From masterpieces and memes to virtual watches and even racehorses, the NFT craze continues.
Adam Holter, an Emeryville tech attorney, was already a traditional art collector before he started buying NFTs. He acquired prints over the years and had just started adding original pieces to his walls when friends suggested he check out crypto art. “I’m not going to lie, I was initially drawn to them for money purposes,” Holter says. “My buddies who were into them before me told me, ‘Hey, this is an opportunity to make some money.’”
But as Holter started collecting from artists such as the Italian DotPigeon (one of whose NFTs recently sold for $33,000, according to the website cryptoart.io) and Brooklyn-based thr33som3s, Holter grew enamored of the medium. “I’ve found a lot of great artists who are on NFTs,” he says, “and a lot of art that I would consider natively digital that can’t really be conveyed in the traditional sense.”
Holter is among the growing number of collectors and techies rushing to embrace NFTs, or nonfungible tokens. According to the market tracker DappRadar, NFT sales jumped from $1.2 billion in the first quarter of 2021 to $11.6 billion in the fourth. An NFT is not the artwork itself; instead, it is a digital certificate of ownership, recorded on a cryptographic blockchain, to which a digital file — such as a jpeg, video or song — or even a physical piece of art can be attached.
Digital art has been around for decades, from the pioneering work of British artist Harold Cohen in the 1980s to the more recent iPad art of David Hockney. But it was only in March 2021, when the Charleston-based graphic designer Beeple (aka Mike Winkelmann) sold an NFT at Christie’s for $69 million that the market exploded. The pandemic spurred interest, too. “Everybody was sitting at home on their computers for 18 months,” says Barry Threw, executive director of the San Francisco art and technology nonprofit Gray Area, “and at this time, a market appeared where creators could sell digital works online and make a fairly substantial living off it.”
NFTs have made such a splash in the art world over the past year that Art Basel Miami Beach featured them prominently in 2021, and the fourth annual NFT.NYC conference takes place next month. Because so much of the NFT world is anonymous, decentralized and online, it’s harder to say what’s happening in the Bay Area, where Big Tech money has historically had a mixed record on supporting the arts. But Silicon Valley provides a lot of the money and infrastructure that make NFTs possible. The U.S.’s largest cryptocurrency exchange, Coinbase, was founded in San Francisco. Venture capital firms Andreessen Horowitz and Blockchain Capital, huge backers of NFTs, are based here. Katie Haun, a former partner at Andreessen Horowitz, recently left the firm to create her own $1.5 billion investment fund targeting crypto startups and digital tokens. Twitter and Discord, the social media platforms favored by NFT artists and collectors, are headquartered in San Francisco. And the Bay Area’s Dylan Field, CEO of the software company Figma, was owner of what’s been called “the digital Mona Lisa” — the NFT “CryptoPunk #7804” — until he sold it for $7.5 million last year.
The NFT world is still nascent and rapidly evolving, but one of its most attractive qualities is that it allows artists to make a sustainable living by participating in the secondary market. Traditionally, artists have only made money when they initially sell a work. But when artists sell NFTs through a blockchain, they include a royalty (often around 10 percent) that they’ll receive if the art is resold. “It starts to change the economic structure, so that artists can actually talk about retaining equity of their work and not just have it gone to the world when they sell it,” says Sarah Wendell Sherrill, cofounder of San Francisco’s Lobus, an equity management platform for art with $7 billion in assets. A Beeple NFT that sold for $66,000 in October 2020, for example, resold for $6.6 million four months later — and the artist got a cut.
“It starts to change the economic structure, so that artists can actually talk about retaining equity of their work and not just have it gone to the world when they sell it.” — Sarah Wendell Sherrill
That was part of the appeal for Agnieszka Pilat, a San Francisco– and New York–based painter who explores the intersection between art and technology, when she did her first NFT drop in February 2021. She was intrigued by the fact that artists could now reach thousands or even millions on Twitter and Discord, or through digital galleries like Nifty Gateway, Art Blocks and OpenSea. “What I learned is that unless you advertise a lot and have buyers lined up,” says Pilat, “nothing will happen.” She is approaching her second drop, in June, more thoughtfully, carefully planning her marketing strategy beforehand.
