Crypto art - a new stage in the history of art
March 11 can be called the beginning of a new phase in the history of contemporary art. On that day, the first truly major sale of a digital work of art took place. Christie's auction house sold a work of The 5000 Day Selects by digital artist Bipple (Mike Winkelmann) for 69.3 million dollars - more than 5 billion rubles - in the cryptocurrency Ethereum. So Beeple took third place in the list of the most expensive living artists after Jeff Koons and David Hockney. Since then, artists who weren't previously interested in the crypto market have entered, followed by auction houses of the traditional art market and celebrities like Grimes and Paris Hilton.
For Christie's and Sotheby's auction houses, the cryptocommunity is a tidbit, and high-profile sales are a powerful PR campaign for art dealers, crypto-enthusiasts and businessmen alike. And while the NFT market, which many called a bubble, had sagged by April, it's with us for good.
Why did the NFT boom happen in the art world?
There are a lot of artists working in digital today. They used to make money in the game industry, advertising, and creating visuals for pop-star shows. Bipple (whose work was sold on March 11), for example, created videos for Katy Perry and Justin Bieber's concerts. Thanks to NFT marketplaces, creators can now sell their work like traditional artists.
In 2017, the creators of a small New York IT company came up with a program that generated cryptopunks, 10,000 unique pixel characters inspired by the London punk scene, the movie Blade Runner and the cyberpunk novel Neuromancer. Punk's total sales to date have surpassed $348 million due to its value to the crypto-enthusiast community. Crypto-punks are to the crypto-art world what Marcel Duchamp's "Fountain" is to contemporary art.
Digital art has been around for years, but it used to be difficult for galleries to sell it, because to an audience, a digital picture is essentially a gif from the internet. Over the past year, the art market has actually gone online: large art fairs are held in this mode, galleries trade through online viewing rooms - three-dimensional visualizations of gallery "white cube. A report by UBS and Art Basel Fair 2020, the most authoritative market study, noted that nearly 49% of the world's collectors are now millennials, with 92% of millennial collectors buying art online. During the pandemic, online gallery sales skyrocketed by 27%, meaning that the way art is bought has changed, the audience has changed, and this has led to the digitalization of the entire field.
The NFT boom began in the fall of 2020 - the market grew 50%. The platforms that used to sell mostly collectible characters like crypto-punks have seen a surge in artists. In April 2020, they were asking about $200 for one ether on the exchange; in January 2021, it was already worth over a thousand dollars.
It is important to understand that the prices for NFT in dollars, which are usually specified in the media, are approximate, because the volatility of ether is high: from the beginning of this year to spring it has doubled - in mid-January one ether was worth $ 1,051, on April 10 - $ 2,136.
What is crypto art?
Crypto art is not a new trend in art, like video art or abstract expressionism. Crypto artists are called all those who have tokenized, i.e. attached their pictures or animations to a token. It is not necessary to be a digital artist, because a scanned pencil drawing can also be tokenized.
Most authors who sell their art as NFT are digital artists or motion designers. Among them, there are those who use blockchain and NFT as a new medium and means of artistic expression, but these are rare.
Where is digital art for sale?
You can buy crypto art on trading platforms that operate in the Ethereum blockchain ecosystem. Most provide two services to the artist at once. First, they tokenize the work, meaning they create a token spelled out in the Ethereum blockchain. Second, like any marketplace, they promote and match the artist with collectors.
The most democratic marketplaces are OpenSea and Rarible. The latter, by the way, was founded by Russian businessmen and crypto-enthusiasts Alexander Salnikov and Alexey Falin. The most elite ones are SuperRare, Foundation, KnownOrigin, digital art V-ART and Nifty Gateway. The latter is a partner of the auction house Sotheby's, in addition, he, unlike other platforms, accepts payment in dollars from ordinary bank cards. At the elite marketplace has a curatorial selection, an invitation system, a beautiful mailing list for collectors with a selection of the best works. That's where the stars - Grimes, Pussy Riot, Paris Hilton, Edward Snowden, and the big name artists - gather.
If you wander around the main page of Rarible, the first thing that catches your eye are the very simple pictures like the bitcoin-coin hyphos. The sites with the most good digital art are Foundation, Nifty Gateway, Async, KnownOrigin, MakersPlace, SuperRare. Better yet, check out the social media sites of artists you like; they may have already released tokenized work.
