Rise of NFTs: when art turns into crypto

Works of art that have been snapped up in purely digital form: this is the new phenomenon of NFTs, a kind of digital equivalent for deeds. A market that since the beginning of the year has approached a billion dollars in transactions.

It’s a short ten – second animation that shows what looks like a giant naked body of former US President Donald Trump, scratched with slogans, lying in a park, and in front of which spectators pass by, which is hardly suitable for it.

This digital work by artist Beeple – whose real name is Mike Winkelmann – was sold on Friday, February 26, by American collector Pablo Rodriguez-Fraile for $ 6.6 million. He had acquired it five months earlier for only $ 67,000. An impressive capital gain and a record-breaking transaction in the little-known world of NFTs.

From artist Grimes to Christie’s

These are, in fact, three letters that do not matter to the public. But for a growing number of artists, investors, traders, collectors or techno enthusiasts, these NFTs are a new El Dorado.

This acronym denotes Non Fungible Token or non-fungible tokens, which “are unique digital assets found on the blockchain [un registre public en ligne de toutes les transactions dématérialisées, NDLR] and can represent any other type of product, whether it is virtual – such as pictures or videos – or real, such as paintings and real estate, ”explains Nadya Ivanova, Operations Director at L’Atelier BNP Paribas, an independent subsidiary of the French bank. specializing in research and forecasting, contacted by France 24.

These NFTs are the digital equivalent of deeds. Thus, collector Pablo Rodriguez-Fraile did not resell the clip of Beeple as such, but the NFT that the artist had made for his video. The unique characteristics of his creation were encoded. “It’s all metadata such as the name of the work, the name of the author (s), possible tags to describe it, etc.”, explains Gauthier Zuppinger, co-founder of Nonfungible.com, the main platform world of NFT market analysis, contacted by France 24.

And these NFTs are snapping up. Canadian artist Claire Elise Boucher, better known as Grime, sold the NFTs in 20 minutes on Sunday, February 28, for her collection of drawings and images inspired by Nordic mythology – an operation that brought her $ 5.8 million. . French street artist Pascal Boyart (PBoy) had no trouble finding buyers for the NFTs of his latest graphic, the Underground Sistine Chapel, a 100-meter mural painted on the wall of a former gold smelter from Ivry-sur-Seine.

The famous auction house Christie’s has also taken up the NFT era. She is currently organizing her first sale of “crypto art” for a collage made by Beeple. “This is a whole new area for us, and within ten minutes there were already hundreds of participants bidding for over a million dollars,” Noah Davis, a contemporary art specialist for Christie’s, told Reuters.

New templates for artists

The experts at Nonfungible.com, which has been producing an annual inventory of the NFT market since 2018, have also noted that interest in its dematerialized tokens has exploded. “There was $ 983 million in transactions in the first two months of the year, almost five times more than in the whole of 2020,” said Gauthier Zuppinger.

What an increase in the power of a digital asset that has only existed since 2017. At the time, the first creations were based on NFT technology that had some success, Cryptopunks, a series of 10,000 small characters made of pixels that were has been distributed for free online by the California company Larva Labs. “Today, they trade for a minimum of $ 40,000, and some Cryptopunks sell for over $ 1 million,” notes Gauthier Zuppinger.

But we have to wait until 2020 for the sauce to really start to take hold. “Well-known brands such as the NBA, the video game publisher Ubisoft or even F1 have developed products supported by NTFs, which has made it possible to attract a wider audience,” emphasizes Nadya Ivanova, from Atelier BNP Paribas.

The NBA “Top Shots” in particular have contributed greatly to the popularity of these NFTs. These are short videos of the best actions of American basketball stars for which you can acquire the rights. Thus, on February 21, 2021, the American Basketball League sold $ 2.6 million of “Top Shots” in 30 minutes.

For artists, NFTs are a real boon. “They make it possible to develop new revenue models,” says Nadya Ivanova. It is thus possible in these digital tokens to encode clauses stating that each time their work is resold, they receive a portion of the price. “It’s a way to have recurring revenue,” says the expert from L’Atelier BNP Paribas.

New blessing for speculators ?

But what’s the point of acquiring an NFT for a painting or a piece of street art that you can not exhibit in your living room? Or even for a short video that anyone can watch for free on Twitter or YouTube? This new technology is currently experiencing a phenomenon of “gold rush similar to that which would have benefited cryptocurrencies”, assesses Gauthier Zuppinger.

In other words, some of the new NFT converts are speculators hoping to take advantage of the current boom. A phenomenon that is largely due to the health crisis. “There’s a huge amount of liquidity available in the markets right now thanks to central bank stimulus packages to support economic activity, and investors are looking for investments that pay off, and it’s often risky assets like these NFTs that can help win ( or lose) big “, sums up Nathalie Janson, an economist and cryptocurrency specialist at Neoma Business School, contacted by France 24.

But it is not just stockbrokers who are currently operating the NFT planet, assures Gauthier Zuppinger. “We also meet a growing number of wealthy art collectors who see new territories in these works to satisfy their passion, and enthusiasts of new technologies who have earned their fortunes thanks to cryptocurrencies and who believe it is necessary to invest in these NFTs because they offer new perspectives that still need to be explored, “he says. It remains to be seen what new opportunities these dematerialized deeds will create.

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