French painter Henri Matisse famously said, “Creativity takes courage.” But how far should artists take creativity? Crypto art is the latest frontier to send enormous ripples across the art world, with some digital artworks being auctioned for hundreds of thousands to millions of dollars.
Prominent examples include one artwork by digital artist Beeple that sold at Christie’s for $69.3 million (40,000 ETH), and the source code for the World Wide Web by Sir Tim Berners-Lee that auctioned for $5.4 million (2,572 ETH). With sales figures like that, it’s really no surprise that the total The market capitalization (or market cap) of a cryptocurrency is a measurement of its market value. In other words, it... of crypto art surpassed $2 billion in 2021, according to data from NonFungible.com.
The emerging market for crypto art has naturally generated substantial interest in the medium. But is it another passing blockchain fad, or is crypto art the future of the industry? We take a look at what exactly crypto art is, how it differs from traditional art, how the technology works — and some notable examples.
What Is Crypto Art?
Crypto art is digital art that uses blockchain technology to verify ownership. Just as an original Matisse can have its authenticity verified, crypto art uses a non-fungible token (NFT) for verification. The work’s uniqueness is what makes it valuable, because unlike ordinary digital art that can be easily replicated, crypto art is one-of-a-kind.
The idea that uniqueness is what makes digital art valuable may sound absurd, but think of it this way: anyone can buy a perfect print of the Mona Lisa that is visually indistinguishable from the real one. But only one museum in the world owns the original —and that physical piece of art is considered priceless.
Crypto art represents a new artistic landscape that uses the blockchain to confer uniqueness and digital scarcity. Previously, digital artwork and content could easily be replicated an infinite number of times, making it impossible to build the perception of scarcity that traditional art enjoys.
This concept has created a whole new market almost overnight. Content creators can now specify what version of their work is the “real” one. They also have the freedom to create 100, or 1,000, or however many limited edition copies of their work, without having to worry about forgeries.
Decentralized auction houses have sprung up to facilitate the trade of crypto art. Jason Rosenstein, the co-founder of Portion, told Decentraland that the goal of his auction house is to cater to both established and new artists. Anyone is free to create an NFT on Portion, and they receive 100% of the proceeds.
Even museums and traditional auction houses are dipping their toes into the crypto art world. For example, the famous auction house Christie’s spearheaded the landmark Beeple sale that raked in more than $69 million. The Uffizi Gallery in Italy has minted and sold a Michelangelo NFT for $170,000. The museum is working to mint and sell more masterworks from its collection.
In June 2021, iconic London auction house Sotheby’s announced an online auction called “Natively Digital: A Curated NFT Sale” which featured works by 27 digital artists. The auction’s goal was to cultivate the sale of crypto art, with appeal to both crypto enthusiasts and traditional art collectors. Bidding started at $100, and payments could be made in fiat money or cryptocurrency.
The enthusiasm for crypto art shows no signs of slowing down. Both old and new artworks and collectibles are continuing to trade on several platforms, with billions of dollars worth of collective trading volume.
Differences Between Crypto Art and Traditional Art
Art has evolved by leaps and bounds over the past century. The traditional art world has existed since antiquity and includes painting, sculpture, music, theater, drawing, architecture and cinema. On the other hand, digital art first came onto the scene in the 1960s. It falls under the category of “new media art,” which includes computer art, multimedia art and digital photography.
The two art worlds share many similarities, but they also have some fundamental differences. Digital art tends to have fewer “mistakes” because the artist can simply undo any errors. Traditional artists don’t have that luxury. Errors are permanent and can’t be undone, which is part of the appeal.
Reproduction is also a key facet that sets traditional and digital art apart. When it comes to the digital space, it’s incredibly easy to press CTRL+C and make infinite copies. In contrast, traditional artworks are harder — if not impossible — to completely reproduce. This impacts the rarity of a piece, which in turn impacts its market price.
The value of digital art varies wildly, with prices ranging from hundreds dollars to millions. There are many factors which affect the value of an artwork, including style, size, color palette and exhibition location. The name of the artist can also influence the general assessment of an artwork, as well as how much collectors are willing to pay for it.
People ascribe aesthetic and emotional value to material items such as fine art. They’re more than happy to pay top dollar for something they perceive as rare. However, digital media has historically not enjoyed that privilege because of its ease of reproduction.
