Cryptocurrency & the Art Market
Major players in the primary and secondary market
Despite their existence since 2014, after Beeple’s $69 million dollar sale in February 2021, NFTs became a permissible force in the contemporary art market, compelling galleries and auction houses to seriously consider allocating time and resources to this new and exciting, yet volatile, economy. Since the boom of NFTs and ETH earlier this year, most people are asking themselves if NFTs are a sustainable way to buy and sell art or if they are part of yet another brief, hype-based trend? This sense of fleeting “virality” has kept many old guard art world figures apprehensive from diving into the NFT market. The record sales of NFTs derived from celebrity or meme culture, sales from Nyan Cat to rapper Jay-Z to Rick and Morty creator Justin Roiland, can be seen as further proof for critics that the NFT craze is just that, a temporary symptom of our celebrity obsessed culture and thus not a reliable avenue for art dealing. With critics comparing the digitalization of art with the digitalization of music and the introduction of streaming platforms like Spotify, many seasoned dealers and collectors are worried NFTs will disrupt the art market. For the galleries and institutions that have invested attention to this emerging market, will it pay off?
Regardless of one’s opinion of NFTs as a game changer in the art market, the effects of this boom has seen individuals and institutions from two seemingly disparate industries, art and technology, collaborating on both the production and sale of NFTs, creating a new digital space with which to experience digital artwork. Now, three months after Beeple’s momentous sale, we can better understand how galleries and auction houses are planning to incorporate NFTs into their own markets.
Beeple’s swift transition from selling $100 prints to selling digital art for $69 million, seemingly overnight, demonstrated the success of collaborative efforts between digital artists and auction houses. In the wake of Beeple’s sale in partnership with Christie’s, many auction houses and galleries began experimenting with collaborations intended to test the waters of cryptocurrency and NFTs in the art market. Christie’s gamble and ultimate success on selling Beeple’s work at auction not only opened the doors for a variety of other collaborations between digital artists and commercial galleries, but it also allowed non-art world crypto traders and investors to enter into a market which they previously had limited to no access to. Marking a record price for the sale of an NFT, and a record price for an artwork bought with cryptocurrency, Beeple’s sale signaled the opportunity to purchase digital artworks as NFTs and to purchase artworks, digital or physical, with cryptocurrency. While the concept of purchasing an NFT and the concept of purchasing art with cryptocurrency are entirely different, the sale of Everydays: The First 5,000 Days (2007–2021) allowed for both concepts to be introduced and popularized not only in the art market, but the wider global market as well.
A similar test run was conducted during Sotheby’s collaborative sale with popular digital artist Pak in partnership with NFT marketplace Nifty Gateway. Rather than focus on a specific piece of artwork, The Fungible Collection auction featured Open Editions, which offered an NFT with the image of a single cube. Buyers were welcome to purchase as many NFTs as they would like just so long as they were distributed in quantities of Cubes (ie. A Cube, Five Cubes, Fifty Cubes, Hundred Cubes, Five Hundred Cubes, and so on). The sale of Open Editions, which were offered each day of the three day auction from 1:00 to 1:15 pm EST, resulted in the sale of 23,598 cubes for an approximate sum of $13.9 million. The sales of “The Switch” and “The Pixel”, both an edition of one, sold for $1,444,444 and $1,355,555 respectively, on Nifty Gateway. In total, the sale earned $16.8 million, which, although far less than Beeple’s sale of a single artwork at Christie’s, allowed the auction house to establish relationships with NFT and crypto collectors new to the art market.
From June 3 to June 10, Sotheby’s held Natively Digital: A Curated NFT Sale. The auction house’s efforts to develop relationships with artists, sellers, and buyers interested in NFTs and cryptocurrency during the Pak sale seemed to have paid off. The multi-venue, global sale occurred in partnership with Samsung, offering buyers an in-person experience while considering the digital artworks. Natively Digital was curated by Robert Alice, the brainchild of artist Benjamin Gentilli who began the project in 2018 to bridge the gap between blockchain technology and the visual art community. Presenting a wide range of work, hammer prices ranged from $8,190 (with Buyer’s Premium), with the sale of Ikar Cavalcante’s Perennial Links (2021), to over $ 11,754,000 (with BP), with the sale of Larva Labs’ Cryptopunk 7523 (2017), one of only nine alien punks in existence. For Sotheby’s Pak sale, a more precautionary introduction into the NFT market provided an opportunity to cultivate relationships with crypto collectors and digital artists.
