Non-Fungible Tokens – the Art Market’s Digital Disruptor

How Technology is Creating an Exciting New Landscape for Digital Artists and Art Lovers

Non-Fungible Tokens (NFTs) have recently been popping up more and more in the mainstream news. But what are these curiously named entities? And why are they becoming increasingly synonymous with the fast-paced world of digital artwork?

Let’s look closer at NFTs, understand what they are, then examine their implications for the art sector – one that at Hookson we’re proud to be immersed in.

Fungible. A Word of Worth

Now fungible might sound like the name of a character – an ogre, maybe, or a troll – from the latest Disney film. But the word just means freely tradeable, identical and/or exchangeable.

A real-life example of a fungible asset is a ten-pound note. If you loan a friend a tenner and she pays you it back via two fivers that’s fungibility in action. If she pays you back with just one fiver, well that’s a scam in action.

Gold. Oil. Boxes of cornflakes. These items possess fungibility because they hold the same properties and values of other items. So our two fivers, again, hold equal value to our one tenner.

The word’s been around for centuries, so it’s not even a fancy new one. But it’s one that’s only recently leapt from the sanctums of industries like finance and economics and out to the wider world.

OK, But What’s Non-Fungible all About?

If a thing is non-fungible it’s unique. You can’t exchange it with something else of its own kind. Diamonds, for example, are non-fungible because each stone displays unique properties – size, cut, colour – that determine value.

A famous example from the world of art would be the Mona Lisa. Sure, you can own a print or a postcard of that mysterious lady, but there will only ever be one original. That’s of course an easy concept to apply to such a famous physical asset.

But what about a piece of digital art: a work that the press of a key can reproduce? Well the response to that query is at the heart of how NFTs are shaking up the art world. Let’s explore further.

If a thing is non-fungible it’s unique. You can’t exchange it with something else of its own kind.

Non-Fungible Tokens: Making the Digital Tangible

NFTs are data units that certify the authenticity and uniqueness of a digital asset. One way to think of them is as a certificate of ownership.

Since NFTs’ entrance into the mainstream in 2017, these assets have typically included video clips, music, photographs and digital artworks. But applications are expanding as smart brands – as well as bands and switched-on celebrities – begin embracing the technology.

Movies Get in on the Act

In 2018, 20th Century Fox for example offered for sale limited-edition digital posters for its Marvel superhero film Deadpool 2. That’s a terrific example of how NFTs are already disrupting traditional marketing and promotion. Each poster’s unique code ensured buyers were in possession of a one-of-a-kind item.

Music Marketing Reinvents Itself

A couple of years later, pioneering Nashville group Kings of Leon sold a series of NFTs related to the  2020 album When You See Yourself.

Standard NFTs sold for $50 and included special-edition artwork. But six ‘golden ticket’ NFTs went further, entitling the holder to added-value perks like a lifetime’s supply of front-row concert tickets and VIP experiences.

In effect, these NFTs became a kind of new limited-edition release in themselves. And with a value now attached, they were sellable – just like a physical artwork.

Star Struck by ‘Lightning’

Elsewhere, actor, singer and artist Lindsay Lohan bagged more than $57,000 for her artwork entitled Lightning when offered up on Rarify, one of the major digital asset marketplaces.

Proof of ownership? In the world of NFTs this is stored and tracked on a blockchain, a digital version of a ledger, and this is fungible – it can be bought, sold and traded. Right now, Ethereum is the big noise in the blockchain technology that’s tokenising art. Its cryptocurreny Ether is second only to BitCoin in terms of market value.

The uniqueness NFTs gift to digital art is the key. It ensures that just like those Deadpool 2 posters, the artwork in question is also one-of-a-kind and demonstrably not interchangeable. Therefore: non-fungible.

From Origin to Ownership – The Four Steps to a Non-Fungible Tokens Artwork

But if Digital Artworks are a Snap to Reproduce, Can’t They Just be Copied?

Yes. But NFTs have changed the game.

As we know, it only takes seconds to make a copy of any given piece of digital art.

Where NFTs come in though is in assigning the one true, traceable and authenticated original of that piece of art to the holder of its corresponding NFT.

Recently, and away from art for a moment, NFTs have been existing alongside traditional collectable basketball cards courtesy of Dapper Labs’ Top Shots series.

Rather than a static shot of a player though, a clip of LeBron James – the 6ft 9” LA Lakers forward – completing a magnificent slam-dunk, sold for just over $200,000.

To reiterate, the buyer, 32-year-old entrepreneur Jessie Schwarz, holds neither a physical copy of the clip nor its publishing rights. But he does own its authenticated NFT. And in basketball circles that’s desirable in exactly the same way as a rare or special-edition traditional card would be.