Now, all that is changing, thanks to blockchain and crypto technology. It is now much easier to designate an official copy of digital artwork. Crypto artworks are designed to be completely unique, making them the perfect medium for those who create art. Whether they’re artists, influencers or musicians, artists can make money selling digital goods that would otherwise be freely copied, shared or stolen.
If the artist only makes one copy of their work, then that’s the only one which is authentic. People can download multiple editions off the internet for their own personal use, but those can easily be verified as fakes. It’s like buying a print of the Mona Lisa from a museum souvenir shop. No one would believe it’s the real deal.
The sale of various crypto artworks in 2021 represented a new high point for ownership rights in the sphere of digital art. The nascent market reflects a new way for tech-savvy and digitally native content creators to eliminate middlemen, and to connect financially with their audiences.
The eye-popping sale prices of some crypto artworks have naturally attracted confusion and derision. There’s plenty of cynicism, but the truth is that buying digital collectibles is no different from buying physical ones. No one collects limited-edition sneakers, designer clothing or Pokémon cards for the value of their materials. Rather, they typically buy them for aesthetics, craftsmanship and rarity.
For buyers, the most obvious benefit of crypto art is that they have ownership rights baked into the product. Only one person — the real buyer — will have access to a unique blockchain entry that proves true, verified ownership.
For digital asset investors, NFTs are a new speculative asset they can buy and hold with the hope that its value will one day increase so they can sell it for a tidy profit. There’s a big market for trading NFTs, which has significantly contributed to the rising market value of crypto art.
For artists and content creators, crypto art provides a new way to profit from the sale of their work. By using the blockchain to tokenize their artwork, artists even have the option to receive a percentage of the resale price every time their artwork is sold — in perpetuity. This means that even if the artwork is resold many years later, the original artist will still receive proceeds. They can still get some benefit from their work, especially if it becomes more popular and valuable in the future.
All that being said, it’s unlikely that crypto art can or will completely replace traditional art. Interest in collecting rare paintings and sculptures is still as great as ever, despite the fact that it’s now simple to make digital reproductions of any classic artwork. The two mediums are different enough that they’re guaranteed to find a way to coexist.
How Does It Work?
What Are Non-Fungible Tokens (NFTs)?
NFT stands for “non-fungible token”, which is essentially a unique ID number assigned to a digital file that’s immutably recorded on the blockchain. All transactions involving an NFT are validated by the blockchain, which makes it easy to keep track of ownership and authenticate transfers between buyers and sellers.
Other NFT Use Cases
The technology behind crypto art can be used to tokenize pretty much anything — from music, drawings, certificates and tweets to articles like this one. Since blockchain data is distributed across a network of computers, there is no single central location where a digital file can be tampered with or altered.
Crypto Art Marketplaces
There are hundreds of marketplaces for the growing cryptoart community, encompassing everything from digital art and trading cards to virtual real estate and games. Investments in NFTs may not rival currency trading, but they’re still significant, which is great news for NFT creators and artists.
NFTs use the ERC721 token standard, which is a tamperproof smart contract built on Ethereum that guarantees the authenticity of a digital file. Many crypto platforms enable artists and content creators — even those with minimal technical ability — to easily mint crypto art using NFTs. All you have to do is open an account, upload your work and add it to the blockchain.
Deciding which platform works best for you largely comes down to your needs. Consider factors like security, fees and commissions, ease of use, copyright protection and royalties. Below are some examples of popular crypto art marketplaces.
OpenSea is a peer-to-peer (P2P) NFT marketplace that facilitates the creation, sale and collection of crypto art. The platform offers a wide range of products in more than 200 categories, including digital art, digital collectibles, virtual worlds, decentralized domain names, and more.
Anyone can trade NFTs on the market, regardless of location. The platform takes a 2.5% cut from every purchase. Payments can be made using more than 200 cryptocurrencies, including Ether (ETH), Bitcoin (BTC), USD Coin (USDC), Decentraland (MANA), Sandbox (SAND), and others.
Art Blocks is a content creation platform built on Ethereum. Crypto artists can use the platform to create images, interactive content and 3D models. The platform also enables a creator to mint their work into an NFT and add it to the blockchain.
Any work that’s successfully minted on Art Blocks is instantly represented on the Ethereum network as an NFT token. The token can then be listed on any NFT marketplace, including OpenSea.
Art Blocks has had a big impact on the NFT market since its launch in November 2020. Its trading volume for August 2021 alone surpassed $586 million, according to data from CryptoSlam!
