple’s work, you’ll see that its still heavily influenced by the ‘meme’ format. For fine art aficionados, this kind of work doesn’t qualify as serious art. Beeple himself has commented on how he knows very little about art history and has never really studied it. The alternative view is that NFTs allow artists who are from outside the traditional fine art circles to really create value for themselves.
Much like how the internet gave millions of ordinary people a platform to express themselves and create a following, NFTs also have talented artists an avenue through which they can monetise their work. While this is the idea, the story so far with respect NFTs has only replicated what we already see in the traditional art space, i.e there are small handful of well established stars along with a large number of aspirers
The scope of NFTs go far beyond graphic artworks. People can purchase GIFs, Tweets, NBA Moments (a short video highlight of a basketball game), and so on. Jack Dorsey, who is the founder of Twitter, just had his first tweet ever sell for just under $3 million.
Consumers can also look to purchase video game wearables and virtual land in fantasy worlds. There is still debate over whether NFTs are here to stay or whether they are just a fad. Some are of the opinion that NFTs are just another aspect of the ‘meme economy’, which is a subreddit on Reddit where individuals can trade in meme templates. The popularity of a piece of artwork really just depends on the hype around during that moment in time. Much like the GameStop frenzy we witnessed earlier in the year, where investors started short squeezing shares of the video game company even though the prices they were trading at were far above its inherent value. They picked the company arbitrarily.
These are still very early days in the world of NFTs and as such it is difficult to predict which path it will go down. Its application in terms of how it determines ownership rights and royalty distributions, however, are a game-changer. The seemingly exorbitant fees that some of the artwork has collected so far may well prove to be the result of pure frenzy. The owners of these NFTs obviously have a different point of view. With such high figures being attached to them, they may have a point.