Why Would Anyone Buy Crypto Art – Let Alone Spend Millions on What’s Essentially a Link to a JPEG File?

Yves here. This article does a fine job of trying to make sense of NFTs, aka crypto art. But as far as I am concerned, this is too many years of super low interest rates producing peak bezzle. In the 1980s, when there was a lot of money floating around by the standards of then-recent memory, but penny ante compared to now, the decadence took the form of things like sushi with generous amounts of gold leaf.

And as someone who is extremely private, I disagree vehemently with the premise that art is inherently social. Some of the few pieces of art I have may still have commercial value. Some probably don’t have much given the change in the market. Some are attractive folk pieces that almost certainly have no value in sale. I don’t care. All that matters to me is the enjoyment I get from looking at them.

By Aaron Hertzmann, Affiliate Faculty of Computer Science, University of Washington. Originally published at The Conversation

As an academic researcher, developer of artistic technology and amateur artist, I was quite skeptical about crypto art when I first read about it several years ago.

However, I follow a community of artists on social media, and some of the artists there whom I respect, like Mario Klingemann and Jason Bailey, embraced and advocated for crypto art. Within the past few months, activity and prices seemed to snowball. I started thinking it deserves to be taken seriously.

Then the Beeple sale happened.

On March 11, Beeple, a computer science graduate whose real name is Mike Winkelmann, auctioned a piece of crypto art at Christie’s for US$69 million.

The winning bidder is now named in a digital record that confers ownership. This record, called a nonfungible token, or NFT, is stored in a shared global database. This database is decentralized using blockchain, so that no single individual or company controls the database. As long as the specific blockchain survives in the world, anyone can read or access it, and no one can change it.

But “ownership” of crypto art confers no actual rights, other than being able to say that you own the work. You don’t own the copyright, you don’t get a physical print, and anyone can look at the image on the web. There is merely a record in a public database saying that you own the work – really, it says you own the work at a specific URL.

So why would anyone buy crypto art – let alone spend millions on what’s essentially a link to a JPEG file?

Art Is Inherently Social

It might be helpful to think about crypto art in the context of why people buy original works of art.

Some people buy art for their homes, hoping to incorporate it into their living spaces for pleasure and inspiration.

But art also plays many important social roles. The art in your home communicates your interests and tastes. Artworks can spark conversation, whether they’re in museums or homes. People form communities around their passion for the arts, whether it’s through museums and galleries, or magazines and websites. Buying work supports the artists and the arts.

Then there are collectors. People get into collecting all sorts of things – model trains, commemorative plates, rare vinyl LPs, sports memorabilia – and, like other collectors, art collectors are passionate about trying to hunt down those rare pieces.

Perhaps the most visible form of art collecting today, and the one that drives so much public discussion about art, is the art purchased for millions of dollars – the pieces by Picasso and Damien Hirst traded by the ultrawealthy. This is still social: Whether they’re at Sotheby’s auctions or museum board dinners, wealthy art collectors mingle, meet and talk about who bought what.

Finally, I think many people buy art strictly as an investment, hoping that it will appreciate in value.

Is Crypto Art Really That Different?

If you look at the reasons people buy art, only one of them – buying art for your home – has to do with the physical work.

Every other reason for buying art that I listed could apply to crypto art.

You can build your own virtual gallery online and share it with other people online. You can convey your tastes and interests through your virtual gallery and support artists by buying their work. You can participate in a community: Some crypto artists, who have felt excluded by the mainstream art world, say they have found more support in the crypto community and can now earn a living making art.

While Beeple’s big sale made headlines, most crypto art sales are much more affordable, in the tens or hundreds of dollars. This supports a much larger community than just a select few artists. And some resale values have gone up.

Value as a Social Construct

Aside from the visual pleasure of physical objects, nearly all the value art offers is, in some way, a social construct. This does not mean that art is interchangeable, or that the historical significance and technical skill of a Rembrandt is imaginary. It means that the value we place on these attributes is a choice.

