Wiesbaden Everything you need to know about non-fouling noises (NFTs) is summed up in a tweet from Calvin Wong, Director of the Games Podcast: “I’m going to a gallery and want to buy an NFT for a board. I pay the asking price and they print a fancy receipt and give it to me. Besides, a receipt printer uses More electricity than a small town. You keep the board. I just get the receipt.”
There is still a gold rush mood in the market for NFTs. On the other hand, there are increasing signs that Sagittarius can already be overrated. Sneaker NFTs, Tim Berners Lee’s IP source code, and other intriguing things are related to the NFT buzzword. Even UEFA makes the NFT its trophy for the most beautiful goal in the European Championship and claims in a press release that it is art.
But by no means everything that is presented under this keyword is art. Because NFT can be “mined” to just about anything. Ultimately, it is a way of connecting a digital or physical object to the blockchain, typically Ethereum, thus making it counterfeit-resistant and tradable.
According to industry service nonfungible.com, which monitors various trading platforms, while art is a bigger market than sports, it’s not even half the size of the broad field of “collectibles.” These also include Larva Labs’ pixelated CryptoPunks, which have already sold over US$400 million, much more than art.
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Kristi made just under $17 million in revenue with “9 CryptoPunks” alone. Ironically, Sotheby’s is now treading on thin ice with CryptoPunks: the auction house has just sold five of these digital photos, 24 x 24 pixels, in the classic fashion as unique prints on 40 x 40 cm paper – with prices ranging from $151k to £227k .
The involvement of Christie’s, Phillips, and Sotheby’s in this area is likely to contribute to some confusion, as auction houses have so far refused to clearly separate the different NFT divisions.
Aside from the media hype and financial rally, NFTs seem to give artistic production and discourse a huge boost. Prisca Pasker, owner of the Cologne Gallery, thinks it’s not just about the money: “I see the NFTs as a very good opportunity to discuss art, photography, video and everything else available digitally in a global network.” In a time of turmoil, like the present one, in her opinion, artists should be paid more attention and listen. “And that could happen through the NFT market.”
Johann König, owner of the Berlin Gallery, sees the NFT boom as an opportunity: “Digital art has been around for many decades, and the hype surrounding NFTs has moved digital art along with painting, sculpture, photography and video. It is not a new form of expression. But it is a niche that is now being discovered by the general public.”
It wasn’t traditional art collectors who bought on related trading platforms like Nifty Gateway and SuperRare, Koenig says, but fans of artists raised through social media and members of the tech industry, who have a different approach to art. “These new collectors are part of the NFT community on Twitter. They are in direct contact and exchange with artists who are auctioning their work on the NFT Markets.”
Here Johann König sees opportunities to revitalize the art market. “And to attract a new generation of collectors who are very interested in new things.”
Berlin gallery owner Saskia Draxler of Galerie Nagel Draxler is curious: “It is interesting how or whether this technique can structurally change aesthetic perception and art, or add new possibilities to traditional genres of painting – sculpture, installation and media art.” On the other hand, the art market is no different from other markets: “Not much will change for the market. The market has no feelings and often a little too.
What is being traded is also present in the art market. For example, Christie quickly jumped into a wholly childish and politically questionable position as Beeple shows that well.”
Damien Hirst has always known how to play with the market and its structures. His project “The Currency” consists of two parts: drawing dots on paper and NFTs in a joint edition of 10,000. It is initially a high-resolution JPEG file with a 3D image and other information.
NFT also includes original works on paper. After one month, the buyer must decide whether to replace the NFT with physical work. He can only keep one. If the NFT is not replaced after one year, the papers will be destroyed. If the buyer chooses physical work, the NFT is destroyed.
This is interesting because the two are not separate – an NFT can certify a physical work of art, while what is commonly referred to as an NFT in this case is a blockchain-based JPEG authorization. Hearst is perhaps more interested in the question of whether buyers want digital or paper work for $2,000 – and how prices for both evolve in the secondary market.
Rüdiger Weng looks at the art market and the new phenomenon through the eyes of a businessman. His company Weng Fine Art AG is active in both the B2B and end customer businesses, with versions written by Jeff Koons and Damien Hirst, among others. It is now valued at more than 100 million euros on the stock exchange.
Weng’s judgment: “The main advantage of ‘securitizing’ art in the form of NFTs – and thus potential segmentation – is that you can use it to homogenize a heterogeneous product and make a good liquid liquid. The art also becomes lighter in this way that is investable. As a result, according to Weng, “Liquidity will flow greatly into the art market and prices will rise significantly.” Through the retail process, everyone can become co-owners of high-quality works of art.
Categorizing and securitizing artworks into investment products can be seen as demonic or as a tool to democratize the art market. Cryptocurrency advocates claim that Bitcoin and Ethereum & Co are similarly beneficial to the financial world. All blockchain-based applications have one thing in common: their power consumption.
Miners threaten a coup
According to estimates, Bitcoin alone uses as much electricity as the Netherlands. With Ethereum, the blockchain on which most NFTs are docked, and the Ether currency associated with it, the power consumption is not much lower. This should change with the change in the mining process from Proof of Work to Proof of Stake. But there is no exact date, and miners, making money with computing power, threaten a coup.
For now, it stays that way: according to the online calculator carbon.fyi, creating and submitting a single NFT generates the same amount of carbon dioxide as the trip to Mallorca. This is not specific to NFT, it affects the entire crypto world.
However, compared to physical works of art, NFTs have cost advantages in terms of storage and transportation. Insurance, on the other hand, is a bit more complicated. “The advantages of the collector are that apart from the risks of the Internet and speculation, there are no risks worth mentioning,” explains Stefan Zilkens, a technical insurance broker in Cologne.
“Classical risks, such as fire, burglary or tap water, don’t exist with NFTs. Server farms can catch fire, but even then, the risk can be controlled, because NFTs don’t exist locally or technically in one place.” So far, insurance has been The artwork is all risk insurance – that is, all damages that are not excluded are insured.
However, Zilkens warns: “Insurance companies are increasingly excluding cyber risks from art policies. Standalone products only exist outside of classic fine art insurance.”
In any case, for entrepreneur Rudiger Wing, it is clear: “It will continue to be traditionally collected. But the future of the art market will be the financial market and the investors that thrive there. Through NFTs, art will increasingly take on the character of a store of value.”
Will buyers who paid 140,000 euros for one of nine copies of one of the many digital masterpieces from the Uffizi Gallery in Florence really be pleased with their heirs? Will Beeple’s $69 Million Digital Group Return? In 100 years, will anyone still be interested in who owns the “origin” of CryptoPunk? All this is very doubtful. But Koenig agrees: “NFT products sell for as little as the Internet.”
more: Non-Fungible Code: Genie out of the bottle