The art market is changing colour

Non-Fungible Tokens emerge as trusty authenticators

Good Morning! Our story today shows how blockchain technology is revolutionizing the business of art and collectibles by making it easy to trace provenance. Some artists and galleries are even looking to create digital derivatives of physical artworks. Also in today’s edition: the best of reads from the week. Happy weekend reading.

In early June this year, a Milanese collector paid $18,300 for artist Salvatore Garau’s work titled io sono or I am that’s literally thin air. It is nothingness marked out in a 5 x 5 unobstructed area with no heed paid to lighting or backdrop. Was it a sculpture or a painting? Who knows, for it only existed in the imagination of the artist and the viewer. The buyer took home instructions for installation and a certificate of authentication.

In Delhi, Samrat Kishor, a partner at Golden Next Ventures, has made the purchase of a lifetime. Just this year, he has bought Non-Fungible Tokens (NFTs) for digital paintings, music, and collectible characters online with Bitcoins and Ether that amount to a Tesla car’s worth, he told The Intersection.

The Milanese collector paid good money to own Garau’s certificate of authentication. Kishor paid for something similar – the digital equivalent of the creator’s signature. The value of both resides in their origins but collectors like Kishor are increasingly putting their faith in the digital world. They see a certain permanence in digital art.

Provenance is the bedrock on which the $50 billion global art market stands. While there might be a dividing line between fine art and pop art, the value of any work, sometimes even definition, of art is in its authenticity, which is usually validated by the artist’s signature. The astronomical sums collectors often shell out to own a famous painting is, in reality, the price they pay for the cachet that comes with owning the signed original. It is the artist’s hand-drawn scrawl that makes it worth the money.

So far, the market has relied on the eye and experience of experts and critics. Records could go missing or the genuineness of a work could be in question. NFTs, which are blockchain-based, tamper-proof digital certificates of authenticity, could change that, even redefining what art is in popular perception as people build their second lives in digital worlds.

The more than half a million dollars that a collector paid for the Nyan Cat meme in February 2021 is an acknowledgment of the technology’s influence on art and its value.

“NFTs is the beginning of another generation for art,” said Shovin Bhattacharjee, the first Indian contemporary artist to sell an NFT. The value of his works shot up after he started putting them up as tokens.

India’s largest cryptocurrency exchange, WazirX, launched an NFT platform in June. Based on creator and collector demand, the platform has been scaling step-by-step, introducing auctions and secondary sales, mirroring the traditional art world.

“The moment secondary markets open, you see the popularity of NFTs grow,” Nischal Shetty, founder and CEO of WazirX, told The Intersection. Currently, creators and collectors on the platform are largely crypto enthusiasts.

The intangibles

Art derives its value from the wealth of feelings it generates —happiness, joy, anger, despair— according to Bose Krishnamachari, artist, curator, and President of Kochi Biennale Foundation. The reality is slightly different.

“The world of art or the market by design is not developed by artists. It is made by collectors, galleries, art fairs, auctioneers,” noted Krishnamachari. The Kochi Biennale, for instance, doesn’t sell artworks but merely showcases artists and their works. Any art show or fair, from the market’s perspective, is an organised effort to build credibility and reputation of artists which, in turn, multiplies the value of their works.

French poet and philosopher Paul Valéry said that we must expect great innovations to transform the entire technique of the arts, thereby affecting artistic invention itself and perhaps even bringing about an amazing change in our very notion of art. That’s what we are witnessing. From intellectual property like book manuscripts, video game characters, and Twitter founder Jack Dorsey’s first tweet, anything flies as an NFT.

In the eyes of the beholder

Even the occasional story of an elephant putting brush to canvas or chimpanzee expressionism captures public fascination and headlines. But for the first time in human history, artificial intelligence (AI) can create art, questioning the very role of sentience in the artistic process.

In Masked Reality, Bengaluru-based Harshit Agrawal used AI to transform faces into real-time masks to build on the idea of identity and identity transformation. In Strange Genders, Agrawal collaborated with art-duo 64/1 and invited people to draw male and female stick figures to showcase a spectrum of gender. Agrawal, who says he is India’s first AI artist, insists that AI is just an instrument.

“Art requires [human] intention. There is no art without the audience,” said Agrawal.

It is the audience and its nature that helps build cultural cachet for art and the artist. Everything could be art, says Kochi Biennale’s Krishnamachari. What value do audiences, collectors in particular, derive from art, especially extreme abstractions such as Garau’s io sono or Comedian, Italian artist Maurizio Cattelan’s 2019 work which is a banana fixed to a wall with duct tape?

“If you were to break it down, art is something that is supposed to either stir a sea of emotions, please you, rile you, or challenge you to a corner. It can serve ambiguity in some manner,” Arvind Vijaymohan, CEO of Artery India, a domestic art market intelligence and advisory firm, says.

Market decides

In 2018, Banksy, a once little-known London street artist, sold a painting titled Girl With Balloon for $1.4 million. As soon the gavel on the auction dropped, the frame began to eat itself, self-destructing completely in minutes. Banksy also posted about it on Instagram with a quote from Picasso, “The urge to destroy is also a creative urge.”

It is, however, difficult for something that doesn’t exist such as Garau’s io sono to appreciate in value. But NFTs could change that.  

In digital worlds, the ways of appreciating, experiencing, and owning art would evolve and that change would likely be driven by the market and technology rather than critics and curators. 

Some imagine digital galleries in metaverses. WazirX’s Shetty says one big collector on his platform wants to create a digital art gallery within games. He pictures viewer’s avatars strolling through the gallery for a fee. Even legacy institutions are changing their approach. 

Online art gallery recently sold the works of Bengali master Lalu Prasad Shaw with a digital token. Established artists are also exploring the option of creating NFTs for their work. Some are considering having a digital version of a physical artwork and sell the token separately to eke out the maximum value, says Shetty. It could boost their revenues by 30-40% although he does not think the hybrid model would scale as fast as the digital-only market.

That, however, raises the possibility of the digital version potentially commanding a very different, likely higher, price than the physical one.

More tangibly, NFTs help ensure secondary royalties. In the legacy set-up, artists are rarely able to monetize repeat sales of their work. Galleries, collectors, and institutions end up pocketing most of the money. Tokens etch secondary sale royalties into the initial blockchain contract itself. Agrawal, who puts up most of his work as NFTs on online platforms, gets 10% of the sales without any paperwork or commercial discussions.

With the pandemic shutting down galleries and museums, digital sales are flourishing. Artists, galleries, and museums alike took to virtual exhibitions to sell artwork. As per a report by Art Basel and UBS, online sales of art and antiques doubled in value in 2020, hitting a record high of $12.4 billion in 2020. That’s a quarter of the market value.

“It’s a matter of time before this becomes the norm,’’ says Artery India’s Vijaymohan. “The route to market is clearly going to be digital.”



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