So, the token art "Everydays: the First 5000 Days" (2021), existing only in digital format, was offered as part of an online auction at the period from February 25 to March 11, 2021. It would seem that there is nothing new in displaying a work of digital art at an auction, which has no analogues in the physical world: they have been circulating at the art market for a long time, they go to online auctions, and are sold as part of specialized digital art fairs. But the appearance of this particular lot and exactly at Christie’s enthralled crypto adepts all over the world, and there were reasons for that.
The main subtlety was that the exposed lot combined the properties of a work of digital art and NFT (Non-Fungible Token). NFT art has already been sold, but earlier it was more likely about specialized platforms for gurus of cryptocurrencies, blockchains, and something like that. Now one of the world's leading and most traditional auction houses has opened its doors to token art, the auction house usually associated with canvases in gilded frames, tuxedos, evening gowns, and the sound of the auction hammer.
Christie's made the first step towards tokenization by selling the work of Robert Alice "Block 21 (42.36433 ° N, -71.26189 ° E)" in October, 2020. A round canvas, covered with 322,048 digits of the original bitcoin code of Satoshi Nakamoto, was sold as part of the usual auction of the post-world war and contemporary art for US$131 thousand, while it had been estimated in US$12-18 thousand. Though the canvas was not just a painting with digits: the digital NFT version was also its integral part. Having seen that there was a demand for the NFT art (recall that the work by Robert Alice exceeded the estimate value by almost 10 times), Christie’s went even further and put up for auction the work by Beeple, which existed only in the NFT format. It was a huge digital “collage” of 5,000,000 original photographs that Beeple took every day for 13 years, starting with May 1, 2007. Hence, when buying the lot, the new owner received an encrypted file with the oeuvre, and information about that transaction entered the blockchain.
Bidding started on Christie’s website on February 25, and 20 bidders raised the price from the starting US$100 to US$1 million during the very first eight minutes of the auction. The day before the end of the auction, the price of the hammer was already US$9.75 million; on the final day — US$14 million. But the most amazing thing happened literally in the last 10 minutes of the auction, when the participants reached the hammer price of US$60.25 million in steps of millions (US$69.3 million including Christie’s commission).
In terms of tension, the auction for the Beeple’s work was compared by Bloomberg journalists to the auction for the Salvator Mundi by Leonardo da Vinci in 2017. The only difference was that thattime everything was held exclusively in the online format. The last minutes of the NFT art sale on the Christie’s website were followed by 22 million persons. Almost all participants of the auction (91%) registered on the Christie’s website for the first time. 58% of the bidders were born in 1981-1996 (the so-called millennials), generation X (those born in 1965-1980) owned 33% of bids, significantly less bidders were born in 1997 and later (generation Z) and the so-called boomers (1946-1964) had 6% and 3% of bids respectively. The buyers were mainly from the USA (55%); Europeans made up 27%, and Asians — 18%.
The result of the Christie's auction made Mike Winckelmann's work not only the most expensive piece of digital art and NFT art, but also the third most expensive work of a living artist in the world. Only the "Rabbit" sculpture by Jeff Koons for US$91 million and paintings by David Hockney for US$90.3 million are ahead of Beeple. At first, the auction house tried to insist that their commission be paid in traditional currency, but during the auction, Christie's resigned to the inevitable and agreed to payment in ETH — Ethereum. However, the volatility of cryptocurrencies, whose rates can rise several times a week or fall just as much, makes this decision quite risky for Christie’s. But no matter how much commission the auction house received in the end, the main prize lies elsewhere: Christie’s managed to attract the attention of a huge number of young and very wealthy buyers.
After a couple of days of speculations and erroneous assumptions about the name of the owner, it was found: Beeple's work was bought at Christie’s by the founder of the "crypto-exclusive fund" Metapurse, a Singaporean crypto-entrepreneur known under the pseudonym Metakovan (the real name — Vignesh Sundaresan). According to him, he switched to cryptocurrency long time ago and for several years he had no account in an ordinary bank, as well as his own car and a house, at the same time he was the founder and chief financier of the "crypto-exclusive fund" Metapurse, where, as far as it is known, the largest collection of NFT art in the world is kept.
