Art Basel Miami Beach is America’s most prestigious art fair, and it draws the cream of the world’s art collectors. But Miami, the host city, is also a magnet for cryptocurrency and blockchain entrepreneurs. These people, who are busy trying to reshape the way finance works, have lately become interested in art — and specifically in NFTs.
So on an early December Sunday, I headed south and soon found myself staring at a giant screen on a beach. It was just after sunset. The beautiful people were arriving at the Faena Hotel in Miami’s mid-beach. Like tropical fish advancing through a coral reef, they glided through the lobby, past the pool, the pineapples roasting over a firepit and Damien Hirst’s gilded skeleton of a woolly mammoth, before crossing the boardwalk onto the sand.
Standing between the crowd and the ocean, a huge, square-shaped screen beckoned, glowing brightest white. We waited in the warm Miami night for it to come alive with a work of digital art — a shining example of an NFT, by Refik Anadol, a Turkish artist based in Los Angeles.
You’ll want to know about Anadol’s work, I promise. But first …
What is an NFT, in the art world?
An NFT, or non-fungible token, is a unique digital representation of a good — for our purposes, a work of art. It’s akin to a certificate of authenticity or a deed and it’s recorded on a blockchain (more on that momentarily). Typically (forget art for a minute), an NFT represents something in digital form that you might not previously have thought of as a good: Jack Dorsey’s first tweet, for instance, or a clip of TV footage from a basketball game, or a pixelated cartoon ape in the form of a jpeg.
Ah, yes! You’ve heard of Bored Apes and CryptoPunks? These rudimentary digital illustrations were minted as NFTs, released in batches of 10,000, then traded as collectibles. CryptoPunks helped kick off the NFT craze. They usually sell for between $350,000 and $500,000, but one has fetched $11.7 million, and Bored Ape NFTs, which were released more recently, are also selling in the millions.
An NFT can be minted (i.e. registered on a blockchain) from almost anything: a virtual racing car inside a video game, a photo of Harry Styles’s cardigan or a work of digital art.
Wait. What is a blockchain?
A blockchain is a digital database, most often in the form of a public ledger. It stores information across a network of computers. Transactions on a blockchain can be verified without the need for any central authority, like banks or governments, and are supposed to be impossible to change, hack or corrupt. Each transaction is time-stamped and added to a growing chain of blocks of data.
What is the point of an NFT?
Creating an NFT does two things: It provides proof of ownership and it guarantees scarcity. The scarcity is really the key part. If you want to sell something that exists only digitally, the problem is that all things digital can be infinitely copied. NFTs don’t stop the copying. But they allow you to distinguish the copies from this one, notional “original.” And they prove, through the ledger, that you own it.
Until, of course, you sell it. And that’s the real point. By minting something as an NFT, you’re creating a commodity.
What’s the relationship between NFTs and the art world?
If you believe the hype, NFTs are poised to transform the art world, changing not only how art is bought and sold, but also what kind of art we value, and which artists. Justin Sun, a prominent Chinese American tech entrepreneur who has spent millions on NFTs, told me that they will “revolutionize the existing trading model in the art market, especially for digital art.”
But NFTs won’t just bring digital art to the fore. Sun said they will bring “transparency into the art world” (because the blockchain ledgers they’re stored on are public). And they’ll reward artists with resale royalties, because you can embed contracts in NFTs that award artists a percentage every time a work is purchased.
Why is everyone suddenly talking about NFTs?
NFTs made headlines in March, when a digital work minted as an NFT by Mike Winkelmann, a graphic designer, artist and animator who goes by the moniker Beeple, sold at Christie’s for more than $69 million. The work, called “Everydays: The First 5000 Days” is a montage of digital illustrations, cartoons and sketches that Winkelmann made on his computer, one per day, for more than 13 years.
Beeple was famous among digital artists, but almost no one in the art world had heard of him before the sale. The bidding started at $100. Over a period of weeks, it was pushed higher and higher by several cryptocurrency entrepreneurs.
