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 stands motionless in a futuristic data center, against a backdrop scary music. After a few seconds, a click occurs and the robot seems to come to life, animated by artificial intelligence. The video, Agent, by the American Maskarade (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 the sum of approximately 180,000 dollars.

Everyone can continue to see the work online, but only tg12 can boast of being its owner, since it has the token that attests to it. This token, called NFT (for non-fungible token, or non-fungible token), is the certificate of ownership of the digital file. The history of all transactions concerning Agent is accessible in real time thanks to blockchain technology, this large decentralized database that serves as a virtual ledger for cryptocurrencies, for example. Thus, when the collector resells 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.

NFT technology has been around 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 Everydays: The First 5000 Days, by American illustrator Beeple. The presence of an NFT at a reputable auction company had attracted attention. But it was the final amount of the transaction, US$69.3 million, that triggered a veritable media tidal wave.

Why buy a digital work that everyone can see for free while surfing the web? many people still wonder. Short answer: sometimes for the love of the art, but mostly for its speculative value. Just as the market dictates the value of a physical work, it is the human 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 is a lot of speculation,” says Gauthier Zuppinger, co-founder of the NonFungible.com site, which monitors the NFT market and estimates the value of collectors’ cyberportfolios. 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-looking beings generated by an algorithm. Or the NFTs from the Bored Ape Yacht Club collection, avatars of monkeys. Some of these simple, computer-generated images fetched around two million dollars! No wonder those who own them (there are 10,000 CryptoPunks and 10,000 Bored Apes, which sell for over $250,000 each) usually use them as avatars on their Twitter accounts.

The popularity of NFTs has propelled 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 jumped from $2.5 billion to about $3.4 billion. And that’s largely thanks to NFTs.

In the primary market (the sale by the artist), collectors shelled out some $675 million for NFTs in the first six months of 2021 alone, when it sold for around $37 million. in 2020, according to an analysis by Swiss financial services firm UBS. Same increase on the side of the secondary market: the resale of digital works rose from 47 million to 960 million dollars during the same period.

Most platforms where NFTs are sold give 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, does not profit in any way from speculation on the resale of his paintings.

In order to allow creators to take advantage of the craze, the 0x Society gallery has set up a grant program to train Canadian artists in this technology. “We offer them, among other things, seminars specific to NFTs, in particular to help them build an online community and find a pace of creation 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 The Crypto Syllabus, composer Brian Eno had this comment in the fall of 2021: « I don’t see what’s new, other than a succession of numbers that move from one bank account to another. Many artists have expressed such reservations.

“NFTs have an impact in 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 notes in passing 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, believes November Paynter, which would, among other things, make it possible to discover a new generation of artists.

Over the past few months, the technology has been tried and tested. Companies like the Montreal Canadiens, The Associated Press, Adidas, and Nissan have released collectible NFTs. The hockey club, for example, produced dozens of virtual hockey cards in the fall, each selling hundreds of copies (multiple NFTs of the same work can be created). Social networks and video games are also beginning 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 its game. 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 of 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 that 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 possibilities for players”.