To the uninitiated, the idea of paying millions of dollars for digital art might sound like a barely believable concept. Throw non-fungible tokens (NFTs) into the mix and the picture can be even more baffling.
But for the last couple of years, this new technology has enabled artists across the globe to distribute and monetize their work like never before. And it is already worth serious money.
Last year saw more than $40billion of sales of NFTs – a massive rise from the $250million reported in 2020. Contributing to that mind-boggling number was a sale by artist Mike Winkelmann – AKA Beeple – who sold an NFT of his work at the world-famous auction house Christie’s for $69million. Remarkably, that put him among the top three most valuable living artists, along with Jeff Koons and David Hockney.
A number of high-profile sales suggest 2022 is going to be even bigger, with popstar Justin Bieber spending more than $1.3million on an NFT from a collection called the Bored Apes Yacht Club.
So NFTs are worth serious money. But what exactly are they?
NFTs are effectively digital tokens linked to assets that can be bought, sold or traded. Much like Bitcoin, they exist on a blockchain. However, where they differ from cryptocurrencies is each NFT has its own unique valuation set by the highest bidder.
In this sense, they are well-suited to art. Just as someone pays a specific amount based on what they feel a painting is worth, so the same is happening with NFTs.
When it comes to selling them, vendors first have to sign up to a marketplace before they ‘mint’ their tokens via the blockchain – a digitally distributed, decentralized, public ledger that exists across a network. The work is then listed, before being purchased by the highest bidder.
The quantities of money involved are dizzying, but there are critics of the movement – not least those who lament the fact that no physical artwork changes hands while vast sums of money do.
Others claim it is simply the latest bubble which is set to burst once the craze has died down and celebrities have lost interest.
That does not seem to be happening any time soon though. Just last month, Agoracles – an NFT art collection inspired by the world of Greek mythology under the artistic direction of designer Olivier Lapidus – was launched. They were purchased in just a few minutes to the tune of €330,000.
Artists are embracing the rapidly evolving scene by producing more digital work than ever. The nature of NFTs also means that almost anyone can earn money from their creations, while also collaborating and connecting digitally over their artwork. Just six months prior to his $69million sale at Christie’s, the most Winkelmannhad ever sold a print for was $100.
Perhaps unsurprisingly given their role in the deal, Christie’s has revealed that it plans to sell more NFTs in the near future. And as long as the sums of money continue to grow, the appetite for NFTs only looks set to increase.