When Christie’s experimented with the sale of digital avatars in early May, Christie’s auctioned off nine CryptoPunks in a single lot for $16,962,500 (with Buyer’s Premium) during their 21st Century sale. Though the sale of their second NFT was far from fruitless, surpassing its estimate of $5 to 7 million, some critics speculated that the sale would have benefitted if each CryptoPunk was sold separately. Proven further by Sotheby’s sale last month, Larva Labs’ aliens are the rarest CryptoPunks, the most desirable, and therefore have some of the highest hammer prices for NFTs.
Massive auction houses are not the only art institutions with resources to invest in crypto. Making a name for himself in the realm of tech-related art ventures, Marc Glimcher has not only developed new businesses in this nascent marketplace (like Superblue) but also has taken his gallery, Pace, to the forefront of the NFT art market. Pace’s announcement in April 2021 that they would be collaborating with contemporary artist Urs Fischer to create an NFT was controversial not only because the artist is technically still represented by Pace’s competitor Gagosian, but because it marked the first time a major commercial gallery would accept cryptocurrency as payment for an NFT.
The sale, Fischer’s first-ever involving NFTs, showcased CHAOS, 501 original works in the form of unique digital sculptures. Each work consists of an animation showing various, mundane objects fused together. CHAOS #1 Human, depicting a lighter and egg in collision, sold for $97,000 on Fair Warning, an app founded last year by former Christie’s specialist Loic Gouzer (source: artnet). The rest of CHAOS, sold by Pace and MakersPlace, have achieved prices up to $60,000. Though Fischer’s sale marked the initiation of NFTs into the mainstream commercial art market, it still pales in comparison to the priciest NFTs sold, most of which have sold in the last year. The slew of NFT sales show no sign of stopping. On July 21st, ahead of their platform launch this fall, Pace released two new NFTs by Fischer, CHAOS #20 and CHAOS #25, and are offered at $50,000 each.
As Pace builds hype for its NFT marketplace, due to launch this September, the gallery recently announced it will accept cryptocurrency for any purchase, digital or physical. As more galleries and auction houses accept cryptocurrency, access to buying and selling art will continue to widen. The newfound popularity of NFTs has allowed non-art world collectors to enter the market, diversifying not only their collections but ownership throughout the global art market.
Marc Glimcher and Pace are not the only, nor the first, art dealers to dabble in NFTs. Working with NY based gallery Petzel, Simon Denny has curated exhibitions dealing with cryptocurrency since 2016. Coincidentally, “Mine” opened a week after Beeple’s Everydays sale, and offered a critique of Ethereum and its environmental impacts. Denny created a series of NFT “portraits” using mining computers that he bought on eBay, which he then donated to environmental researchers at Oxford. This year, Kamel Menour collaborated with French AI art collective Obvious, who are known for selling the first AI-generated artwork at Christie’s in 2018 for USD $432,500 (43x its presale high estimate). With the goal of establishing relationships with NFT collectors at more accessible price points, almost all of the works sold for around $20,000, allowing the gallery to build relationships with new clientele. Konig Galerie presented “The Artist is Online: Digital Paintings and Sculptures in a Virtual World” in March 2021, featuring work by digital artists Jonas Lund, Anne Vieux and Addie Wagenknecht, as well as art dealer Kenny Schachter. The experimental show allowed the gallery to see if existing clients were comfortable purchasing works with cryptocurrency. “The Artist is Online” was visible on Ethereum-backed decentralized 3D VR platform Decentraland, which sells off virtual “land parcels” and is used by NFT owners and Sotheby’s to present digital artworks. Works were made available on OpenSea, an NFT trading platform. After nearly all 29 works sold, Konig’s foray into cryptocurrency proved successful. The gallery plans to roll out exhibitions on Decentraland over the next six months, continuing to present virtual exhibitions, and deal with cryptocurrency.
