BETWEEN FASCINATION AND IRRITATION: NFTS IN THE ART WORLD
Back in 2017, software developers Hall and Watkinson issued 10,000 NFTs: virtual certificates of ownership recorded on the blockchain and linked to algorithmically generated portraits of characters inspired by the London punk scene, for free. In February 2022, Sotheby’s planned to sell 104 of these ‘CryptoPunks’ for a total of USD 30 million. A year earlier, in March 2021, Christie’s auctioned an NFT by artist Mike Winkelmann for USD 69 million. In 2019, Swiss artist Johannes Gees created 360 NFTs based on a laser platform. These too were valued in the millions in 2021. As a new form of digital art, NFTs have undeniably made it on the mainstream art scene – and have become a hotly sought-after investment.
An NFT is a non-fungible token – essentially a digital code that points to a digital or physical object, similar to a digital certificate of ownership. The token is stored, immutably and publicly, on the blockchain.
For many years, ‘digital’ or ‘generative’ art – art generated via computer algorithms – eked out a niche existence. This was mainly because digital objects are easy, cheap, and quick to copy – and thus of little value to collectors or investors.
Combining digital artworks with manipulation-proof digital certificates in the form of NFTs proved an immediate game changer, giving a huge uplift to digital art and propelling it into the realm of respectability. Auction houses and galleries are not the only ones to profit from the digital art gold-rush. For artists, too, it has opened up a completely new market.
The generally technology-averse and slow-to-change art world is now seeing rapid innovation driven by accelerating technological advances based on blockchain. It is a familiar phenomenon from the business world: Wherever new technologies disrupt the established way of doing things, they create momentum for rapid change. We only need to think here of how Amazon transformed the book trade or how Spotify revolutionised how we listen to music.
When the first NFTs were pitched onto the art market, tempers flared: Can digital art be considered art? Can’t digital artworks simply be copied at will? Something that is digitally reproducible and consequently anything but unique surely can’t be valuable in the conventional sense – or can it?
How does art define itself? And is art only ‘good’ art if it costs a lot of money? At what point does the physical (art) world transition to the digital world? Question upon question, but one thing is clear: with NFTs, the traditional concept of art is reaching its limits. At the same time, it has always been the task of art to critically reflect contemporary events and to play with traditional ideas.
The connection between NFTs and art shows once again that wherever there is innovation, there are also breaks with tradition. In my view, the beauty of technological acceleration is that it generates a wealth of new ideas and projects in rapid succession. It promotes iteration as an intrinsic feature of creative work. At the same time, rapid reproduction raises the question of whether generative art is artistically substantial and of lasting value whatsoever. What constitutes quality in digital art? What will stand the test of time?
“Digital art has become socially acceptable.”
Top-priced NFTs today include the well-known Bored Ape (Yacht Club) and the CryptoPunks mentioned earlier. They enjoy cult status in the crypto world and attract strong media attention. Their high prices (several hundred thousand USD) result in people showing them off in social media. This brings another important function of digital art into focus: Owners use it to burnish their social status and prestige, and to gain access to an exclusive coterie – just as with traditional art.
In this context, it is quite legitimate to ask if the focus here is on art at all – or if it is all about investing and media self-promotion. Some hail generative art as visionary, iconic and trailblazing while others denounce it as trashy and over-hyped.
Another area of tension is the relationship between capital and art. While artists are all too quick to say they have nothing to do with the commercial art world, they still profit from the enormous value development of their artistic output. Both aspects collide with great force in NFTs.
I have worked together with the Zurich artist Christian Etter for a number of years. He is the founder of the Museum of Digital Arts in Zurich and designed my book, Crypto Nation Switzerland. Right now, he is working on a physical sculpture that incorporates digital, NFT elements. His aim is to transport predominantly digital art into the physical world. And it is important to him that his artwork remains aesthetically compelling, both digitally and physically. As the co-initiator of this art project, I am fascinated by the creative process and the challenges of the interface between digital and physical art.
Even the Swiss Art Market Association is grappling with the question of how the digital transformation will affect the art world. The question is, where is all this going? Are NFTs in art no more than a flash in the pan, or do they have sustainable future potential? Are they worth investing in?
The current hype around NFTs reminds me of the initial coin offering (ICO) boom in 2017. Back then, countless blockchain start-ups raised huge sums in fundraising campaigns. Shortly thereafter, the crypto market corrected sharply. Most of the projects turned out to be pump-and-dump schemes, and in some cases, investors lost a lot of money. I can imagine a similar situation with NFTs. In fact, no one can give a reliable prognosis at the present time.
Digital art has found its way into the classical art world within a few years due to blockchain technology. High auction prices and strong media attention have put an end to generative art’s niche existence. Whether that makes lasting sense is something only time will tell. But ultimately, art is expected to mirror society, thereby promoting critical discourse. This is precisely the contribution that NFTs can make in view of the rapid digital transformation in business and society.
“Art is expected to mirror society, thereby promoting critical discourse.”
Alexander E. Brunner is from Zurich and works as a consultant for international technology companies. He also writes about digital assets and is a member of the Zurich City Council. As an art lover, he has long taken a personal interest in the arts and promotes artists in Switzerland and abroad.
Before working for Ben & Jerry’s, the cult ice cream brand, Alexander studied business administration at the University of St. Gallen in Switzerland. He later worked for over a decade in alternative investments, hedge funds and impact investing before becoming a senior executive at a Swedish-Swiss big data start-up.
Alexander is the author of Crypto Nation Switzerland, the first book about the Swiss Crypto Valley (2019). He also authored the first Swiss Digital Asset and Wealth Management Report (2021).
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