NFTs have stirred a heated debate within the art community because Ethereum, the blockchain on which most NFTs are sold, uses huge amounts of energy, raising climate change concerns. The reason for this is that Ethereum, like most major cryptocurrencies, uses a system called “proof of work,” which acts as digital security. To keep financial records secure, the system forces people to solve complex puzzles, using energy-hungry machines. There’s a fee associated with conducting transactions on Ethereum, called — appropriately — “gas.” According to Digiconomist, a website that exposes the unintended consequences of digital trends, the annual carbon footprint of Ethereum is comparable to that of Finland.
That’s why Zai Divecha, a San Francisco paper sculpture artist, chose to do her first drop on Hic et Nunc (which has since morphed into teia.art), an energy-efficient platform on the Tezos blockchain. Instead of using a “proof of work” model, Hic et Nunc used a “proof of stake” model, which gets rid of the need for computers to solve complex puzzles, thus reducing emissions. (Ethereum is planning to move in that direction, but as the Gazette went to press, it had not yet.)
Divecha did the release — which featured stop-motion videos of her all-white paper sculptures, crumpling and uncrumpling in a mesmerizing way — with a group of artists led by a pair of French climate activists, artist Joanie Lemercier and curator Juliette Bibasse.
While Divecha felt good about dropping art in a climate-conscious way, she also bumped up against the anonymity of the blockchain. Two of the pieces she sold (for 430 and 175 Tez, or $2,328 and $947) included a physical piece of art and were bought by an anonymous collector. But the collector never identified themselves, so Divecha couldn’t send the art. She couldn’t even find the buyer’s Twitter handle. “I had no idea who they are,” she says, “and they hadn’t stepped up to claim this artwork.” After 11 months of trying to find the buyer, she finally tracked him down and plans to ship the art to him overseas.
Divecha is not the only one who has experienced this, which is slightly weird because one of the things collectors love most about NFTs is the connection and community they create. Andrew Maury, a San Mateo blockchain data analytics consultant who goes by Rantum online, found this to be true. A sports fan, he hadn’t collected much art before he got into buying the NBA’s Top Shot NFTs in the summer of 2020. He soon started exploring crypto art and acquired work by the likes of Coldie (Ryan Colditz), who lives in Auburn, and British artist XCOPY, one of whose NFTs recently sold for $4.1 million, according to cryptoart.io.
Maury got so into the art that he created a 3D metaverse gallery people can visit on his website, rantum.xyz. He also recently set up a display in his home, so friends can see his collection. He regularly connects with artists and fellow collectors online — and whenever possible, in person. Holter has done the same; while attending Art Basel Miami Beach and NFT.NYC, he stayed in houses that thr33som3s rented for his collectors.
For Wendell Sherrill, this is what the art world has been waiting for. “What is happening, and what has always needed to happen for this next generation to give a s— about art, is that they want to be connected to the creator,” she says. “They want that community. They want that engagement. A lot of younger collectors discover artists on Instagram, and that’s how they learn who they want to collect. NFTs have 10 times that.”
OMG the NHG NFT
The Gazette has minted our very own digital drop! Mainly because we, too, wanted to know what exactly NFTs were and how we could get involved. Here’s how we did it: Step 1: Create an artistic concept. We liked the idea of developing a character, and what better than the very S.F. smug seals — or sea lions, to be exact — that hang around Fisherman’s Wharf? Artist Olivia Wise came up with four ideas for our character, each with an animated element, since NFTs are able to contain motion and sound. Scan the QR code to the right to see them in action. Step 2: Decide where to try to sell your digital asset. We’ve been hearing a lot about green blockchains, so we are giving that a go and dropping on objkt.com. Other green options are versum. xyz and teia.art. Explore them and see what interface you like the most. Step 3: Get crypto. But how? Set up a wallet with the cryptocurrency accepted on your NFT platform of choice (objkt takes Tez, and Zai Divecha gifted us 2 Tez to get us started — in line with a new tradition of paying it forward to a fellow artist). With an account, a wallet and a browser extension to link the wallet to our NFT account, we were set. If we’ve lost you, don’t worry, the platforms will walk you through the process. (See the NFT)
— Matthew Petty