Berlin British artist Damien Hirst is a shrewd market strategist. He has also entered the crypto art business. In 2021, he digitized a painting of ten thousand dots on paper into non-fungible tokens (NFTs) at a price of $2,000 each.
Buyers can choose to keep the NFT, a digital work with a digital ownership certificate, or purchase the painting. All remaining paperwork will be burned in October 2022. That most customers prefer the original could be an indicator of a weakened crypto art market.
The whole thing is a clever money machine that, at the will of the author, turns art into currency and currency into art. This market offering is just one of the rampant production of NFTs in the Corona year 2021. The highest valuation is the legendary $ 69 million, which a collection of 5,000 images by the American digital artist Beeple achieved in March 2021 at Christie’s. This record price is still valid.
Since that time, countless crypto art middlemen have busied themselves in a market. But he keeps getting talked about with security issues, sharp price swings, and most recently with the drastic downturn in cryptocurrencies – minus 70 percent.
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While the UK Supreme Court classified NFTs as “property” in April; but that doesn’t stop hackers from operating in a still largely unregulated market and even distributing copies (tokens) of stolen art, as has already happened in China.
The magazine of the Artprice database complains that there are large numbers of replicas of almost all known NFT projects in circulation on the largest marketplace, Opensea. In February, this provider removed 1,138 NFTs that were not authorized by their creators, including Anish Kapoor and Damien Hirst.
As a new industry, NFTs have a strong fascination with internet-savvy collectors, and not just them. The Art Market Report 2022, launched by Art Basel and UBS, reported that 56 percent of ultra-wealthy collectors surveyed plan to buy digital art and concludes, “There are no signs that interest in NFTs will wane in 2022.”
Research by analysts NonFungible contradicts this. They revealed in June that the NFT Wallets browser extensions used to access NFTs and their marketplaces have shrunk by 88 percent since September 2021: from 119,000 to 14,000 “digital wallets.”
Takashi Murakami apologizes for the price drop
In February, Sotheby’s canceled a last-minute auction of 104 crypto punks for an estimated $20-$30 million due to a lack of bids. And that’s not all. There’s also a drop in price for overpriced art that doesn’t really deserve the name.
Japanese artist Takashi Murakami, who also has copies in circulation, apologized to his collectors in June after the value of his “Flower” NFTs dropped from $260,000 to $2,000. Digital currency prices, which collapsed across the board in the first half of the year, also helped drive the fall in prices for hyped digital art.
A good example is the humble minds of CryptoPunks, one of which was bought for $11.8 million in June 2021 and plummeted to $139,000 in May 2022. An effigy from the BoredApe Yacht Club series, which was highly coveted last October, dropped from $513,000 in April to $161 in June. An image of a robot by hip digital artist Snoop Dog fell from $32,000 in April to a high of $480 in June.
The token business is falling
The only glimmer of hope was Dutch goal scorer Johan Cruyff’s 1973 NFT video, which was upgraded to a football adventure pack.
Sports exceptions aside, these are dips that reflect an overall contracted crypto art market. New providers are struggling. Cryptocurrency trading company Coinbase invested $600 million in its marketplace that launched in May. But the token business fell from $75,000 to $19,000 in the first six weeks.
Critics have always viewed NFTs as overrated. Billionaire Bill Gates is one of them. He recently stated to the financial portal CNBC that such works are “100 percent based on strong fool theory.” Conservatively, nothing could be added to that.
More: Crypto Art: NFT: Yuga Labs buys rights to CryptoPunks