Debate: can NFTs revolutionise an elitist market?

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What exactly is an NFT?

Standing for Non-Fungible Token, an NFT is a unique certificate of ownership, built on blockchain technology. Rather than receiving a physical copy of what they’re buying, a purchaser would receive proofs of authenticity conferring their rights to certain digital content. This identification enables the art to be collected and traded as a rare and valuable asset.

For: NFTs are challenging a rigid industry

The traditionally conservative world of art auctioning has suddenly found itself the centre of an NFT craze. Just last month, Sotheby’s sold ‘The Bored Ape Yacht Club’, a collection of pop avatars, for $24 million, while Beeple’s ‘The First 5000 Days’ went for a whopping $69 million earlier this year at Christie’s. These jaw-dropping valuations have attracted critics, who claim NFTs merely represent yet another volatile financial asset for investors to play around with. In reality, collection for investment purposes is nothing new and expensive purchases at auction are very common.

Indeed, this is hardly the first time the art industry has faced questions about valuation. Contemporary artworks which appear to have been made with little effort have proved so controversial that the art market has even been accused of money laundering. Perhaps ironically, the high valuations placed on NFTs could even be perceived as a form of performative art in themselves. For example, Damien Hirst’s new project ‘The Currency’ enables buyers to participate in his exploration of art becoming currency and vice versa. In this sense, NFTs help us reimagine the way we interact with the medium.

NFTs have opened the art market to outsiders.

More importantly, growing NFT sales have helped the art industry and auction houses rebound from the impact of the pandemic by empowering artists. Firstly, the blockchain technology can track every transaction and assert the indisputable ownership and authenticity of the artist’s work, distinguishing it from replicas. Secondly, many NFT platforms allow producers to receive instant payments and royalties on subsequent sales without having to go through agencies, financially empowering the artist. Moreover, NFTs have opened the art market to outsiders by providing an accessible online platform for self-taught artists and new collectors, decentralising an elitist industry. In this respect, NFTs may well represent the opening of a new era of modern art – justifying their blossoming place in the global market.

Against: NFTs facilitate money laundering 

The ‘Bored Ape Yacht Club’ is a fun collection of pop avatars and very appealing from an artistic perspective. Yet a $24 million sale represents the dark side of the art world: the creation of arbitrary elitism as a mask to cover up money funnelling and tax evasion. The wealthy are notorious for spending exorbitant amounts on artwork from auction houses like Sotheby’s as a stratagem to write money off of the books and lower their taxable income. Now the art world has figured out how to move these sales online, tax-dodging has become even easier, because at least before you actually had to find a place to store what you bought.

The ‘Yacht Club’ avatars are just another mask for this system. These funky apes went for a ‘fair’ price (according to their website) at $290/ape. Certainly, artists deserve to be paid well for their hard work, and many are still underpaid, so the steep charge is fair enough. But when we look at the collection that just sold at Sotheby’s, it was 101 apes for $24.4 million, so the numbers simply don’t stack up.

A $24 million sale represents the dark side of the art world.

Now the ‘Yacht Club’ apes have become an investment commodity, so the price has risen to $149,000, at a minimum. The reason? Probably not the dope looking ape, free access to a graffiti board on their website or the associated merchandise. What really appeals is the fancy receipt that allows investors to liquify their assets. Indeed, with the resale rate getting higher, collectors can write more and more off of their tax records. This ‘Yacht Club’ then, is just an extension of a long-lasting game created by the elite, for the elite, designed so they keep more money and appear cultured. NFTs, then, are just the latest tool for collectors to trap artists in these financial follies.

Image: Tanya Pro via Unsplash

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