Blockchain art took a major step forward this weekend. The largest-ever NFT auction came to a close, earning $11.7 million. Justin Blau, better known as the dance music legend 3LAU, organized the sale of 33 NFTs, to mark the three-year anniversary of his album Ultraviolet.
The most expensive NFT in the sale set a record of its own with its $3.6 million price tag – the priciest NFT ever sold in an initial offering. The NFT included a custom song, access to never-before-heard music on his website, custom art and new versions of Ultraviolet’s 11 original songs.
I understand being a super fan – but spending ₹ 25 crore on some digital goodies seems a bit much, doesn’t it?
Except the more I think about it, the more it makes sense.
Economically-speaking – value is derived from the highest amount a buyer is willing to pay for it. So what if there’s only a few people willing to pay for it, and the rest of us think they’re idiots? After all, people saw bitcoin the same way just five years ago.
Another economic principle comes to mind* – the idea of conspicuous consumption. As humans, we like to own things. Especially if we own something rare. Something that maybe not everyone can own. It’s one more way for us to seek validation, and show to the world that we’re (hopefully) successful enough to afford life’s luxuries.
So maybe I’d not spend much on dance music, but I’m a big fan of basketball. The NBA too, is in on the blockchain art game with NBA Top Shots. These were developed by the NBA in collaboration with Dapper Labs, the same minds behind CryptoKitties.
Mark Cuban, owner of the Dallas Mavericks, compared Top Shot to trading cards. Instead of a picture of a player with statistics on the back, you get a video highlight of a play like a LeBron James dunk or a Steph Curry 3-pointer. The advantage of going digital means that there is no concern of damage, or theft.
Not all of these collectibles are going to cost $208,000. Some even sell at as low as $16. A larger question still remains. Why would I put money down to “own” a video highlight when they’re freely available on the Internet?
Cuban again writes:
“I get to enjoy knowing I own my Maxi Kleber dunk Moment, along with knowing the serial number and much more. Some people might complain that I can get the same video on the internet anywhere any time and watch it. Well guess what, I can get the same picture on any traditional, physical card on the internet and print it out, and that doesn’t change the value of the card.”
Long story short? You could print out a picture of the Mona Lisa and hang it in your home. Will anyone believe you own THE Mona Lisa? Probably not.
This is where NFT technology can bring a massive change to art. digital art market. Until now, it was nearly impossible to authenticate online work as original. Artists try their best, adding watermarks and digital signatures to their work – but circumventing those is laughably easy.
Creating art on a blockchain means every piece comes with a unique code to prove it is an original, as well as a publicly available ownership history.
There’s still a LONG way to go.
NBA Top Shot has done over $230 million in transactions since its inception in October 2020. Most of this is speculative trading – people buying with the understanding that they will sell at a profit.
“The biggest difference between the traditional art world and NFTs is the pace. NFTs have become hot potatoes – and no one wants to be the last one holding it.”
In an interview with On the Flipside, art collector Steven Abraham explains how he sees NFTs’ path to mainstream acceptance. The pace of the market must slow down. Galleries prefer collectors who will keep works for a long time. This is because how frequently an artist’s work sells is very important to their long-term success.
It circles back to why people are even collecting art in the first place. Me and my wife have a rule of thumb – if all the artworks in our collection was worth nothing in the end, would we still be okay with it? That helps us assess why we’re collecting art in the first place.
Much like Bitcoin, NFTs and blockchain art need to be recognized as more than a get-rich-quick scheme before they can take the next step in their evolution.