Artists' Experiences: Will the NFT Craze Change the Art World?

This article is from the Chinese version of Art News, original title: "Will the Crazy NFT Craze Change the Art World? An Undercover Observation by an Art Practitioner," written by Liu Yiran.

It is said that the art market follows capital, and as a practitioner in the art market, I cannot be an exception. When I saw the digital artist Beeple's work auctioned for 3.5 million dollars on the NFT crypto art platform Nifty Gateway, and then sold at a high price at Christie's on March 12, I had to start taking this completely unfamiliar concept, NFT, seriously. Because I also run a primary market gallery and exhibit, represent, and sell digital art, from personal experience, I know how difficult it is to sell an invisible and intangible work. Does the emergence of NFTs mean that everything is changing? And the characteristic of NFT crypto art trading that directly connects buyers and artists also makes me wonder if the gallery industry will be threatened as a result?

Sales data of the crypto art market from 2018 to the first half of 2021, image source: blockonomi

Before starting any discussion, I still want to try to explain NFT in my own words: NFT (non-Fungible Token) is a non-homogeneous token, a proof of digital rights encrypted on the Ethereum blockchain. To put it simply, it is a property and authenticity certificate stored in the cloud.

The proof of rights of NFTs is different from Bitcoin and Ethereum; they are unique, and there will never be two identical NFTs in the world. They are indivisible; an NFT cannot be divided into smaller units like currency. They are securely immutable; once created, all NFTs are forever unchangeable (including deletion, yes, they will always exist in the online world).

Because of these attributes of NFTs, they naturally link to unique assets for use, such as identity verification, intellectual property, real estate, and artworks. From a usage perspective, NFTs provide absolute positive assistance; they guarantee the confirmation of unique assets and eliminate the possibility of forgery. These seem to solve the problems that plague the art market. There is also another use case for the art market: using smart contracts in NFTs can automatically transfer a percentage of profits from secondary sales into the artist's wallet. (Europe has long had laws regarding Artists Royalties, but due to operational difficulties, they are hard to enforce strictly). It sounds like NFTs can indeed solve many problems in the art world, but will these problems really be solved by NFTs, or will they create more issues?

Alice Bucknell, E-Z Kryptobuild, digital reconstruction of the late Zaha Hadid as Kryptobuild's AI ghost and unofficial mascot, image source: Alice Bucknell

Thanks to Clubhouse, we art circle frogs in the well can truly listen to discussions about NFT crypto art from the crypto or coin circles, which also made me realize the huge gap between the traditional contemporary art circle (yes, contemporary art needs to be prefixed with "traditional" in this context) and the crypto circle.

When I was preparing for the Art Reading podcast, I had conversations with NFT researchers from different industries. The tech circle believes that the traditional art circle has a huge misunderstanding and prejudice against NFT crypto art. Similarly, this misunderstanding is mutual. Next, I want to summarize some of the views from the crypto circle that I observed and my thoughts.

The interviewee is a well-known trading platform in the NFT crypto art world, co-founder of Nifty Gateway, revealing the deep misunderstanding of the crypto circle towards the art market, image source: Crypto YC

The emergence of NFT crypto art platforms can eliminate intermediaries, allowing artists and collectors to connect directly, benefiting both parties more

In many Clubhouse discussions and crypto news, I, as an art practitioner, am referred to as a conservative, guarding an old world order that is about to be breached by new forces. The art world is a small society filled with barriers and high walls, with participants in the art market comprising layers of hierarchy. People in the industry know that having money does not guarantee you can buy the works you want; I have had several experiences of being refused to purchase works, which is disheartening. The sales of NFT crypto art and the emergence of platforms have shattered these high walls overnight; crypto art has no exclusivity, anyone can register an account on the platform, and as long as your electronic wallet balance is sufficient, you can buy any crypto art piece you desire.

AMEX black cards and identity backgrounds are of no importance in the crypto art world. The buyer's identity is no longer that of a socially attributed person but a virtual wallet name, a string of numbers. So when you want to resell a piece, you no longer need to face the "expectations" of the gallery owner or artist; you just need to tap your fingers a couple of times, and the entire transaction can be completed in seconds, without considering any personal relationships or face issues. This world without "intermediaries" seems perfect, but it also attracts a large number of speculators (flippers) to enter the market. In the current world of crypto art, it is common for works to be resold within days; as long as there is trading demand, works can change hands multiple times in just a few minutes. It's like passing the parcel; each handler hopes the music stops, and the parcel is in someone else's hands.

Crypto Rain video work, Marius Sperlich, auction ends at 7 AM Beijing time on March 16, image source: artist's Twitter @mariussperlich

Continuing to address the issue of eliminating intermediaries, in the current crypto art context, not only are intermediaries in transactions removed, but all intermediary links in the art ecosystem are ignored. We all know that the value system of an artist's work is established through a long process involving alternative spaces, commercial galleries, museums, biennial exhibitions, and important museum collections. The rapid rise of the crypto art market directly bypasses the foundational infrastructure of the ecosystem, entering directly into transactions between artists and collectors, "transaction = value," is how artist aaajiao responded when asked about crypto art. Whether something can be traded and the price of that trade have become the only criteria for value judgment. So how long can this purely transactional ecosystem, vacuumed from the art ecosystem, sustain? Beeple's auction record did not show me a prosperous market but rather the familiar bubble beginning to burst.