Ensuring Authenticity

When we swap the basketball clip for a work of digital art, suddenly it’s clear that there’s value to the owner of the artwork and, crucially, to the artist who created it. With ownership publicly recorded on the blockchain, forgeries – so damaging to reputation and income – are impossible to create and compromise the market with. And that makes artists’ originals extremely attractive to collectors and speculators.

'Everydays: the First 5000 Days' The world's most celebrated NFT art sale. Artist: Mike Winkelmann (Beeple)

Still to be Convinced? Let’s Look at Some More Celebrated NFT Successes and Milestones Across the World of Art

Beeple: Christie’s Makes the Digital Leap

In 2021, Christie’s became the world’s first traditional auction house to sell an NFT-based artwork.

The collection of images – one created each day since 2007 – is titled Everydays: the First 5000 Days. The piece was sold for more than $69m, making the artist Beeple, in Christie’s own words, “among the top three most valuable living artists”.

To date, Beeple has sold more than 1,300 artworks translating to a combined value in excess of $140,000,000.

Kevin Abosch: Opportunities Opened

The same year, Irish artist Kevin Abosch, responding to Covid-cancelled in-person shows, launched 1111 – a series of 111 pieces all offered up on OpenSea as NFTs. Realising £2m profit, he became the platform’s most successful NFT artist and told The Guardian:

“Some people struggle with this idea because they want to know, what is it you actually own? But people of a younger generation don’t struggle with it. It’s a very old-world idea, wanting to hold something in your hand, as if the intangible or the immaterial doesn’t have value.”

Chris Torres: The Cat That Got The Green

One of the most cited NFT art sales is an interpretation of a popular animated gif that found fame on YouTube. The gif, titled Nyan Cat, featured the eponymous animal, its body composed of a Pop Tart, flying through space and trailed by a rainbow.

In 2021, original creator Chris Torres updated his 2011 sensation, offered it as an NFT – and sold the piece for $561,000.

FEWOCiOUS: Lots About Life

Christie’s, hot on the heels of its headline-making Beeple sale, has welcomed also the work of 18-year-old trans NFT artist FEWOCiOUS.

On offer were five lots – a mix of digital and physical. Poignantly, each one represented the years across which the artist discovered his gender identity. NFT-wise, it was largely video artwork that contributed to the 2021 online auction titled Hello, I’m Victor (FEWOCiOUS) and This Is My Life.

An established success prior to the Christie’s event, FEWOCiOUS – whose regular name is Victor Langlois – had already garnered $18m of NFT sales. He began creating art, aged just 13, to deflect from a conservative upbringing in which he felt compelled to hide his true self.

At Hookson we’re predicting a happy future in which the traditional ways of viewing, buying and selling art - via our auction-house clients - will co-exist with Non-Fungible Tokens and digital artwork.

But What Might Non-Fungible Tokens Mean for Traditional Auction Houses and Galleries?

All of the bank-busting examples of what is becoming known as cryptoart might feel a bit out-there, plain weird or even a little vulgar. But it’s worth looking at the benefits NFTs will bring to less-celebrated artists, and to those in the business of promoting and selling their works.

At Hookson we’re predicting a happy future in which the traditional ways of viewing, buying and selling art – via our auction-house clients – will co-exist with Non-Fungible Tokens and digital artwork.

Christie’s, with its early and groundbreaking acknowledgement of NFTs as legitimate art provides perhaps the best evidence for this assertion. It’s one backed up also by rival Sotheby’s‘ entry into the NFT market. That auction house will be handling the sale of the original source code created by World Wide Web pioneer Tim Berners-Lee: an artefact that really kicked off the modern internet.

The Art of Innovation

We know from experience that our art and auction-house clients welcome innovation. In fact, many were first out of the traps across areas like online catalogues and bidding, and in forging reach-expanding partnerships with specialist bidding platforms.

This foresight makes us suspect that as NFTs develops further, these enterprises will be glad to get on board.

Breaking Artistic Boundaries. Increasing Artistic Control

Like a lot of innovations in the art world, NFTs are breaking boundaries.

The big-ticket items, left-field pieces and crazy values will always make the headlines. But for collectors and art-lovers with less-deep pockets Non-Fungible Tokens are bringing emerging artists and their work to a wider and enthusiastic new audience. They’re increasing also the control that creators have over their works. These are all good things and well worth celebrating.

A Landscape of Opportunities

So, to sum up, for artists and creators, the digital landscape looks loaded with opportunities. As use of Non-Fungible Tokens gathers pace, this exciting new way to authenticate, sell and distribute beautiful art will become easier and better understood.

Across the art world, NFT is on the march. And at Hookson we’ll be watching with interest.