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Infinite estimates: The true value of NFT art is in the protocol behind it

Written by Brady Ng Published on     5 mins read

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The tech behind NFT art is changing visual culture in subtle ways.

Let’s say you bought a few bitcoins when they were worth pennies, or a few dollars, or even a few hundred dollars. If you sold them at any time in the past three years, you gained easy, explosive profits! And you might be thinking you deserve to treat yourself.

In the past few weeks, crypto profiteers and culturally astute futurists have been forking over cash (or coins) in exchange for NFT art—works that are non-fungible tokens, meaning they are not mutually interchangeable, hosted on a blockchain, and verifiably scarce.

Mind-boggling, abstract, and cutting-edge, NFT visual culture has taken much of the art and collectibles world by storm. An exhibition featuring big-name NFT artists is already in the works to be staged in Beijing, organized by crypto art marketplace BlockCreateArt and funded by recognizable names like Bitmain, the Kusama Network, blockchain and crypto investor Digital Finance Group, and Singapore-based Winkrypto.

Titled “Virtual Niche” and opening in late March, the show poses one question: Have you ever seen memes in the mirror?

 

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What are NFTs?

Non-fungible tokens are unique digital markers that represent something that is one of a kind, whether it is a physical object, a non-physical creation, or even just an idea. Like Bitcoin, NFTs run on a blockchain network. One use case that gained some traction was CryptoKitties, a game where players buy, breed, trade, and sell virtual cats. CryptoKitties was so popular in late 2017 that it gummed up the Ethereum network and slowed down its transaction speed.

Because they are not interchangeable (unlike many other blockchain-based applications, like Bitcoin), NFTs are also deployed as authenticators for unique artworks. While big-name contemporary artists have tapped into this medium, it is mostly digital artists and graphic designers who utilize NFTs when they sell their artworks.

Right now, that market is pumpy—perhaps with good reason. Many of us are still working from home, isolated from regular social gatherings. We spend so much time online. Mounting some online art that we can call our own is a reasonable thing to do.

 

 

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What’s the big deal?

Complex technology is the most elegant when it is an afterthought. That means the user is fully immersed in the experience that the tech is meant to provide, rather than bogged down by the awareness that there is new tech empowering those services or products or sensations.

That’s why NFTs are one medium—yes, a medium—that is providing a breakthrough in contemporary visual art and culture. Unlike blockchain applications that require an understanding of their dense, ledger-based, esoteric nature, NFT art carries a visual aspect that is meant for pure enjoyment, or induces a snarky chuckle, or gives owners the bragging rights for owning a desirable, of-the-moment collectible.

NFT art is providing value for a subset of art collectors and many newcomers, both in the cultural and financial sense. High-tech pop music and visual artist Grimes sold over USD 5.8 million worth of crypto art within 20 minutes after dropping a set of images for “WarNymph Collection Vol 1.” Prices ran within the band of USD 20 to USD 388,938 apiece.

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A 10-second video called Crossroads (2020) made by the absurdist digital artist Beeple, whose real name is Mike Winkelmann, left the auction block last week for USD 6.6 million—more than 98 times the price it was sold for just five months ago. At the moment, Beeple has another work, EVERYDAYS: THE FIRST 5000 DAYS (2021), up for auction on the website of Christie’s. The lot carried an unknown presale estimate, which is a rarity for auction houses. Simply put, there were few references for what a fair price band might be.

Bidding started at USD 100 on February 15. At the time of writing, the highest bid is at USD 3 million, with ten days to go before the auction closes. Before bids started to flow in, Noah Davis, a Christie’s specialist in postwar and contemporary art who is leading the sale, said he expected the auction to be like a “mosh pit.”

“We’re very familiar with paintings and sculptures at Christie’s. Our audience is very familiar with art that can be hung on the wall and experienced in the round. And this is our first foray into offering something that is completely intangible. It does not have any objecthood, objectively speaking,” Davis said when he spoke to Bloomberg last month. “The code is represented on our website and in the mind’s eye of our audience.”

Typically, aside from a printout, blockchain address, and certificate of authenticity, physical tokens issued by Beeple include—no joke—a tuft of the artist’s hair.

What do we see beyond the price tags?

Frothy valuations are familiar waters for people who are into tech, venture capital, and art. NFTs have bridged these worlds, even if it’s only for a moment. This type of tech-driven culture isn’t about to displace painting and sculpture anytime soon, but it is opening a new front in how people think about our interactions with the intangible parts of our existence.

That is the beauty of NFTs when they are wielded by the right creative minds. Tech isn’t just about gig work, or moving products from warehouses, or making efficient cars that don’t burn fossil fuels. Tech is also about opening up new ways to connect with new people and new ideas—and maybe even be exposed to experiences that we couldn’t have imagined yesterday.

Perhaps a lot of NFT art is merely a flash in the pan. Or maybe it will trace the peaks and valleys of popular cryptocurrencies to develop mini booms and busts for techies who have an affinity for digital art that lives somewhere on the web. There’s already a secondary market for NFT art, just like for limited edition sneakers and streetwear, and some buyers say they will “HODL” onto their pieces until they “moon,” lifting lingo from cryptocurrency speculation that means to hold onto an asset until it skyrockets in value.

There is a drawback to NFT art, which typically lives on the Ethereum blockchain. Using blockchain tech is hardly green. Bitcoin consumes more electricity than Argentina, and Ethereum is the second most popular chain after that. But the developers of Ethereum have pledged to change their system to make their chain more energy-efficient. The goal is to cut its electricity usage by 99%.

Zooming out a bit, KrASIA has been cataloging how blockchain technology is becoming more relevant to our lives in Asia every day, particularly in cases where it works out of public view to untangle inefficiencies. Some examples are the foundational changes to Singapore’s financial transactions, as well as the formulation of digital currency exchanges in Indonesia and Thailand. Slowly but surely, the meaning of money and value are changing, increasingly abstracted and reliant on the web.

In any case, NFTs are at new frontiers of how one corner of visual culture is bought, sold, looked at, appreciated, valued, and distributed. That’s exactly what great tech is about—working behind the scenes, challenging existing paradigms, and even setting new bars. With NFTs, we have new things to look at and think about, whether they are monumental memes or avant-garde art.

Feature image: Beeple (Mike Winkelmann), EVERYDAYS: THE FIRST 5000 DAYS,  2021. Courtesy of the artist and Christie’s.

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