One of the bidders was Justin Sun. He had been hoping to bid up Beeple’s work even higher but was prevented, he said, by “technical problems.” He lost out to Vignesh Sundaresan, a blockchain investor who goes by the name MetaKovan and who paid for the work in Ether, the native cryptocurrency of the blockchain Ethereum. (Cryptocurrencies are virtual currencies secured by cryptography, making them impossible to counterfeit or double-spend. Because they’re not issued by a central authority, they’re theoretically immune to government manipulation.)
What explains the astonishing price?
The bidders really liked Beeple’s work, no question. But they were also up to something else. They wanted to create a sensation, to whip up publicity for NFTs in particular and cryptocurrencies in general.
The Beeple sale was “the most genius form of advertising for Ethereum,” said Sarah Meyohas, an artist whose 2015 conceptual artwork “Bitchcoin” is credited with anticipating NFTs. Over the next six months, the Ethereum cryptocurrency roughly doubled in value. In this way, Meyohas claimed, Sundaresan likely made more than his money back just from “their Ethereum holdings going up.”
Soon after the hammer came down, Winkelmann — who later claimed in a podcast interview with the gallerist Lucas Zwirner that he had never flown first class and that his entire wardrobe at the time was worth about $600 — boarded a private jet to Miami. By the time the jet hit the tarmac, his share of the proceeds — 56 million in U.S. dollars — had landed in his bank account.
The Beeple sale kicked off a frenzy of NFT speculation. According to Sun, NFT art sales in the first half of 2021 generated $546 million on more than 190,000 transactions. By early December, total NFT sales (not just art) had reached $12 billion.
No. NFTs are not a new artistic medium in the way that oil paint, printmaking, photography or video art were. Even digital art (which is just art made on a computer) preexisted NFTs by decades.
NFTs are financial instruments. They make it easier to sell digital files by creating scarcity.
But you can also do other things with NFTs. For instance, you can divide an NFT into fractions and sell it as shares. If it goes up in value, so will the shares. The companies already doing this promote it as a way to democratize art ownership and investment. (In early December, in a complex, incentivized sale that points to the gamification of the NFT art market, more than 28,000 buyers spent a total of $91.8 million to acquire 266,445 “shares” of a digital work called “The Merge.”)
You can also mint physical works of art as NFTs. The point of doing this is not to displace the painting or sculpture itself. It’s to create a digital bundle of secure data about that work, including a record of its ownership, instructions about its care and display, and stipulations about how much money should go to the artist when it is resold.
“NFTs have already transformed the art world, regardless of whether the boom continues,” curator Hans Ulrich Obrist said.
Ugh. My head hurts. Can you take me back to the beach? That sounded like quite the scene.
It was. Among the glossy A-listers getting sand in their shoes were art dealers and collectors who’d spent the day at the VIP opening of Art Basel Miami Beach. Some of the world’s wealthiest people attended the art fair, which filled the vast Miami Beach Convention Center. The venue teemed with brute, physical works by the likes of Warhol, Basquiat, de Kooning and Picasso. People were talking about NFTs, but it was like a faint, background buzzing. Only three or four of the 250-odd booths at the fair were actually displaying them.
The rest were showing physical stuff — works made not only from paint, but also scrap metal, elephant dung, taxidermied pigeons, hairdressers’ endpapers, wax, wool, black soap and bitumen. Walking through it was visceral, like walking into a horse stable. You could feel — you could almost smell — the power of stuff, in all its actuality.
On the beach, the Art Basel crowd mingled with the movers and shakers of the cryptocurrency world. These “crypto-bros” (they’re overwhelmingly male) are the ones behind the whole NFT craze. They were in Miami for their own reasons. Speaking the previous day at Decipher, a two-day conference organized by Algorand, a blockchain/cryptocurrency platform, Francis Suarez, the city’s aggressively pro-crypto mayor, predicted that the week ahead would bring “the largest gross sales in NFTs in the history of the planet right here in Miami.”
