Many people first heard about NFT not so long ago, after a loud and controversial event in the art market. Beeple’s painting “Everydays: The First 5,000 Days” was sold for an astonishing US $ 70m. Why is it controversial? Well, let me explain.
The idea of cryptocurrency was first a rebellion against financial institutions and intermediaries that gain their commissions on the services that we cannot refuse to use. Auction house is kinda same intermediary: it’s a service that, although provides high quality promotion to your artwork, charges extremely uncomfortable commissions for its services. The idea of tokenizing artworks was first a geek joke, however soon found its “socialistic” mission: while one owns the art it is available for everybody to reach out and see it, and the owner from any corner in the world can sell it to anyone, paying less than a dime fee for transferring. No need to pay any commissions, transporting insurance or storage fees. And of course, art tokenization is strongly connected with cryptocurrencies, it is bought and sold mainly for Ethereum or ETH-based Alts. Thus, after all Beeple’s work which went under the hammer of a famous auction house and was bought for US dollars is a great advertising move, which made a lot of hype, but not the authentic NFT sale.
Well, anyway, NFT was not invented yesterday. As all cool things in this world do, it started with pussycats. CryptoKitties rolled out onto the scene in 2017. Collectible digital cats were treated by the public as a funny joke. No commoner could ever dream a digital image of a cartoon kitten would rise in price to more than US$1m in 3 years. Yet it did.
Nevertheless, back then this cute project pushed two smart guys, Devin Finzer and Alex Attalah towards the idea of developing a trading platform for NFTs, Opensea.io, currently the largest NFT marketplace on the Internet. There are also some alternative platforms like Mintable, Nifty Gateway, and Rarible.
When first heard of Beeple’s success, many creators probably thought they can repeat his success, and started uploading their works to the market. However, if we visit Highest Last Sale section on Opensea.io we will see the following:
Two main projects here are CryptoPunks and Decentraland, and our old friend CryptoKittens of course. So who are those two holding supremacy on the NFT market?
If you are into NFT you have probably heard of CryptoPunks, the series of 10 000 collectible avatars created in 2017. The founders of the project admitted their first code had a bug that allowed buyers of collectibles to get both an item and refund. As code running on the blockchain can’t be updated, they had to release a separate version of debugged code and convince everyone to switch on it.
Talking about CryptoPunks deal, that’s where the real NFT sale comes in. Just hours before Beeple’s clout, CryptoPunk #7804 was sold for the equivalent of about $7.5 million in Ethereum immediately acquiring a title of the new Mona Lisa. The seller, CEO of Figma Dylan Field in his interview said that he purchased #7804 in January 2018 as thought it could be viable investment. No one can judge whether this is true or bragging, but man probably made a great investment decision. But the real question is who is the buyer? Anonymous investor known on Twitter as Peruggia explained his abnormally high bet for the collectible: he is one of those true geeks, who believe in blockchain technology that much they are pumping it with their own money. He twitted that for now this deal seems to be stupid, but years after it won’t look the same. For some people trading CryptoPunks is just a deal, one among millions, — he said, — while for others this is a thoughtful decision. Peruggia thinks that the blockchain and NFTs are here to stay, and this investment is his contribution to the popularization of it.
After this hype price of all CryptoPunks raised along with the interest towards pixel avatars, you can clearly see it in the picture.
Decentraland is an Ethereum blockchain-powered virtual world, developed and owned by its users, who can create, experience, and monetize content and applications. The community fuels the interest internally and pushes project to the top of charts. The deals are made in exchange to the MANA, their own currency, which “already been fully decentralized, in the sense that the private key that controlled its smart contract has been thrown away” the founder says.
Basically, both projects’ collectibles are not art created by a human, they are AI generated sequences of pixels, and that stirs up interest for them among geeks even more. Art is now generated by computers, sold via computers using money that were issued by computers. Right now top NFT items are sold from millions of dollars, but average internet user, who would come across the news about such trades, will probably not get the point of those primitive pixelate images. They are valuable for their origin not for what they depict.
In culturology art is divided into three categories by its audience and origin: elite, folk and mass. Elite is art for the sake of art, it is not mass content that goes with the flow, but an organism developing in his own pace. Elite art is what after all becomes classic. NFT in 2017 was elite, it is still elite in 2021, but it won’t last long. With the growing commercial success mainstream will flood the market soon attracting funds of commoners into the market. Until then the community of NFT enthusiasts will have time to enjoy, construct the portfolios and place their bids.
