Weekly Market Update - Friday, June 16, 2023

Cryptoart, NFTs, and the Art Industry

Cryptoart is digital art that lives on the blockchain in the form of non-fungible tokens (NFTs). This fast-emerging sector is disrupting the art industry for artists, dealers, and investors alike — and creating a far more accessible, equitable, and inclusive art market. Today, we explore the origins of cryptoart and NFT art, as well as how artists may benefit from the proliferation of this new art medium.

From digital art to cryptoart

Emerging around the 1970s, digital art has become one of the more popular subgenres of contemporary art. Digital art may refer to artworks created or enhanced with software, digitally rendered animations, or interactive art consumed through a digital device. There is also “generative” digital art, which artists produce mostly by using algorithms.

Some digital artists use blockchain technology itself as their medium — employing custom software and code, along with a slew of new decentralized applications (dApps) to create their work. Once it’s on the blockchain, digital art falls into the realm of cryptoart. So what is cryptoart exactly? As with all things crypto, the vocabulary and definitions surrounding this art movement are dynamic and iterative, but there is a baseline distinction: Cryptoart is art on the blockchain — natively published as an NFT.

These rare digital artworks — interchangeably termed crypto-collectibles, NFT art, nifties, or cryptoart — are represented by unique and provably rare tokens.

The rise of cryptoart and NFTs

Before NFT art captured the zeitgeist, early projects like Monegraph in 2014 and Rare Pepe in 2016 allowed users to register collectibles on blockchain networks. In 2017, a new vehicle for digital art emerged with Ethereum’s introduction of the ERC-721 standard, enabling the creation of NFTs and springboarding the cryptoart movement into existence. 2017 saw the rise of CryptoPunks, CryptoKitties, CurioCards, and Dada.nyc — paving the way for the NFT art movement.

Blockchain enters the mainstream art market

The development of cryptoart has not been limited to the fringes of the internet. In 2018, Christie’s New York became the first auction house to register a sale on a blockchain platform with its $318 million USD sale of the Barney A. Ebsworth collection. This collection featured artwork by landmark American artists Edward Hopper and Georgia O’Keeffe, among others.

Read more about fine art and blockchain here.

Mainstream acknowledgment of the blockchain art sector reached a tipping point in 2021 with the sale of digital artist Beeple’s “Everydays — The First 5000 Days.” An entirely digital crypto art piece, it sold for $69 million USD at Christie's. The sale made Beeple one of the wealthiest artists alive in the world today.

Now, there are multitudes of NFT art marketplaces such as Nifty Gateway, OpenSea, Rarible, and KnownOrigin, each with unique value propositions. Fine-art specific NFT marketplaces include Maecenas, Masterworks, Artchain.world, Aditus, and Portion.

How artists can benefit from NFT marketplaces

The plethora of online NFT marketplaces is good news for artists and collectors, as these markets are typically more accessible, approachable, equitable, and inclusive than storefront galleries.

The most important benefit for artists may be that they can get paid equitably for their work. In the traditional art model, an artist typically gets 50% of an artwork’s sale price and the gallery takes the other 50%. If the piece is resold, the artist receives no royalties. In the cryptoart world, however, an artist can earn 80% or more of the initial sale price, depending on the venue, and a standard of 10% or more of all secondary sales.

Further, these funds don’t need to be tracked down or negotiated. They are cryptographically secured and guaranteed by autonomous smart contracts on the blockchain. NFTs automatically authenticate the art and track its provenance and value as it changes hands.

See you next week. Onward and Upward!

Team Gemini

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