Can I invest in art? What is an NFT?
Investing in art is intimidating. It also seems impossible because prices are so high. So where do you start?
In 2010 I watched the documentary, "Exit through the gift shop." It helped me understand the abstract world of art, in particular the evolution of street art from something that wasn't taken seriously to something that suddenly was. Here is a link to the documentary on Youtube but you can also find it on Amazon Prime: Exit through the giftshop. The documentary follows the story of a legendary street artist named Banksy and his interaction with a filmmaker who later turns into an artist himself, Mr. Brainwash. It is an incredible story and I highly recommend watching it as an introduction to contemporary art.
The reason I bring this up is because the same thing appears to be happening again. But this time instead of street art, the interest is in something called Crypto art. And the "new Banksy" is an artist named Beeple.
So what is Crypto art? What is crypto?
We are used to assets, or things of value, existing in the physical world. Like physical dollars or physical paintings and sculptures. But things have been moving into the digital world at an accelerating rate. Crypto is that thing you've been hearing a lot about like Bitcoin, Ethereum, and Dogecoin. Crypto is a digital asset like a piece of art or a currency, that exists in the digital world and is based on blockchain technology.
Blockchain technology or a blockchain seems like a very complicated concept (and it is) but to put it simply, blockchain is a database of information. What makes it special is that this database stores information on many computers instead of just one. This is what takes it from being centralized (on one computer) to being decentralized (on a group of computers). And in order to change information on the database, all the computers must check with one another and agree on the change. Because there are so many computers in the network, it makes the database very secure. There's a lot more detail to this, but lets keep it simple for now.
Crypto art is art built on blockchain technology. Blockchain allows for the creation of a unique, one of a kind object called an NFT or a "non-fungible token." Think of it like a one of a kind baseball card. Because all the computers on a blockchain network need to agree on the authenticity and "one-of-a-kindness" of a piece of digital information, it makes it impossible to replicate. If someone tries to make a counterfeit of the digital information, they couldn't because they would have to hack into all the computers in the network to create the counterfeit which is impossible.
The concept of fungibility is also important to understand. Fungibility is the ability of a good or asset to be interchanged with another individual good or asset. For example, something like a physical dollar bill is fungible, meaning I can loan you a dollar and you can pay me back with a different dollar bill. However, something like my car is non-fungible, meaning I can loan you my car, but you can't bring me back another car even if it is the same color, make, and model.
Now for the fun stuff. Since 2017 a niche genre of art has emerged called crypto art which is built on a blockchain to make sure it's authentic. I first dabbled in crypto art by exploring the exchange Nifty Gateway, but there are others like SuperRare. I'm a big fan of Kobe Bryant so I purchased my first crypto art, a piece by artist Boss Logic called Forever Mamba, one of 429 "prints" sold. Boss logic is known for, among other things, creating a promotional poster for Marvel Studio's Avengers: Endgame.
I originally purchased the piece for $824 on the initial drop (release) of the artwork on Jan 29th 2021. Then I was stunned to find that about a month later, the artwork was selling for...$7,995.00.
I realized the same thing happened with the second piece I purchased called The Last Stand of the Nation State by Slimesunday, one of 415 "prints" sold.
I had purchased The Last Stand on Jan 29th, 2021 during the peak of chaos surrounding the Gamestop battle between Wallstreetbets and hedgefunds. I thought the artwork captured the populist Occupy Wallstreet sentiment well and honestly it just made me laugh. I purchased The Last Stand for $850 and the last piece sold this week for $6,000.
This is all very surprising and I'm still learning. It is exciting but I also advise caution and due diligence before purchasing any art. Remember things of value are subject to supply and demand and this space is very fluid so these pieces may turn out to be worthless should demand for them fall. But for now, it's such an interesting space and I don't find many women exploring it. It's particularly exciting because although crypto artists have been around since 2015/2017 they are just now getting a tremendous amount of hype.
Some of the biggest news in the space was announced this week. Beeple will become the first artist to auction a purely digital, NFT-backed artwork at a major auction house, which will open for bidding Feb. 25- March 11 at Christie's. This gives the space a kind of legitimacy it hasn't yet enjoyed.
Hopefully I've piqued your interest in NFT’s and if you'd like to start reading more in depth about crypto art here are some great articles:
'Beeple Mania': How Mike Winklemann Makes Millions Selling Pixels
Early Crytopunk Digital Collectible Sells for $762K in Ether
The Nine most Innovative Crypto Artists of 2020
Very interesting!
Such a great read - I had no idea Crypto Art was a thing!!!