Following suit, this year on July 14th, Lehmann Maupin, with locations in New York, Hong Kong, Seoul and London (as well as seasonal spaces in Aspen, Palm Beach and Taipei), announced an exclusive partnership with crypto trading platform Gemini, becoming the first commercial gallery to accept payments in crypto through the Gemini platform for art sales globally. As big players in the commercial gallery circuit continue to broaden their capabilities of dealing with cryptocurrency, smaller spaces may be forced to follow their lead, lest miss out on a significant slice of the art market.
Accepting crypto for all artworks, not just for NFTs, widens the marketplace for who can purchase a physical work of art. In the months following Christie’s acceptance of $69 million for Beeple’s work in cryptocurrency, other galleries have followed suit, accepting both ETH and BTC as payment for artworks. In partnership with Coinbase Commerce, Heather James Fine Arts is now accepting cryptocurrency for numerous works, including Picasso’s La Communiante Avec Missel, priced at $1.85 million, a sign of galleries marketing sales towards the cryptocurrency and NFT market, rather than solely focusing on their general clientele. The opportunities offered by this new set of clientele are still being explored, as small to midsize galleries position themselves within the new crypto art market.
Though it is clear that the art market will not be upended by NFTs and cryptocurrency, and the pace at which galleries will evolve to accommodate this new market remains to be seen, it is clear that there are players establishing relationships with crypto artists and buyers, carving out their own space in this new undiscovered marketplace. As Pace continues to tease their unreleased platforms, and auction houses continue to cultivate valuable relationships with consumers of both crypto and art, look out for a continued presence of cryptoart, with cryptoart’s proven popularity, reflected in sales and successful virtual exhibitions, institutions like Christie’s, Sotheby’s and Nifty Gateway, as well as the Hermitage Museum, have plans to tokenize masterpieces and world class art works as NFTs on the blockchain.
Timeline of Blockchain Technology and Art Sales:
2008
- Sakoshi Nakamoto develops the first blockchain. The design served as the core component in the development of popular cryptocurrency bitcoin.
2017
- Decentraland launches, before its release in Feb 2020
- CryptoKitties launches on Ethereum blockchain
- Kate Vass Galerie opens, specializing in art and technology, specifically blockchain, crypto and AI. “Pioneering in the space of physical and digital, the gallery represents the best program of generative art.”
- Jason Bailey begins collecting NFT art, becoming the first collector on SuperRare, introducing the marketplace to their first artists and collaborating to bring NFTs into the traditional art world. Bailey goes on to launch Club NFT with the mission to build the next generation of NFT tools to aid collectors in discovering, protecting and sharing their digital assets in April 2021.
2018
- OpenSea, an NFT marketplace, launches in early 2018.
- Nifty Gateway is founded by Duncan and Griffin Cock Foster
- On May 12 2018, Codex Protocol initiates the sale of “first-ever live auction of cryptocurrency themed art”. Cryptokitties’s Celestial Cyber Dimension a.k.a. Cat #127 (an NFT) hammered at $140,000 and sold to Igor Barinov, marking the first major sale of an NFT.
- June 14 2018 — ATO gallery sells Benjamin Katz work for 1.3 million bitcoin, marking the first major sale of an artwork with cryptocurrency.
2020
- In October Christie’s auctions off Robert Alice’s Block 21 (42.36433° N, — 71.26189° E), the first work to be sold with an accompanying NFT by a major auction house, hammering at $131,250
2021
March
- On March 19 2021 Beeple sells Everydays for 69 million with Christie’s.
- Nifty Gateway and Sotheby’s begin partnership
April
- Pak x Sotheby’s earns $17 million during the auction house’s first NFT sale
- Pace launches first collection of NFTs with Urs Fischer in a collection titled CHAOS
July
- Lehmann Maupin exclusively partners with Gemini to begin to sell artworks with cryptocurrency
- Other galleries like Heather James Fine Art and Pace already set precedent, partnering with Coinbase Commerce. Announcing their intent to accept cryptocurrency for any work of ar
- Pace launches second set of CHAOS NFTs with Urs Fischer
