In the museums of the future, visitors will line up to see memes. On February 18, the digital art collecting market experienced what could be a foundational moment when the meme Nyan Cat, the famous flying cat that leaves a trail of rainbows, was sold online with cryptocurrencies worth up to $580,000.
This surprising record was possible thanks to the so-called Non-Fungible Tokens (NFT), digital assets that are rapidly transforming the art market, allowing the revaluation of products or cultural goods that, until now, have circulated on the network in an unrestricted way free. Its impact has been compared to a revolution or the Renaissance. How does that system work?
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For centuries, human beings have collected artistic objects for their aesthetic, economic and emotional value. Collectors, traditionally aristocratic and wealthy, have acquired the works of artists such as Picasso, Van Gogh, Caravaggio or Banksy at astronomical prices. Their market value is very high because they are unique original pieces in the world. The exclusivity has promoted a sale that has spread to other artistic branches such as music, cinema or video games.
PARADIGM SHIFT
But what about digital art? On the Internet, creations can be copied, stolen or reappropriated with many changes. That power of transformation and sharing is the very essence of the Internet, but in the world of collecting it makes it practically impossible to know what the original work is, something that reduces its market value.
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The NFT come to break that logic and create a new culture of collecting. In the digital world, a token is a unit of reference. While the shares of a company all have the same value, a non-fungible token associates a certain value with a unique, rare and indivisible digital object. The value that we used to give to physical goods such as stamps or works of art to market can now also be applied to intangible goods. NFTs are a record of who owns a unique digital piece.
In addition to digital art, this opens the door to marketing endless content such as digital copies of images, Twitter posts, or Pokémon cards. Although NFTs have been around since 2017, in recent weeks they have seen a boom in popularity. Actress Lindsay Lohan sold a photo of her face for $17,000 (it was resold for $57,000) and music artists like Deadmau5 and 3LAU have made over a million from the system.
TECHNOLOGY TO DRIVE VALUE
And how do you give value to a digital object that can be copied? NFTs work through Blockchain, a revolutionary technology that allows the transmission of data privately and without intermediaries. In that system, which operates as a DNA chain of encrypted information, purchases are made through cryptocurrencies such as Bitcoin.
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Artists use this technology to certify the authenticity of a digital asset, marking it permanently and unalterably, without relying on an expert to appraise its value. That makes it a unique and special item. And the more people want to acquire it, the more its value will skyrocket. NFTs derive their value from their scarcity and authenticity, from supply and demand, and from the fan's emotional attachment to the work.. And they take that practice to the digital world.
In many cases, the purchase of NFT is not intended to acquire sole ownership or copyright of a specific work, but rather a true copy. Like the artistic collecting of a lifetime, the NFTs work as a mechanism of social distinction or as a business. To brag or to invest. The system represents a paradigm shift that can help artists. Virtual trading galleries like 'Nifty Gateway' have sprung up and traditional auction houses like Christie's have jumped on the bandwagon. In December, an artist nicknamed "Beeple" sold 20 of his works on the platform for $3.5 million.
AN EXPANDING BUSINESS
This new market is taking off in the United States, where it has unlocked a juicy business for companies like Nike, Ubisoft or Louis Vuitton. Last year the sales volume of NFTs quadrupled reaching a value of 250 million dollars, according to a study by nonfungible.com.
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Major sports leagues such as the NFL or the NBA have also made the leap to this market. The basketball association has a portal where short videos of plays are auctioned at prices that are hardly credible . A collectible LeBron James dunk trading card sold last week for $208,000. The move can be seen a thousand times for free on YouTube, but the card is unique.
SPECULATIVE GAME
Experts warn that NFTs open the door to highly speculative business, as the financial value of these collectibles may be completely unrelated to their artistic value. But the value of a work is what people give it. The acquisition of an NFT on an 'online' platform can be resold to infinity. The positive thing about this technology is that it allows the author of the original work to receive a commission of between 3 and 15% each time that sale is made, a mechanism that rewards the artist.
As has already happened with the rise of other markets such as cryptocurrencies, the lure of getting rich in four steps has also facilitated fluctuations in value and scams. At the beginning of February it was made public that an anonymous user pretended to be Banksy, one of the most famous urban artists of recent decades, to sell works for more than a million dollars.
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