NFTs: between art and commerce

On one of the 12 55-inch televisions in the 0x Society art gallery in Montreal’s Griffintown district, a 45-second video loops: a humanoid standing motionless in a futuristic data center against the backdrop of scary music. After a few seconds, a click occurs and the robot appears to come to life, animated by artificial intelligence. The video, Agent, of the American Masquerade (real name Brandon Allen Bolmer), found a buyer during the opening of the exhibition humA.I.ns, in early November. The collector tg12 (his pseudonym on the internet) bought it for a sum of about $ 180,000.

Anyone can continue to view the work online, but only tg12 can boast of being its owner as it has the token that testifies to it. This token, called NFT (for non-fungible token, or non-fungible token), is the digital file ownership certificate. The history of all transactions regarding Agent is available in real time thanks to blockchain technology, this large decentralized database that acts as a virtual ledger for e.g. cryptocurrencies. Thus when the collector sells on Agent – ideally more expensive than he paid for it – everything will be done in virtual mode, payment as transfer of ownership, and the whole world will be able to see the details.

The NFT technology has existed in its current form for about five years, but it was in March 2021 that it really entered the collective imagination with the sale at Christie’s of the digital collage Weekdays: The first 5000 days, by the American illustrator Beeple. The presence of an NFT at a reputable auction house had attracted attention. But it was the final amount of the transaction, $ 69.3 million, that triggered a true media flood.

Why buy a digital work that anyone can watch for free while browsing the web? many people still wonder. Short answer: sometimes for the love of art, but mostly for its speculative value. Just as the market dictates the value of a physical work, it is man’s desire to own a digital work that gives it value, whether it is a video, of a drawing or a song.

The fashion effect is undeniable. “There’s a lot of speculation,” said Gauthier Zuppinger, co-founder of the website NonFungible.com, which monitors the NFT market and estimates the value of collectors’ cyber portfolios. Some amateurs acquire works to encourage artists, he says, but many buyers simply want to take advantage of the wave and resell the acquisitions at a higher price.

The NFT market is also dominated not so much by works as by virtual collectibles, such as CryptoPunks, these representations of punk-like creatures generated by an algorithm. Or the NFTs from the Bored Ape Yacht Club collection, avatars of monkeys. Some of these simple, computer-generated images brought in about two million dollars! No wonder those who own them (there are 10,000 CryptoPunks and 10,000 Bored Apes selling for over $ 250,000 each) usually use them as avatars on their Twitter accounts.

The popularity of NFTs has driven contemporary art in general to new heights in 2021, according to the latest annual report from ArtMarket, a French art market analysis firm. In one year, total sales rose from $ 2.5 billion to about $ 3.4 billion. And that’s largely thanks to NFTs.

In the primary market (artist sales), collectors paid out about $ 675 million for NFTs in the first six months of 2021 alone, when it sold for about $ 37 million in 2020, according to an analysis by Swiss finance firm UBS. Same increase on the secondary market side: resale of digital works increased from $ 47 million to $ 960 million in the same period.

Most platforms where NFTs are sold provide a percentage (5% to 10%) of the secondary transactions to the artists who created the works. This is not the case in the traditional art market, where a painter, for example, in no way profits from speculation about the resale of his paintings.

To enable creators to take advantage of the craze, the 0x Society Gallery has created a grant program to train Canadian artists in this technology. “Among other things, we offer them seminars specific to NFTs, in particular to help them build an online community and find a creative rhythm that optimizes supply and demand,” illustrates co-founder Yannick Folla.

Although NFTs have survived the skepticism that followed their explosion in the spring of 2021, many people in the art world are still a bit embarrassed before adopting them. In an interview with online media Cryptopensumcomposer Brian Eno had this comment in the fall of 2021: “I do not see anything new other than a series of tracks moving from one bank account to another. Many artists have expressed such reservations.

“NFTs have an impact on the commercial sector that surrounds art. But for artists who are already established and for institutions, the interest is not yet clear,” according to the artistic director of the Museum of Contemporary Art in Toronto, November Paynter, who in passing notes that “digital art is not new. For example, we regularly pay artists to create video works.” However, it is only a matter of time before certain museums present such NFT works, says November Paynter, who among other things would make it possible to discover a new generation of artists.

Over the last few months, the technology has been tested. Companies like the Montreal Canadiens, The Associated Press, Adidas and Nissan have released collectibles. The hockey club, for example, produced dozens of virtual hockey cards this fall, each selling hundreds of copies (multiple NFTs of the same work can be created). Social networks and video games are also starting to take an interest in this market.

Ubisoft has thus designed Quartz, a platform for buying and reselling virtual objects that can be used in their games. Tom Clancy’s Ghost Recon Breakpoint. Colorful costumes and weapons are nothing new in video games. They are even at the heart of the business model for many titles, such as Fortnite. But so far, players could not resell their acquisitions.

Quartz is only “a first experiment,” explains Nicolas Pouard, vice president of Ubisoft’s Strategic Innovation Lab. The latter hopes the experience will be an opportunity to better understand how this technology can be used in the future and what it “can bring as new opportunities for players”.

According to Gauthier Zuppinger, it is the tests of the genre that mark the NFT market the most at the moment. “Everything is evolving extremely fast, and technology is going in all directions,” he notes. It also has a very Darwinian side, as many projects die while the strongest survive. We are evolving. »

Which uses will collapse and which will have a real effect on their domain? The bets are open.

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