Another option is to go to a site that sells tokenized work by contemporary artists from traditional galleries.
"The main buyers of digital works are members of the cryptocommunity, whose main social network is Twitter, so you have to be able to promote yourself there
How does trade happen?
First, the artist mines the work, i.e., creates its token in the blockchain. The artist simply uploads his file there, as in Instagram, and the platform does the rest. The moment the work turns into a token, a new block is added to the blockchain, this operation is calculated on the computers of different people. For this, they charge the artist in the ether, which they call gas. The cost of the gas fluctuates throughout the day and can be as high as $100 to $200.
The artist then indicates the value of the work - even if it is $100 million - and the auction begins. The first person who wants to buy puts his price, often below the author's. The auction continues until the artist accepts a bid that suits him - for which he also pays gas.
Venues receive an average of 10% commission. If the collector resells the work at the same venue, the artist will receive 10% from that sale. Of particular importance is the first mined work of the artist - it is called genesis, and to have it is especially honorable for the collector.
NFT marketplaces are linked to online cryptocurrency wallets such as Formatic or MetaMask, so you have to install the wallet applications in your browser. Then you have to buy ether on any cryptocurrency exchange, and that's it - you can go to the site and buy.
Where is the NFT stored after purchase?
After you buy an artist's work on a marketplace, a non-exchangeable token drops into your cryptocurrency wallet. That is, a new record appears in the blockchain about the movement of the token from the artist's wallet to your wallet, along with all the associated information: token ID, value, artist's wallet number, and so on. Wallet contents can be viewed through the Etherscan website, which displays all wallets and transactions in the Ethereum blockchain.
Even if the site where you bought your NFT disappears tomorrow, the information from your wallet won't go anywhere. The main thing is not to lose your wallet number and private key.
Where is the artwork itself, where is the picture?
You will have your own profile on the Marketplace, inside which you can see your entire collection. It's easy to show it to your friends just by sharing the link.
But a profile on the marketplace is just an interface. The token that confirms your ownership lies in your wallet, but the picture itself is separate from the non-interchangeable token and is most often stored in the InterPlanetary File System (IFPS), a file storage system that is similar in principle to torrent trackers. Essentially, the picture is spread all over the Internet and stored on the computers of hundreds of different people.
So why can't the media file be stored in the token itself, hence the blockchain? It's very expensive. For example, the cost of storing Beeple's work, which sold for $69 million, on the Ethereum blockchain is over a million dollars, and it only weighs 320 megabytes. Therefore, the blockchain usually stores only an address (URI) that can be used to find information about the token: the name of the work, the legal terms of use (for example, if the image cannot be printed on T-shirts) and the work itself.
Because of this situation, the token itself and the media are not connected to each other. If the storage is unreliable and the picture gets lost, you are left with only a token in your hands, that is, a proof of ownership, but for what - is unclear. By the way, the auction house Christie's has prudently indicated in the terms of purchase that it is not responsible for the risk of loss of data or access to the NFT.
There are non-interchangeable tokens that store inside the blockchain and the picture itself, if it is primitive and weighs little. Such tokens are called on-chain NFTs. For example, cryptopunks are on-chain tokens.
After buying a work on an NFT marketplace, you can get the picture or video itself in good resolution from the artist, place it in the interior with a digital frame and thus display the purchased digital art.
"If the data storage is unreliable and the picture gets lost, you're left with only a token in your hand, that is with proof of ownership, but for what, it's unclear."
NFT exactly confirms my ownership of the work?
NFT can be called a digital security, it is a kind of certificate certifying the property right, in our case - ownership of an art object (digital or traditional). This is important. For the first time, digital art receives a kind of conditional objectified representation and a guarantee of uniqueness equal to traditional art. Authors of digital art through the NFT are entitled to dispose of exclusive rights to their work or receive a percentage of remuneration from resale - the so-called right to follow.
In the United States and the European Union there is no official approach to the definition of NFT. The closest variant of regulation is digital rights (tokens), which belong to the category of property rights and confirm the possession of a certain object. NFT is a non-interchangeable token, it has value only through evidence of the existence of some digital or physical asset.