In Metakovan’s oppinion, his new acquisition could be worth even a billion dollars. “When it comes to expensive NFTs, this one will be quite difficult to beat. And this is why: it represents 13 years of daily efforts. Techniques can be copied, experience can be surpassed, but the only thing that cannot be hacked is time. It is the pearl of the collection, the most valuable piece of art of this generation,” Metakovan commented on his purchase. By the way, this is not the first acquisition of token art by Beeple for him. Last January, he bought Everydays: The 2020 series of 20 Beeple’s works for a total of "only" US$2.2 million through the Nifty Gateway platform.
So, we have a precedent: a modern artist with the education of a graphic designer, who took part in five semi-marginal group exhibitions and does not have a single auction sale, shows the result of US$69.3 million at the very first public auction, having picked up from the starting price of $100. Without a section of Digital Art, the Artprice portal enters the artist's work into "photographs", but the image itself is not shown — which is strange, because formally, according to the laws of the crypto community, it should be in free access from the moment of purchase. However, Artprice lawyers say to their bosses: "We live in the physical world, let us wait." We have a legislative paradox: before the auction, when the work was in a single copy in the form of a code, its image was actively promoted, and from the moment of transition to the crypto state, they began to hide it. But who will be surprised by the paradoxes today?
More important and much more interesting is what the deal with Beeple's work has become for all interested parties, and how soon can we expect his record to fall? First, let us list all the beneficiaries:
• Beeple, Artist
KAWS sculptures flying across smartphone screens are temporarily pushed into a corner - the art market has received a new favorite. While journalists are lining up, and critics are trying to correlate not the most diverse work by Beeple with the history of art, his early works are "cleaned up" by digital collectors, and new ones promise to follow. For some reason, it seems to me that the third most expensive contemporary artist will have a better chance for a successful career development if he draws into his shell and continues to do what he can - as if not noticing the record sales. Moreover, large brands of clothing and accessories will now be interested in his design, for since 2020 they have resumed Art+Fashion collaboration to please the younger generation.
• Metakovan, Buyer
As soon as the crypto businessman transferred money for the purchase, he flew to Los Angeles, according to rumors, to meet with Elon Musk. If that is true, the two tech adventurers with great flair will definitely have what to talk about. Moreover, Musk is actively involved in promoting NFT: first, his finances and influence allow, and second, a lot of things can be tokenized in space. We should point out something else: NFT is becoming a social elevation tool, similar to the ultra-expensive physical art being purchased for the amounts exceeding $100 million, which open the doors to closed business communities through the covers of magazines. Do not be surprised when Metakovan attracts several new billions to his crypto fund: he has spent only $69 million for that.
• Christie's
We reasonably believe that the auction house with almost 300 years of history does not really believe in NFT: Christie’s has seen much in its life. It would be great if there is growth, they were the first to appear at the new market. In case of recession — the auction was just an intermediary, and there should be no questions. Another thing is more important: while working with NFT, Christie’s attracts completely new customers and collects their database. And then, depending on the situation, it will continue to sell them digital art or offer old-school art, wrapping it beautifully. And even though the auction house will be familiar with the majority of collectors only by network pseudonyms, the main thing is that the account number in the contract is shown correctly. And it does not really matter, whether it is a digital contract or a paper one.
• Digital art and NFT sales platforms
Users of "traditional" crypto platforms — SuperRare, Nifty Gateway, Foundation and others - have become more active after the most resounding success of the NFT outside the digital world. Thus, the revenue only of SuperRare from early February to mid-March, 2021 amounted to US$18.1 million (of which US$2.72 million made the platform's gross profit), and the global NFT sales for the same period exceeded the indicators of the entire 2020 by 45% (US$480 million in comparison to US$330 million). Numerous physical art sellers have either started or will soon begin developing their platforms for trading cryptoassets against this background. Though will the digital community accept them? They have their own rules for joining the fraternity, and only Twitter’s will not be enough to mingle with young millionaires.
Who was the loser as a result of the deal? It turns out that nobody on closer consideration. The traditional art market will not compete with digital sales trying to outbid them: its annual volume is now ten times that of cryptoassets. In addition, the "physical" art has one argument, which it still keeps in reserve — secondary sales, which the NFT market cannot yet benefit from to a full extent.
In the final part, we will talk about the further market fate of Beeple in 2021, the main event in which was the sale of the artist's physical object (also accompanied by NTF) last November at Christie's. Perhaps comparing these two sales may give us a clue to what the NFT art market will be like in 2022. We look forward to summing up the results, and ... Merry Christmas!