Creators who put up their work for auction receive 85% of the final sale price. If their work is resold on Foundation or other NFT marketplaces like OpenSea or Art Blocks, then they’re entitled to a 10% royalty — forever. Creators on the platform have earned more than $142 million since its launch in February 2021.
A Nyan Cat NFT sold for 300 ETH on February 19, 2021. Image source: Foundation.app
Nyan Cat is an 8-bit animation of a cat with a Pop-Tart body who leaves a rainbow trail as he flies across a field of stars accompanied by a catchy synthesized tune. The animation was created by Chris Torres in 2011. As with most popular memes, it’s not completely clear why it went viral so quickly. However, there were likely a combination of many factors: the nostalgia of 8-bit animations, the cuteness of cats, the pop-ularity of Pop-Tarts — and the catchy tune (“Nyanyanyanyanyan!”).
Meme magic rarely makes sense to us, but it’s powerful enough that ten years after its creation a crypto rendition of Nyan Cat was sold by Torres for the crypto equivalent of $590,000 (300 ETH).
The Homer Pepe NFT sold at auction for 205 ETH on March 2, 2021. Image source: Instagram.com
Homer Pepe is a card that displays a morph between Pepe the Frog and Homer Simpson. Pepe the Frog is a green humanoid cartoon frog from the 2000s that was popularized on 4chan, Myspace and Gaia Online. Over the next decade, it grew to become one of the most recognizable memes on the internet.
Meme culture is popular among crypto enthusiasts, so it was unsurprising that a live auction for crypto art in 2018 included many so-called “Rare Pepes.” Peter Kell bought the Homer Pepe NFT for $38,500, which was the highest amount paid for crypto art at the time. Less than three years later, Kell was able to sell it for the equivalent of $320,000 (205 ETH).
More than one million CryptoKitties had been bred by 2018. Image source: CryptoKitties
CryptoKitties is the earliest example of the demand for crypto art in action. It’s website was launched as a game in which anyone can breed and adopt unique digital cats in a variety of shapes and colors. Each cat is an NFT that’s validated on the Ethereum blockchain and carries a unique sequence of numbers that function as its DNA. Breeding two cats passes on different attributes from their DNA to the offspring.
The novelty of the cats made them an instant hit. CryptoKitties became so popular that it caused massive congestion on the Ethereum network in 2017. By 2018, over 1 million cats had been bred. One of those kitties sold for $140,000 at the 2018 Ethereal Summit’s Codex + Rare Ethereal Art Auction. The most expensive one sold to date is CryptoKitty Dragon, which was auctioned for $172,000, or 600 ETH, in 2018.
Image source: Beeple-collect.com
Beeple is the professional name of American digital artist Michael Joseph Winkelmann, who’s famous for creating art that makes social and political commentary. He made headlines in March 2021 after his work “Everydays: the First 5000 Days” fetched the crypto equivalent of $69.3 million at Christie’s. The work is a collection of 21,069 x 21,069 pixels that make up a collage of digital images. It was the first crypto artwork to be auctioned off by a major auction house.
Bored Ape #8585 sold for $2.7 million in October 2021. Image source: BoredApeYachtClub.com
Bored Ape is a cartoon primate designed by the Bored Ape Yacht Club. The platform was launched in April 2021 to capitalize on the NFT craze. The founders offered 10,000 iterations of the ape for sale as NFTs. Each one cost 0.08 ETH. The apes quickly sold out and now trade at significant markups.
In August 2021, Sotheby’s announced that it was auctioning a collection of 101 apes. By mid-September, the entire lot had sold for a total of $24.4 million. In October 2021, Bored Ape #8585 was sold for $2.7 million on OpenSea, making it the most expensive NFT from the Yacht Club collection.
The Biggest Issue with Crypto Art
Like many projects involving blockchain technology, crypto art has received its fair share of criticism. The biggest one is that creating crypto art is incredibly energy inefficient, since validating transactions requires a lot of power.
NFTs are reportedly responsible for millions of tons in carbon dioxide emissions. The problem is so serious that ArtStation canceled plans to launch a marketplace for NFTs within hours of announcing it, due to social media backlash.
The good news is that the problem is well-known, and developers are actively working on changing the validation model to reduce the amount of energy required for record-keeping.
The Bottom Line
Crypto art may seem surreal and almost absurdly futuristic, but it’s here to stay. It’s an innovative medium for crypto artists to maintain scarcity and bring their work straight to their audiences. Art is a constantly evolving industry, and crypto art is without a doubt the next step forward.
Now that you’ve read about crypto art, find out about how you can make your own NFTs.