CRYPTO ART & NFT

Under their barbaric acronym, NFTs or "non-fungible tokens" make it possible to become the proud owner of totally virtual works and digital objects of all kinds (digital painting, video extracts, game characters, etc.). But also to sell them. A market that has exploded in recent months and is disrupting the art market in particular. But what are we talking about exactly? Explanations.

A digital ownership certificate

A collage of digital images, the source code behind the web or even the first tweet in history ... For some time, colossal sums have been spent on acquiring objects without physical reality. Or more precisely, to acquire the title deeds of these objects. A security in the form of a secure digital code, an NFT, for "non-fungible token".

The fact that it is "non-fungible" means that each NFT is unique and that it is not interchangeable. For example, coins or tickets are fungible, explains researcher and curator Aude Launay in the book Art & Argent (Amsterdam editions): “If I lose my bus ticket, I buy another; if I lend five euros, it doesn't matter whether I get the same ticket or another ", but a work of art is not. "If I lend my Picasso drawing for an exhibition, I expect this one to be returned to me and not another one to be returned to me. "

However, until then, any digital creation was fungible. Multiple versions of the same digital file had the same value. This is no longer the case with the NFT which, using blockchain technology, acts as a tamper-proof certificate of authenticity. This "token" - which also contains a lot of information about the object and its route - certifies that we are in possession of the original work among the many copies circulating on the web.

And it can be associated with almost anything and everything: you can become the owner of a digital painting, a kitten image, a collectible card, characters or weapons in video games. , extracts from football matches… The NBA has for example put on sale a collection of digital packages containing videos of historical moments of basketball or the band Kings of Leon offered a limited version of their latest album.

The success of a booming market

One can wonder about the relevance of acquiring an object already accessible for free on the Web and which exists in an infinite number of copies ... But having copies of a work is not the same thing as having the authentic version, with the certificate that proves it. NFTs "kind of give meaning to the idea of ​​one-off or limited edition of digital works," explains researcher Aude Launay. They "make it possible to think about digital scarcity and, thereby, to monetize it". Because by making the object unique, the NFT introduces rarity. However, scarcity can, depending on supply and demand, produce value. Lots of value.

In recent years, the NFT market has grown considerably. Sales exploded in the first half to $ 2.47 billion, from just $ 13.7 million in the same period a year earlier, according to Reuters. The market grew from $ 40 million to $ 338 million between 2018 and 2020. And it generates more than $ 10 million every day in virtual galleries. Currently, the market for non-fungible tokens is approximately $ 15.8 billion.


















"Everydays: The First 5,000 Days" (detail), a digital work by American artist Mike Winkelmann aka Beeple, sold on March 11, 2021 at Christie's for $ 69.3 million.

After the sale of the digital collage Everydays: the first 5000 days by the artist Beeple, sold for more than $ 69 million last March, there was a ripple effect, analyzes the collector and gallery owner Guillaume Horen, founder of Buy Art. “On the one hand, many artists felt they had to get started and on the other hand, collectors saw new opportunities with digital art. They were like, "Everyone's going, so I'm going too." People went there with the fear of missing something. And maybe also out of curiosity. But the early euphoria has subsided a bit, according to Guillaume Horen. “The market is changing and we're going back to something more thoughtful, more rational. "

While the trend has picked up with the Covid-19 crisis, non-fungible tokens are nothing new. "The already long history of these collectable digital images began with Pepe's memes declared" rare33 "in 2016, Aude Launay recalls in Art & Argent. It continued in 2017 with the CryptoPunks, then the CryptoKitties marked the beginning of a mad speculation, which experienced an astronomical rebound in the summer of 2020, followed, in the fall, by the entry into this market. popular figures such as Beeple and then Murat Pak. "The media coverage of sales organized by large houses like Christie's or Sotheby's has succeeded in removing the NFTs from their anonymity.


















New perspectives for artists and collectors
But if the actors of the traditional art market are starting to take hold of the phenomenon, some observers point out that one of the interests of NFTs is their ability to "democratize" an environment which has the reputation of being reserved for an elite. enthusiasts and collectors. With non-fungible tokens, anyone can acquire and resell art with just a few clicks, immediately and decentralized during transactions made in cryptocurrencies. Enough to open up the art market to new players. Many are thus the apprentice collectors, young and coming from the world of tech, for example.

Anyone can also decide to associate an NFT with their digital work, whatever it is, and put it on the market via dedicated platforms (OpenSea, Hic and Nunc, SuperRare ...), reducing in the process usual intermediaries. And for artists, NFTs represent new perspectives and opportunities. Resale clauses can thus be introduced into the NFT code, guaranteeing the creator long-term remuneration with royalties, "resale rights" generally amounting to 10%, which he will automatically receive each time. that his work will be resold.​

Until now, it has been difficult for creators to monetize digital works due to the almost endless duplication of their production. "When you think of the artists who for years have spent time preparing their posts on the networks but without any feedback, the NFTs change that, points out Guillaume Horen, the founder of the Buy Art site. It allows them to have more visibility, and potentially to make a living from digital art. "

The risks and limits of a still young system
But the NFT system is still imperfect and raises many questions, including security. The tokens are stored in an electronic wallet to which the owner has access thanks to a secret code called a private key. If malicious hackers get their hands on this precious key, they can completely empty said wallet. But the theft sometimes comes in other forms: artists thus find some of their creations for sale on platforms without their knowledge, even though they had no intention of doing so, or even stamping them with a NFT.

One of the most hotly debated issues right now is green. Like any digital technology of this magnitude and particularly that related to cryptocurrencies, NFTs are very energy intensive. They involve a large number of constant operations and transactions, managed by computers that themselves consume a lot of electricity. The topic has recently inflamed online artist communities, with many creators refusing to be associated with a polluting system despite the potential benefits.

Finally, many wonder whether NFTs have a sustainable future or whether it is a fleeting phenomenon, a speculative bubble that may well explode. Especially since these tokens are bought in bitcoins and ethers and therefore depend on the price of cryptocurrencies, thus suffering their volatility, both downward and upward. But many observers agree that this technology is here to stay, even though the market is young and immature.

"We don't know how it will evolve, to what extent it will develop, but I am convinced that it is something that will last, says gallery owner Guillaume Horen. We have passed an important stage with the NFTs. There are of course issues that are not treated well, such as ecology or safety, but they will be in the future. The market is only in its infancy, it is structuring itself and is still trying to establish its own definitions. Definitions that the famous visual artist Damien Hirst decided to question in his latest project, The Currency, by forcing buyers to choose between a physical copy of his work or the associated NFT, but not both.