Through Art Market & You, Art From Us provides you Analysis, Opinion and Factual Reports regarding the current on-goings of the Global Art Market. In this article, we explore the topic – are NFT’s Heralding a New Era for Art?
A New Chapter
In March 2021, Christie’s sold a work of NFT art by Beeple for $69 million. Since then, many have questioned if this unreal event marks the beginning of a new era in art. Naysayers are concerned with the new technology’s disregard for traditional copyright laws. Laws concerning title and transfer, as well as trade ethics.
Activist Parker Higgins says : “In a sense, the NFT sector should be more attentive to what is offending and upsetting people – especially the artists whose work is attracting interest to their field – than strictly what is technically or legally possible”. In other words, he means, don’t do something just because you can.
Since their marriage to art, NFTs have already created several legal issues. Injective Protocol, a decentralised finance company, created an NFT token for one of Banksy’s limited prints ‘Morons’ (2006). They subsequently burned the original (which they owned), in a bid to ‘transfer’ the value of the physical work to its digital replacement. In reality this is not a winning formula. We strongly advise you against burning or shredding your beloved Banksy’s, Raza’s, Miro’s or your Grandmother’s Picasso’s.
In another instance, artist Simon Stalenhag discovered that one of his artworks had an NFT that he had not created. Someone else was monetising his work, without his knowledge or consent!
The tales of murky transactions within the NFT-art world were seen once again in mid-March 2021. Twitter was flooded with people claiming their Nifty Gateway accounts had been hacked. The hackers used these accounts to buy and sell NFT art. Michael Miraflor was one of the victims. He claimed that upon getting in touch with Nifty Gateway cofounder Griffin Cock Foster, he was told that these transactions were irreversible.
Also, on twitter, any tweet or artwork can now be converted to an NFT, without consent. This is done simply by tagging the account @/tokenizedtweets.
These instances fly in the face of prevailing copyright laws that are intended to protect creators and their output. Ironically, the technology that claims to be preventing art theft, seems to be promoting it.
At this point, all of us, and even you as you read this, have a common-sense question. Who controls these NFTs? You might be perturbed to know that there is no central authority that regulates this technology. The people who created it are the one’s controlling it. And so, a strange kind of ‘market dominance’ has been established. One that isn’t exactly legal, but so far, we haven’t the legal framework to stop it either. Owing to this, digital tokens are often used as a medium of exchange for illicit activities (as mentioned above). And if you thought the problem ends here, you are wrong.
The prestigious world of art has an unfortunate reputation of being a hub for money launderers. And NFTs make it so much easier for people to get away with this undetected. Being a luxury heterogenous commodity, the price of art is volatile, and at best, unpredictable. By falsely inflating or deflating the price of a work (as seen in the Beeple case), traders are able to legitimise their illegal money with ease. Further, the rate at which NFT sales in art has increased even in the last few months (October 2020 – March 2021) has not allowed for blockchain platforms or even real-world authorities to put in place sufficient measures to prevent fraud. This was highlighted with the Nifty Gateway hacking.
A Bubble waiting to Burst?
According to an article by The Verge, until October 2020, the most money Beeple had made from selling an artwork was $100. Yet, not 6 months after, his work was suddenly worth $69 million – the third highest price ever paid for an artwork by a living artist. Let us give you a number that might put this into perspective. With the Beeple Christie’s sale, the value of the artist’s work(s) has inflated by 68999900%. This makes us ask – Are Auctions only a device to inflate the price of Artworks and Artists?
This sudden hike in price begs the question – what are the buyers of NFT-art really paying for? It’s certainly not the ‘artistic skill’ or technique that people traditionally chase when collecting art. Neither is it that the technology or medium (i. e. digital art) itself is expensive to create, produce or distribute. In fact the birth of digital and virtual creative spaces have always been driven with a revolutionary idea to make the creative act free, accessible, portable and user-friendly. This is especially seen in platforms such as Creative Commons and HitRecord that embody the open-source ethos and the 80s-90s mandate of the tech-developer.
The buyers for Beeple’s $69 million dollar work are cryptocurrency entrepreneurs themselves. Vignesh Sundaresan (a.k.a Metakoven), and his business partner Anand Venkateswaran (a.k.a. Twobadour) allegedly bought several Beeple works in the months leading up to the auction. These were then sold to the public as digital tokens. As the price of the Christie’s work increased at auction that day, as did the value of these other tokens that MetaKovan and Twobadour had sold. Finally, by the end of the sale, the value of their shares in Beeple’s works increased by over $50 million, according to The Washington Post. The buyers directly benefitted from increasing the bid price of “Everydays – The First 5000 Days”. This is an excellent example of the inflation-infinity-loop that can be manipulated by outside sources when it comes to NFT and Art.
We reached out to many collectors in the international artworld, bankers, finance consultants, and artists who view Art NFTs with great skepticism. One major source of concern in the illegality and the volatility of what seems to now be a new art market. When asked would they participate in the creation, distribution or collection of NFT-art, 67% of them said no.
We’ll leave you with the facts. Beeple was nowhere close to the million-dollar club before the auction. But now, not only is he part of it, he’s actually leading it – as the 3rd most expensive living artist, after Jeff Koons and David Hockney. Is the art market really that fragile and volatile? Sure seems like it.
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