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The Rise and Fall of NFT Art

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“Auction rooms, as we all know, are a great medium for maintaining fictitious price levels, because the public assumes that auction prices are necessarily real prices. is.”—Robert Hughes, 1984, New York Review of Books

On March 11, 2021, digital artist Mike Winkelmann, known online as Beeple, auctioned his digital artwork at Christie’s, one of the largest art auction houses in the art world. The title of the work is “Everydays: The First 5000 Days” and is a collage of computer illustrations.

It sold for a staggering $69 million.

why so much money A good question that is difficult to answer. Aesthetically and visually, Beeple’s work is not very original or interesting. New York The magazine’s art critic, Jerry Saltz, also tweeted about the work: As far as imagery and imagination are concerned, it’s really, really derivative sci-fi and Conan and Star Wars Crapola. ’ It’s not really a vote of confidence. Nor was Beeple’s work the first ever digital art piece. The history of digital art dates back to his 1990s.

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One of the reasons Beeple’s work sold so well was because it contained NFTs, or non-fungible tokens. NFT is an online digital format invented in 2014. An NFT is a digital certificate or digital file attached to a blockchain, essentially an online ledger. Blockchain technology also enables blockchain and cryptocurrencies such as Ethereum.

Part of what made the sale so noteworthy was works of art and digital media have always been at odds. This is especially true when artists and gallery dealers seek to sell digital art, which in some cases may be entirely digital. Does your artist or gallery sell digital files or just website code? And how exactly is it unique?

Photo courtesy of Nataworry Photography

Nonetheless, in 2021, much in the art world and beyond seems to be betting on NFTs, and by default, the crypto they are based on. This technology solves these and several other problems associated with digital media by allowing cryptocurrencies to digitally authenticate works purchased online. NFTs solve a “unique” problem.

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Accidentally, deliberately, or misunderstood, Beeple’s sale of digital works ushered in a brief golden age of active trading in NFTs. Buying NFTs was a gold rush of sorts. In December 2021, Artnews reported that digital artist Pak has sold his group of NFTs for his $91.8 million. artist. In March of this year, the New York Times reported that he spent $44 billion on NFTs. There was even a new museum dedicated to NFTs that opened in Seattle this past April.

Digital art seemed to have matured with the casting of NFTs.

Then, in May and June of 2022, cryptocurrency prices crashed. According to many news outlets, the effects of that recession spilled over into his NFT market. According to Reuters, NFT sales fell sharply in the third quarter of 2022, from $12.5 billion at the peak of the market in the first quarter of this year to $3.4 billion. Bloomberg reported that NFT trading volume hit a record high this year, down 97% from January. The news outlet also linked the drop in NFT prices to a larger cryptocurrency crash. According to Bloomberg, “The declining NFT market is part of his $2 trillion wipeout in the crypto sector.”

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but it wasn’t that’s all NFT had bad news.

In mid-October, Bloomberg published a huge 40,000-word article. business week, was written by financial writer Matt Levine, who tried to demystify cryptocurrencies and NFTs. However, some might say that in Levine’s story, both cryptocurrencies and he NFTs have been heavily criticized. Esquire This article explains how some of the cryptocurrencies are trying to rethink books as an investment opportunity! Is this Levine’s take? “The bad way to put it is that all web3 projects are Ponzi at the same time.”

Levine also questions the thin link between the code you’re investing in on the blockchain and the actual work of art when buying NFTs. he wrote: Art doesn’t exist on the blockchain…. When you buy an NFT, you own the notation on the blockchain that you own the pointer to the web server. ’ It’s like paying a museum to buy Cézanne, and you’re only given a page from the museum’s catalog.

Speaking to Bloomberg TV, Bloomberg Businessweek financial editor Pat Regnier, who edited Levine’s story, said there are other skeptical aspects to NFTs. [fine-art] Markets—Creating Inflated Valuations—[which may give] Many people stop to enter the space. ‘ Perhaps he was referring to Park or Beeple.

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Legally speaking, there are other thorny issues. “The intellectual property rights to that monkey photo is certainly not a blockchain business. It is not uncommon for NFTs to promise to transfer or part of it to the individual owner of the NFT.But when that happens, it happens outside the blockchain.These promises are made through the normal legal system. Either it is enforceable or it is not enforceable.” In fact, buying NFTs may not really solve the problems people expect.

For Renier, the rather chilling economic lesson from Matt Levine’s story is that many in the crypto world have created digital processes and apps that repeat the mistakes they made during the 2008 economic crisis. That’s it. “It’s a lot like traditional finance going bankrupt, sometimes catastrophically.”

As such, NFT investors may want to keep an eye out. What they have to go through may not just be a very harsh crypto winter, but crypto Armageddon.

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