4/13/21 · Information and Communication Sciences

The auctioning of an NFT by Christie's boosts the use of cryptocurrencies in digital art sales

The auction house fosters the conversion of unique digital files, such as memes and tweets, into collector's items
Photo: Viktor Forgacs / Unsplash

Photo: Viktor Forgacs / Unsplash

In March, Christie’s auction house sold a "non-fungible token" (NFT) by the American artist Mike Winkelmann, known as Beeple, for €57m. With the sale of the digital collage Everydays: The First 5000 Days, Beeple is now third only to Jeff Koons and David Hockney on the list of living artists with the most expensive artworks. According to the experts, this auction has opened up a window of opportunity for digital artists, even though there are some risks associated with the phenomenon due to its speculative nature. NFTs, or unique digital items, are files whose ownership can be authenticated thanks to a system based on cryptocurrencies. Artists have been exploring this area to protect their authorship for some years now. Two years ago, the UOC carried out research in this field with the aim of preventing the illegitimate copying of digital works of art and is now conducting a further study on the copyright challenges that blockchain technology is still facing. Blockchains have now made it possible to sell all types of digital objects, such as jpeg files, tweets, memes and even gifs by converting them into tokens that can be traded in the market.

The member of the UOC's Faculty of Arts and Humanities Pau Alsina believes that in relation to digital art NFTs have managed to do what had previously been thought impossible. The expert said that it has always been very difficult to "control the ownership and authenticity of fluid objects" and now there is a system that can do it. Cryptocurrencies are the key element that allows digital artists to take advantage of blockchain technology. "Cryptocurrencies act as a digital certificate, a way of saying that the work is yours, you can track it and sell it because you can also accredit all copies of it as yours," commented Alsina. The same could also be true of a tweet or any other digital content generated on the internet. "The system facilitates the entry of copiable fluid digital objects into the market by means of a system that can authenticate their ownership and monitor them. That's the big difference," stressed Alsina. However, the UOC member of faculty warned that the phenomenon "could feed the speculative economy" because the value of cryptocurrencies fluctuates. The prestige of the party issuing the certificate could also increase the value of an item. In the case of Beeple's work, it was Christie's, which had a tremendous effect on the popularization of NFTs in digital art: "The fact that Christie’s is using this system to sell a work of art sends a very clear and direct message to the art and collecting worlds."

NFT, from monetary value to the value of a unique piece

Víctor Garcia Font, a member of the UOC's Faculty of Computer Science, Multimedia and Telecommunications, reminds us that NFTs are a use case made possible by blockchain technology, which started with the bitcoin cryptocurrency in 2009. "Bitcoin created a payment system based on a peer-to-peer network, similar to how BitTorrent shares files." An evolution of this system later made it possible to make what were simply exchangeable monetary tokens into unique non-exchangeable pieces, meaning that "for the first time there was a digital asset on the internet that could have an owner." Tokens were then used to amass collectible cards, taking them beyond their monetary value and adding value to a digital item because they could be authenticated and their ownership could be established. This "disruptive" characteristic of tokens had already been present for some time in other spheres. In fact, Garcia highlighted that there is a project to apply NFTs to areas like videogames, "where players can amass elements obtained in an online world, convert them into tokens and sell them to other users, or other videogames could consider the option of importing these elements."

It is this aspect that Pau Alsina highlights as being most important to digital artists. With this system, the expert said, "artists are better equipped to exert control over their work and can dispense with middle men, defend their own rights and directly participate in the creation of value based on demand." The Christie's auction gave a strong boost to a system that offers numerous possibilities in the digital art world. "There are many parties with a vested interested in its success," said Alsina, adding that "instead of museums, these works are exhibited in digital environments, but the non-digital world will be affected." Some digital artists are already taking good advantage of this means of selling art, such as Trevor Jones. NFT creation is open to all artists and there are various platforms available to facilitate it, explained Alsina. "It is highly democratized, with platforms like Cryptoart and Foundation generating systems to allow you to market any digital object," he added. The rise of NFTs in digital art has however not been immune to controversy and ethical dilemmas. Many artists refuse to work with this marketing system because they consider it responsible for the generation of millions of tonnes of carbon dioxide by the networks of computers used to sustain cryptocurrencies. "In the art world it is a particularly sensitive subject and many artists have stopped using them," said Alsina.

NFTs in the media's business models

NFTs open up a slew of possibilities and it is difficult to see where they will end, but opportunities continue to arise. The member of the UOC's Faculty of Information and Communication Sciences Miquel Pellicer highlighted that, beyond art and other aspects such as sports, NFTs also generate options for the media. In fact, there are already cases in which opinion pieces or columns have been sold using this system. In Pellicer's opinion, NFTs may become "one more sphere for the development of media business models." There are myriad possibilities, as the faculty member explained with an example: "I can buy an opinion article from a journalist as an NFT, but in exchange for its use we have to consider the possibility of the owner's name appearing with it, as well as associated intangibles such as the right to chat with the author."

Time will tell which direction the impact of NFTs on digital art will take and whether it will carve out a role for itself as a valid option for artists. "The problem with these emerging works is that they depend on demand, and it remains to be seen how things will go," warned Pau Alsina. "The headlines seem to indicate that there will be room for them. NFTs have sparked a great deal of interest and we will have to wait and see what effect it will have on the market and how long the value of its digital objects and processes will last," concluded the expert.

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