With the NFT industry booming in terms of collectible and music, how does crypto art fit in?
On Mar. 11, 2021 "Everydays: The First 5000 Days," the world’s first non-fungible token (NFT) verified digital artwork to be sold in a major online auction, closed for over 69 million USD. The sale of the piece — which comprises 5,000 images, taken over the course of 13 years — propelled its creator, Mike Winkelmann, also known as Beeple, to sudden fame as one of the world's “most expensive living artists”. It also turned the art world on its head.
Following a period of speculation, the buyer’s identity became public — the founder of crypto-based fund Metapurse, Vignesh Sundaresan aka Metakovan, outbid tech entrepreneur and founder of the TRON crypto platform,Justin Sun by $250,000 in the last 20 seconds of the auction. Through Metakovan’s acquisition of the NFT, he now has exclusive rights to this piece of digital, non-tangible art. Records and price tags aside, Sundaresan’s procurement has attracted attention for other reasons.
“Everydays” is a digital creation and an example of an emerging commodity called crypto art. Unlike works by the Dutch masters or Renaissance painters, crypto art cannot be lost in an attic, stolen by Nazis or hung in your living room. It exists as digital information, its authenticity and providence protected by an emerging blockchain technology: NFT.
As such, the record-breaking Beeple sale has had repercussions across several industries, and may be a bellwether for future trends. Indeed, many in the art community are aghast that a piece of art — that only exists in digital format — could fetch such a sum; taking into consideration the fact that the piece can be viewed by anyone online. Despite this, several global institutions, with a more in-depth understanding of NFT technology are rushing to embrace the trending, emerging crypto art market. Here is what you need to know.
What Is Crypto Art?
Crypto art is loosely defined as art related to blockchain technology — comprising things like videos, digital art and GIFs. Wikipedia assigns two definitions to crypto art:
First: either art that is crypto-themed, or with subject matter related to the politics of cryptocurrency (see the YouTube video Hodl Gang).
Or second, in the case of “Everydays,” crypto art is art that is registered as a non-fungible token (NFT). This article focuses on the second definition — essentially, art that is tokenized via blockchain technology.
Unlike traditional art, most crypto art exists in digital formats. Some argue that crypto art is inherently worthless, as it is widely available to view online. This argument suffers from a lack of understanding of the technology that supports crypto art — the aforementioned “non-fungible token.” Indeed, it is this technology that secures a piece of crypto artwork’s intellectual property rights, and differentiates a “cut and pasted” copy from the original.
Understanding Non-Fungible Tokens (NFT)
NFTs are increasingly used to commodify digital and physical art, video games, collectibles and music. They are cryptographic tokens similar to cryptocurrency, they exist on the blockchain and enable transactions to be tracked and prevent duplications. Conversely, unlike cryptocurrency, NFTs are non-interchangeable (non-fungible).
In the simplest terms, NFTs are units of immutable data signifying unique ownership to a digital object stored in the ERC-721 data standard format (as opposed to the ERC-20 format of fungible assets) on the Ethereum blockchain, although other blockchains have also started implementing their own forms of NFTs.
NFTs represent and provide proof of ownership of a non-interchangeable digital item. Unlike cryptocurrencies like Bitcoin or Ether, which are fungible — if you trade one Bitcoin for another Bitcoin or one Ether for another Ether, you’ll have exactly the same thing — NFTs are unique. One NFT cannot be traded for another. NFTs guarantee artists and their patrons exclusive rights to art, identify knock-offs and avoid intellectual property violations.
The easiest way to conceptualize an NFT and its relationship with crypto art is to think of it as a combination of a digital artist’s signature and proof of ownership. It guarantees ownership rights, is unhackable and extremely precise.
This means that while a piece of digital crypto art can be saved to your desktop, the only true owner is the individual(s) who owns the NFT. Analogously, it is comparable to buying a print of a traditional painting — the ubiquitous copy of Dali’s Persistence of Memory found in every college dormitory for example. In sum, you have a copy of the art piece, but you do not own the original piece.
Why Is Crypto Art Significant?
Following its 2009 invention by Satoshi Nakomoto, Bitcoin and its underlying technology, blockchain, was quickly adapted to industrial applications. The same technology has now attracted the attention of the creative industry, where its application is intended to solve some of the biggest issues plaguing the art world, such as counterfeits and theft.
Other reasons that make NFTs and the world of crypto art significant are:
- Crypto art, and its corresponding technology, NFTs, seeks to address traditional issues of provenance and authenticity as well as modern issues of piracy, copyright infringement and intellectual property. NFT use will hopefully significantly ease issues around authentication.
- Crypto art can be owned by numerous individuals and is therefore more transparent and liquid. Unlike traditional art pieces owned by a single individual, family or institution, crypto art’s NFT technology allows multiple buyers to purchase and trade portions of famous pieces as though it were stock. This feature empowers less wealthy individuals to enter the otherwise prohibitively expensive art market. Likewise, crypto art is notably decentralized in its collection, creation, sale and purchase — and, unlike “Everydays”, is arguably affordable.
- The development of crypto art and NFTs confers numerous advantages to digital and physical artists. NFT technology allows artists to register their artwork, create providence certifications and avoid plagiarism. It further enables artists to monitor future sales and collect royalties from transactions.
- Crypto art is accessible to people of any race, nationality, creed, gender or identity. It is available online, can be purchased and enjoyed from anywhere, and is not controlled by art dealers, censors or intermediaries.
In summary, crypto art is an emerging, trending technology — and artistic medium — that promises to revolutionize the art industry. For example, in April 2021, the world’s first physical space to display crypto artworks opened in New York. While the underlying NFT technology is still new and not completely impervious to security threats (as this “sleepminting” attempt on Beeple’s masterpiece proves), it surely is here to stay.
Whether it comes in the form of purely digital creations like “Everydays” or physical objects that are NFT registered, like Block 21 — crypto art and the corresponding NFT technology have a blank canvas for a future and may very well soon be appearing in a museum or auction house near you.
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