Berlin British artist Damien Hirst is a market strategist. He also entered the crypto art business. In 2021, he digitized a painting consisting of ten thousand dots on paper into non-fungible tokens (NFTs) at a price of $2,000 each.
Buyers can choose to keep the NFT, a digital work with a digital ownership certificate, or purchase the painting. All remaining paperwork will be burned in October 2022. The fact that most clients prefer the original could be an indicator of a weakened crypto art market.
The whole thing is a clever slot machine which, according to the will of its author, turns art into money and money into art. This market offering is just one of NFT’s rampant productions in the Corona year 2021. Its highest valuation is the legendary $69 million, which an assemblage of 5,000 images by the artist American digital Beeple achieved at Christie’s in March 2021. This record price still stands today.
Since then, countless crypto art intermediaries have been busy in a marketplace. But it continues to be the talk of the town with security issues, wild price swings, and most recently with the drastic drop in cryptocurrencies – minus 70%.
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While the UK Supreme Court classified NFTs as “property” in April; but that does not prevent pirates from operating in a still largely unregulated market and even distributing copies (tokens) of stolen works of art, as has already happened in China.
Database magazine Artprice complains that there are a large number of replicas of almost all well-known NFT projects circulating on the biggest marketplace, Opensea. In February, this vendor delisted 1,138 NFTs that were not authorized by their creators, including Anish Kapoor and Damien Hirst.
As a new industry, NFTs have a strong fascination for savvy internet collectors, and not just them. The Art Market Report 2022, launched by Art Basel and UBS, reports that 56% of ultra-wealthy collectors surveyed are considering buying digital art and concludes: “There is no sign that interest in NFT will decrease in 2022”.
Research from NonFungible analysts contradicts this. They revealed in June that NFT Wallets browser extensions used to access NFTs and their marketplaces had decreased by 88% since September 2021: from 119,000 to 14,000 “digital wallets”.
Takashi Murakami apologizes for price drop
In February, Sotheby’s canceled a last-minute auction of 104 crypto punks estimated at $20-30 million due to a lack of bids. And that’s not all. There’s also a price drop for overpriced art that doesn’t really deserve the name.
Japanese artist Takashi Murakami, whose copies are also circulating, apologized to his collectors in June after the value of his “Flower” NFTs dropped from $260,000 to $2,000. Digital currency prices, which crashed across the board in the first half of the year, also contributed to falling prices for trending digital art.
A prime example is the humble spirit of CryptoPunks, one of which was bought for $11.8 million in June 2021 and dropped to $139,000 in May 2022. A coveted BoredApe Yacht Club series effigy last October, fell from $513,000 in April to $161 in June. An image of a robot by hip digital artist Snoop Dog went from $32,000 in April to $480 in June.
Token trading is down
The only glimmer of hope was Dutch striker Johan Cruyff’s NFT video from 1973, which was upgraded to a football adventure package.
Barring sporting exceptions, these are declines that reflect an overall contracted crypto art market. New suppliers are struggling. Cryptocurrency trading firm Coinbase has invested $600 million in its marketplace launched in May. But token activity fell from $75,000 to $19,000 in the first six weeks.
Critics have always considered NFTs to be overrated. Billionaire Bill Gates is one of them. He recently told the CNBC financial portal that such work is “100% based on solid fool theory.” From a conservative point of view, there is nothing to add to that.
After: Crypto Art: NFT: Yuga Labs buys the rights to CryptoPunks