Crypto art has no exclusivity; anyone can create art and consume art in a new world

The crypto circle repeatedly mentions an inclusive community; is the reality really like this? On the largest NFT trading platform Open Sea, you can see over ten million items (not just art, but also other collectibles, virtual real estate, domain names, and game skins, etc.). How do you find what you like among these ten million choices? The importance of the platform is thus highlighted. Among several relatively active and scaled platforms, each has its own focus; for example, Rarible welcomes anyone to "go on-chain," but works quickly get buried in the waterfall of the work library. There are also invitation-based and application-based art platforms like Nifty Gateway, where the number of social media followers and the existing influence of the artist are key criteria for review. So it seems that the new world is becoming more and more like the old world?

NFT trading platform Open Sea website: Open Sea

NFT crypto art aims to create a disruptive contemporary art, a brand new aesthetic standard and value system

The artists and their works currently active in the NFT crypto art world cannot even be called artists and artworks in the traditional contemporary art world. Their backgrounds are mostly designers, illustrators, CG animators, etc. (including Beeple, who might be referred to as a commercial artist in the traditional art field). The works flooding the crypto art platforms are not much different from those on free image sites like Giphy and DeviantArt, so why should we spend six figures to purchase these GIF images that can be downloaded for free?

The answer I received in Clubhouse was that this new aesthetic taste may not be understood by us from the old world, but it represents the standards of the new world. I have a sense of ignorant fearlessness because, lacking knowledge of art and art history, many trading platforms are filled with a large number of works without copyright that are directly downloaded from Giphy for sale, not to mention a pile of infringing masterworks and celebrity portrait GIFs… Think of the news about a piece imitating Banksy selling for nine hundred thousand dollars; who should we hold accountable for this?

The confirmation and traceability characteristics of NFTs make all transactions open and transparent, potentially solving the fundamental issues of dark box operations and false data in the art market

The transaction records and prices of NFTs are all traceable, which seems to solve the issues of dark box operations or price opacity in the art market. But is the transparency we see real? In crypto art transactions, what is displayed is the wallet name rather than the real names of all the people behind it. A person can own countless wallets, making it easy to trade between them. Beeple's landmark auction result last December on Nifty Gateway was later reported by the media to show that out of 12 bidders, 11 were from 11 different wallets belonging to the same buyer (ID: metakovan).

And the last lucky bidder raised the price by 400,000 dollars due to nervousness, ultimately purchasing a piece. So can we assume that if it weren't for that last-minute blunder, all works would have been bought by the same buyer, while we are looking at the information of twelve bidders? And the buyer ID for Beeple's nearly seventy million dollar work auctioned at Christie's on March 12 is metakovan, the same one who bought 20 out of 21 Beeple works in December on Nifty Gateway. Here, do you smell the familiar scent of the traditional art market?

Christie's auction house's official website published the on-chain information about this Beeple auction item, including Beeple's virtual wallet address, which anyone can query for all transactions related to that wallet, screenshot taken at 12:00 on March 16, 2021

Even more impressively, the person with the ID metakovan co-founded the NFT fund metapurse, which issued a token called B20 (full name: The beeple 20) in January this year, a cryptocurrency that distributes ownership of the 20 Beeple works purchased by metakovan in December. After the Christie's auction ended, the price of the B20 token skyrocketed. This also means that it is very likely that metakovan did not spend much money but instead made a fortune from this news event; this trick is something the art world really cannot learn.

B20 token released on January 26, 2021, with a total issuance of ten million, of which Metakovan holds 59%. The initial token price was set at $0.36/token, anchored to the price of the 20 Beeple artworks purchased in December 2020. As of 5 PM on March 16, the value of a single token was $14.78, image source: metapurse

Slow down and build a foundational ecosystem

By this point, you must think I am a gatekeeper of the old world, firmly resisting the new world established by NFTs. But I must clarify that what I oppose is the contradictory structure and rhetoric of creating a so-called 'new art world' using NFT and blockchain technology.

Lars King, "Microchip Capsule - I AM NFT," 2021, image source: Lars King

For more than twenty years, the art market has been trying to attract tech elites into the art collecting field, from Silicon Valley in the United States to Shenzhen to Beijing's 798. The art market has always struggled to open this door to the tech circle. Taking Beijing's 798 as an example, even though there are large internet companies nearby, just a wall away from 798, it is still very difficult to get people from internet companies to walk into galleries and museums. The birth of crypto art has undoubtedly made purchasing digital art possible. Familiar operational methods and the convenience of transactions have made art trading feel less distant. I believe that although there are many speculative participants now, when the hype subsides, and truly good digital artists and art institutions begin to use the innovative technologies brought by NFTs, more people will be willing to collect digital art.

Sarah Zucker, "What Now," 2020, animated GIF source: Sarah Zucker

In fact, within China's art industry, there are curators and scholars who are seriously researching blockchain technology and working hard to promote the foundational construction of a new ecosystem. The New Media Art Center (CAC) in Shanghai has been committed to research, creation, and academic exchange in media art, and recently they have also been working on artificial intelligence art practices. Last year, the curators of the center, Bi Xing and Cao Jiamin, curated an exhibition project based on blockchain technology called "Crypto Manifold." The Times Museum in Guangzhou also established a media lab in 2019, specifically for the practice and research of the combination of art and new technology, with blockchain being one of their research directions. These studies are not only based on the application value of blockchain but also from the underlying logic, participating from the perspective of artistic creation. Only by building a solid foundational art ecosystem can the convenience of NFT transactions be truly leveraged.