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What NFTs Mean for Art

A Banksy artwork was recently purchased for $95,000 at auction, only to be burned during a Twitter live broadcast. This was part of blockchain company Injective Protocol’s plan to turn the work into a virtual asset referred to as a non-fungible token (NFT.) They describe themselves as, “On a mission to bridge the world of physical art with NFTs.”

This is the first time where a physical artwork has been transformed into a unique digital asset for sale.

Banksy and Art Auctions

The artwork was an original print by anonymous street artist Banksy. It depicted an art auction. Patrons in the image were bidding on a canvas that reads, “I CAN’T BELIEVE YOU MORONS ACTUALLY BUY THIS SHIT” The image was entirely in black and white, except for the amount of money on the auctioneer’s podium.

This print –which is titled “Morons (White) and one of an edition of 500– is not the first time that Banksy has mocked the commercialization of art and the fine art world in his work.

In 2013, the street artist set up a stall in New York City’s Central Park amongst dozens of other artists selling their work to tourists. Banksy sold only two pieces, at $60 each, which would seem to be overpriced for the location. At auction they would be worth over $70,000 each.

Gareth Williams, head of contemporary art at Bonham's, stated: "The fact that his paintings were original and were being offered at a tiny fraction of their true retail value, raises real questions about the perception of worth and the nature of art as commodity within the marketplace – something that the artist must be acutely aware of."

Banksy’s most notorious auction stunt is undoubtedly the $1.4 million painting that had a shredder built into the frame and destroyed itself instantly when it was sold. Ironically, it was this anti-art sale statement that attracted Injected Protocol to use Banksy’s work.

"We view this burning event as an expression of art itself," Injective Protocol executive Mirza Uddin said, "We specifically chose a Banksy piece since he has previously shredded one of his own artworks at an auction."

What NFTs Mean for Art

A non-fungible token is a virtual item that is backed by blockchain to assure that the asset is unique. An NFT can be linked to photos, videos, and digital artwork. There may be infinite copies of digital files, but an NFT cannot be duplicated. This can allow digital artists the freedom to sell their original art the way traditional artists do – and some already are. Digital artist Beeple’s digital work sold for $6.6 million at auction at Christie’s.

During the video of the burning of Banksy’s ‘Morons,’ one of the Twitter streamers explained, “If you were to have the NFT and the physical piece, the value would be primarily in the physical piece. By removing the physical piece from existence and only having the NFT, we can ensure that the NFT, due to the smart contract ability of the blockchain, will ensure that no one can alter the piece and it is the true piece that exists in the world. By doing this, the value of the physical piece will then be moved onto the NFT.”

Injective Protocol paid $95,000 for the print and sold it for $382,000. The initial coverage of the sale was doubtful that the print would retain its value when it became an NFT. Even Mirza himself replied to requests for estimates on the value of the Banksy NFT with simply: "I have no idea."

“It’s clear that a market for NFTs exists – Jack Dorsey is currently on track to sell the first tweet as an NFT for $2,500,000. In recent weeks interest in these assets has skyrocketed, increasing public interest in cryptocurrency and causing a boom in NFT trading.

Despite the possible benefits, not all digital artists are on board for NFTs. French artist Joanie Lemercier who is known for creating light sculptures noted that the sale of a single piece of crypto art consumed as much energy as his entire studio used in two years.

“Once the hype slows down, the real value of NFTs will emerge or they'll cool off, said Drew Olanoff, a writer for TechCrunch, “For now, he cautioned potential buyers to avoid getting swept up in the excitement. "These are asset classes, and even if they're new, financial restraint can and should still apply," he said.

Sources: The Guardian, The Smithsonian, CBS, ARTnews, CNBC, Wired, The Art Newspaper