by INATBA Executive Director, Marc Taverner
Like most sectors, the art world (including galleries, collectors, and museums) is susceptible to foundational disruption. Unlike most sectors, it had yet to be significantly impacted by crypto and blockchain – until 2021. Now, every gatekeeper in the art world – from gallery owners to museum curators – need to be educating themselves on how (and how soon) they begin integrating NFTs into their collections. The question is, will the gatekeepers realize this before it is too late? Will we see NFTs in the Louvre or the Prado? Perhaps – but not necessarily in the way we think. Like most cases of blockchain “disruption,” the flashy headlines often make way for the understated, but equally valuable, back-end application of the technology.
Like most cases of blockchain “disruption,” the flashy headlines often make way for the understated, but equally valuable, back-end application of the technology.
If you have not been following the meteoric rise of interest in NFTs, let me share a short overview. NFT stands for “non-fungible” token. In essence, the term refers to tokens (exchanged on the Ethereum) blockchain that represent truly one-of-a-kind digital collectibles. (If you want to know more about NFTs and the technology that powers them, as well as the various use cases aside from digital art/collectibles, I recommend the primer available from blockchain media company CoinDesk).
The first introduction many blockchain enthusiasts had to these “non-fungible” tokens was the introduction of CryptoKitties. An invention by Dapper Labs (who is now rumored to be raising money at a $7.5 billion valuation), Crypto Kitties were on the scene in 2018, and one of them was even auctioned to raise awareness and money for ocean protection. Today, whether due to the digital-only lives many of us have been living this past year, or the presence of a developer ecosystem that is finally sufficient in its size and expertise to capitalize on the interest, NFTs are having a new day in the spotlight. I could spend the rest of this article listing the digital collectibles being sold by the NBA, artist Grimes, Ellen Denegeneres, Emily Ratajkowski, etc for hundreds of thousands (if not millions) of dollars. Worth noting is that the tech powering these high-priced collectibles is just as valuable. Blockchain scale-up Alchemy is used by all major NFT platforms to connect their collectibles to the Ethereum blockchain – it is no coincidence that the company’s investors include Jay-Z & Charles Schwab. NFTs are back, and they’re here to stay.
Important to note, however, is that just like the famous Starry Night, there is a near-infinite availability of reproductions and “prints” of these digital collectibles. Nothing is stopping you, reader, from going to watch the NFT Beeple video that was auctioned for $6.6 million. So when you read about the eye-wateringly high prices paid for these NFTs, what has been bought are ownership rights. The proof of ownership and rights to the collectible are purchasable – and that ownership is recorded on the blockchain via smart contracts. As a result, these tokens cannot be destroyed, removed or replicated.
These institutions could integrate the powerful back-end application of this technology and make publicly available an unhackable record of the history of a piece of art.
This is the aspect of NFTs that art gatekeepers need to embrace most urgently – recognition that immutable records of ownership (by both artist and collector/owner) are now possible with blockchain technology. These institutions could integrate the powerful back-end application of this technology and make publicly available an unhackable record of the history of a piece of art. For the everyday visitor, this could mean walking into the Metropolitan Museum of Art in New York City and being able to view through your phone’s QR code reader who owns and created the work. But for the art collector and auction houses, it is even more game-changing. New pieces of art (or even “old pieces,” if done correctly) having blockchain-secured ownership records is an invaluable tool in the fight against rampant and increasingly sophisticated forgery and fraud (even last week, investigators stopped just in time a $14.7 million sale of a collection of works, including a piece allegedly by Goya, that had falsified documentation).
All to say – the rise of NFTs does not mean the Mona Lisa will be hidden away and museums will be full of music videos played on loop or social media posts framed and on display. The Louvre and the Prado may open a digital collectibles wing, but that would be only a small ripple of innovation. There is an even more significant wave of disruption that is on its way to the art sector. NFTs are only the beginning.
Ready to be part of this disruptive wave? Join INATBA today.