The two worlds have lately been playing footsies, but they’ve remained quite separate. “The crypto people aren’t really going to the art fair,” Meyohas told me as Art Basel unfolded. “They’re having their own events in parallel to the fair, and they’re not really integrating into the art world.”
The event on the beach felt like an attempt to bring them together. The organizers were Faena Art, a cultural nonprofit group named for Alan Faena, the Argentine hotelier and real estate developer, and Aorist, a recently formed NFT marketplace, one of whose co-founders is Ximena Caminos, Faena’s ex-wife.
Aorist’s founder is Pablo Rodriguez-Fraile, an investor and leading collector of digital art. Rodriguez-Fraile told me that the digital art being unlocked by NFTs is “sparking an explosion of talent and innovation” that will amount to “the most important art historical movement in our lifetimes.”
Wow. Really? But my head still hurts. Can I just forget NFTs for a moment and surrender to some great art?
Certainly. I feel the same way.
The work exhibited on the beach is called “Machine Hallucinations: Coral.” Anadol is an established artist. He teaches in the Design Media Arts School at UCLA. He uses data-driven machine learning algorithms to generate gorgeously colored moving abstractions.
Against a backdrop of actual waves that continued their ragged, rhythmic collapse on the sand beyond, the giant screen on the beach presented an illusion of a three-dimensional, boxlike space, inside which waves of saturated color swarmed across the screen like schools of fish. Pixels turned to small spheres and then to forking, coral-shaped forms and splashing liquids. The textures and colors and forms were in constant flux, like 21st-century capitalism. Behind me, a woman speaking on her cellphone sounded awestruck. “I’m on the beach looking at a huge painting,” she said. But the painting was moving.
You’re saying it was good?
It was better than good. I loved it. Which was a relief. I’d come to Miami looking for great examples of NFT art. I’d seen a few fascinating things. But overall, honestly, I came up pretty short. Anadol’s work — visually stunning, intelligent, mesmerizing — amazed and moved me.
Too late. For now, anyway. Anadol’s work was put up for auction as an NFT that night. It sold for $851,130. Acquiring it entitled you to a video of the work as it was exhibited on the beach and a “customized supercomputer” containing all the information required to display it. The buyer was David Garcia, the chief executive of Borderless Capital, a Miami-based venture capital firm.
Did $851,130 represent the ‘true value’?
Huh? Old-school question!
The figure may have been inflated by the buyer’s charitable impulses. (Ten percent of the proceeds went to the ReefLine, a planned seven-mile underwater public sculpture park, snorkel trail and artificial reef just off South Beach.) But like the Beeple sale, it may also have been inflated by a desire to make buying NFTs look a) normal and b) exciting. It seems relevant to note that Garcia’s Borderless Capital is a major investor in Rodriguez-Fraile’s NFT platform Aorist, which organized the exhibition.
What kind of artists are benefiting from the current craze?
Wanting to capitalize on the hype, many unknown and struggling digital artists are minting and selling whatever they can as NFTs, and it’s making a big difference in some of their lives. Unfortunately, they’re also flooding the market.
Another group of people minting NFTs is perhaps more interesting. Since the Beeple sale, graphic artists who create sophisticated computer-generated imagery for films, video games, advertising and concert visuals have been banging on the doors of the art world. Beeple is from this milieu, and the sale of his work convinced many of his peers that NFT technology could help them branch out.
“It means everything for the sovereignty that I want to have with my work,” said Ash Thorp, a digital artist admired by Winkelmann. Thorp mostly works for clients and is very successful in his field. He now feels he has the financial freedom to profit from his personal work. NFTs are “giving me complete ownership of my digital work for the first time,” he said. “So it’s incredibly liberating and empowering.”
Established art collectors are yet to be convinced of the value of digital work by people like Thorp and Beeple. But if the cryptocurrency crowd stays interested, that may not matter.
How do you judge the quality of NFT art?
The same way you judge the quality of any art. A big part is subjective. Another part is less so — which is why consensus develops. What’s interesting about the Beeple sale is that it has exposed a major culture clash between the art world establishment and a preexisting sphere of digital artists working mostly in the commercial field.
Beeple, I would say, is essentially a digital illustrator, like a cartoonist. Thorp is very good with stylish effects. Technically, both are virtuosos. As Beeple pointed out in the podcast interview with Zwirner, casual observers probably don’t realize how “insanely complicated” it is to use “bleeding edge software” to create “something very small and simple” on a computer. He has those skills himself, and he recognizes them in others, including Thorp.
But in the art world, it has been a while since either technical skill or labor were regarded as inherently important. Some of the most valuable works — by Andy Warhol, Jackson Pollock and Cy Twombly, for instance — were made quickly and with little evident skill. That’s because in art, as Meyohas, the conceptual artist, explains, “you can do something really simple and it can be amazing.”
For people who have trouble with that notion, one good proxy, said Meyohas, is “how hard was this to do?” “So some art gets its value from displaying its labor. Beeple’s work is an insane performance of labor.”
Are there digital artists who were already recognized in the art world before NFTs came along?
Absolutely. They’ve been around for decades. They’re a diverse bunch, but the best of them tend to be less concerned with displays of virtuosity and labor and more concerned with getting at something deeper. Just as Warhol was responding to a burgeoning era of ubiquitous advertising and fame untethered from achievement, artists like Meyohas and Anadol are exploring the implications of being alive in a world of immense computing power, artificial intelligence and esoteric finance.
What role is the cryptocurrency crowd playing?
Since the market for NFTs was essentially created by cryptocurrency entrepreneurs, and since they’re still the ones sustaining it, you can’t really understand the NFT craze without contemplating their wider designs.
In a sense, they’re using art works as test cases for how information and assets will be treated in the rapidly evolving blockchain space. That space, often hyped as Web 3.0, refers to an old, yet-to-be-realized idea of a decentralized Internet relying on peer-to-peer technologies. But Web 3.0 has also become a buzzword that refers to the expansion of the so-called metaverse, the extension of gaming into almost every aspect of life, and — with all that — the further erosion of the already debased phenomenon we call reality.
“What we’re seeing is the ripple effect or shock wave of people trying to get their sea legs and figure out what all this means,” said Glenn Kaino, one of the most interesting artists working with NFTs.
What problems are NFTs actually solving?
Good question. New technologies create new possibilities, but they’re often extolled for solving problems that don’t really exist. In the process, they can create unintended new problems. NFTs weren’t invented with art in mind. But now here they are, “solving problems” in the art world that weren’t necessarily there. People were “creating scarcity” before NFTs came along, for instance, simply by selling video and digital art in limited editions and keeping track of who owned each edition.
So what problems are NFTs creating?
One big concern has been the environment. NFTs stored on blockchains secured by a process called “proof of work” used up enormous amounts of energy and were terrible for the environment. But most blockchains have since switched to another process, called “proof of stake,” which consumes far less energy, and many are now publicizing themselves as carbon neutral, or carbon negative.
The main problem NFTs create in the art market is an unintended consequence of their great selling point: scarcity. It turns out that scarcity on its own is not enough. To drive up value you also need demand. The hype around NFTs is one way to create that. But the extreme ease of creating NFTs has created a tension between the scarcity they theoretically represent and the shocking superabundance of NFTs hitting the market.
Spend five minutes on Twitter, the favored social media platform for the NFT crowd, and you see it immediately: We’re living through an NFT deluge.
“There’s so much noise,” Meyohas said, “that breaking through it is constant work.” The hype is out of control and the supply of NFTs so far outstrips demand that it’s hard to know where to look, let alone where lasting value might lie.
As Rodriguez-Fraile, whose collection of NFTs is said to be one of the best around, recently tweeted, “There is a massive oversupply, collector saturation and self-dealing in the [NFT] industry. No one will buy the thousand+ NFTs each of us have bought. There will be no liquidity on the way down. Make sure you do your research.”
Who will sort out the good NFTs from the deluge of mediocrity?
Dealers and auction house specialists will help, and many are already getting in on the game. But there’s a great irony here.
Champions of NFTs think that the transparency and ease of buying and selling NFTs will eventually make dealers and auction houses redundant. They maintain that if everyone can see on a public ledger what something is worth and through whose hands it has passed, there will be less need for middlemen — who take a huge slice of the profits.
“You’re going to have a lot of upset curators and gallerists,” predicted Reid Yager, a spokesman for the blockchain platform Tezos, which had a stand showcasing NFTs on the periphery of Art Basel Miami Beach.
Are art galleries nervous about the threat posed by NFTs?
Less than you’d think. Those I spoke to both before and at Art Basel Miami Beach seemed mildly curious about NFTs, but generally unimpressed. A lot of the buzz, they pointed out, was being produced by a closed loop of people in the cryptocurrency world.
The artists most interested in NFTs, said gallerist Lucas Zwirner, are often “struggling in other aspects of their careers and they’re grasping at something to be relevant. They’re bringing with them all the expectations of the traditional art world and planting it into this new ecosystem. I don’t yet see it as a natural fit.”
How important are dealers anyway?
The art world could certainly do with more transparency. But dealers play a bigger role in artists’ careers than many realize.
The top galleries don’t just exhibit and promote their artists’ work. They also protect their markets. If a sale at auction of an artist’s work is going badly, they’ll bid it up. To prevent speculation leading to collapses in an artist’s value, they’ll make collectors sign agreements promising not to resell for, say, five years. To help consolidate a hot artist’s reputation, they’ll even insist that collectors buy not just one, but two works by a given artist and donate one to a museum.
Sure. That’s the power of combining genuine demand with limited supply.
“With NFTs, all that control and nurturing of an artist’s market goes out the window, because you can buy and sell an NFT in five minutes,” Meyohas said.
“The art world is driven by money,” she said. “People want to buy my art because they think they’ll be able to resell it.” But at least the art world tries also to be about something else, she said; namely, art. “It tries to keep the money in the backroom. You don’t display the prices in the front room.”
“With crypto,” she continued, “it’s the opposite. The prices are the first thing you see. It becomes like a stock market culture. It’s part of a general trend of price discovery for everything. But is that good, to know the price of everything all the time?”
So what’s going to happen?
Meyohas said she thinks “the traditional art world and the NFT world are going to move closer to each other. We’re going to have this physical/virtual continuum where NFTs are just part of it.”
Her prediction appeared confirmed when news came through at the end of the Miami fair’s opening day that one NFT, an interactive piece that is a collaboration between an artist duo, Ralph Nauta and Lonneke Gordijn, who call themselves Drift, and artist and musician Don Diablo, had sold at Pace Verso — a NFT platform recently established by the megadealer Pace Gallery — for $550,000.
“This is the old world that has had its time,” Nauta told me, gesturing at the booths displaying paintings and sculptures all around. “The digital component is more relevant to the younger generation. They can relate to it more. It’s all going to completely change.”
But what if you don’t want it to change? What if you prefer physical works of art to art that exists in computers?
You’re probably in the majority. But guess what? Not everyone thinks like you.
Spend a little time at Art Basel and you might think the art world is a coherent entity, a club. It’s not.
The NFT craze is making it clear that the “art world” comprises an ever-expanding cluster of disparate communities. And as Zwirner said, “Different communities are developing different rubrics for what makes art good.”
In the end, how you feel about NFTs and art probably comes down to your personal philosophy. As Zwirner said, “The art that one values is inevitably tied to one’s world view. If you believe in our ability to be moved by physical objects then you’re going to prioritize the experience, production and dissemination of physical objects.”
Right now, he added, “there is a digital worldview unfolding in which the digital object, just like the gamed experience, is taking precedence over the lived experience.” Large chunks of hundreds of millions of people’s lives are taking place online, he pointed out, and that will affect the kind of art they like.
“But,” he concluded, “the idea that physical reality and physical objects will somehow be supplanted by digital experience? That seems like a marketing ploy for a digital worldview.”
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