When someone pays $90 million for a metal balloon animal made by Jeff Koons, it’s hard to believe that the work has that much “intrinsic” value. Even if the materials and craftsmanship are quite good, surely some of those millions are simply buying the right to say “I bought a Koons. And I spent a lot of money on it.” If you just want an artfully made metal balloon animal, there are cheaper ways to get one.

Conversely, the conceptual art tradition has long separated the object itself from the value of the work. Maurizio Cattelan sold a banana taped to a wall for six figures, twice; the value of the work was not in the banana or in the duct tape, nor in the way that the two were attached, but in the story and drama around the work. Again, the buyers weren’t really buying a banana, they were buying the right to say they “owned” this artwork.

Depending on your point of view, crypto art could be the ultimate manifestation of conceptual art’s separation of the work of art from any physical object. It is pure conceptual abstraction, applied to ownership.

On the other hand, crypto art could be seen as reducing art to the purest form of buying and selling for conspicuous consumption.

In Victor Pelevin’s satirical novel “Homo Zapiens,” the main character visits an art exhibition where only the names and sale prices of the works are shown. When he says he doesn’t understand – where are the paintings themselves? – it becomes clear that this isn’t the point. Buying and selling is more important than the art.

This story was satire. But crypto art takes this one step further. If the point of ownership is to be able to say you own the work, why bother with anything but a receipt?

Manufacturing Scarcity

It still seems hard to get used to the idea of spending money for nothing tangible.

Would anyone pay money for NFTs that say they “own” the Brooklyn Bridge or the whole of the Earth or the concept of love? People can create all the NFTs they want about anything, over and over again. I could make my own NFT claiming that I own the Mona Lisa, and record it to the blockchain, and no one could stop me.

But I think this misses the point.

In crypto art, there is an implicit contract that what you’re buying is unique. The artist makes only one of these tokens, and the one right you get when you buy crypto art is to say that you own that work. No one else can. Note, though, that this is not a legal right, nor is there any enforcement other than social mores. Nonetheless, the value comes from the artist creating scarcity.

This is the same thing that’s happened in the art world ever since photographers and printmakers had to figure out how to sell their work. In the world of photography, a limited-edition print is considered more valuable than an unlimited edition; the fewer prints in the edition, the more valuable they are. Knowing that you have one of a few prints personally made and signed by the artist gives you an emotional connection to the artist that a mass-produced print doesn’t.

This connection could be even weaker in digital art. But what you are buying is still, in part, a connection with the artist. Artists sometimes publicly tweet their thanks to their crypto art patrons, which may strengthen this emotional connection.

A Bubble Bound to Burst?

Personally, I want to buy only art I can hang on my walls, so I have no interest in buying crypto art. There are also environmental costs. Certain blockchains used for crypto art are really bad for the climate, because they require computations that consume staggering amounts of energy.

That said, if buying it right now gives you pleasure – and you enjoy sharing what you’ve bought and the community around it and you’re using a more environmentally friendly blockchain – that’s great.

If you’re buying it for some future reward, however, that’s risky. Will people care about your personal virtual gallery in the future? Will you care? Will crypto art even be a thing in a few years?

As an investment, it just seems inconceivable to me that the higher prices reflect true value, in the sense of these works having higher resale value in the long term. As in the traditional art world, there are a lot more works being sold than could ever possibly be considered significant in a generation’s time.

And, in the crypto world, we’re seeing highly volatile prices, a sudden frenzy of interest, and huge sums being paid for things that seem, on the surface, not to have the slightest bit of value at all, such as the $2.5 million bid to “own” Jack Dorsey’s first tweetor even the $1,000 bid on a photo of a cease-and-desist letter about NFTs.

Much of this energy seems to be driven by price speculation. It’s also worth noting that the winner of the Beeple auction seems to be heavily invested in the success of crypto art. The cryptocurrencies that drive crypto art are often considered highly speculative.

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  1. Krombopulous Michael

    The backstory of Beeple is interesting on its own, and I won’t knock him for getting such a windfall since he’s been productive as an artist for a long time. However, this speaks of a lack of imagination (or depravity) in the “buyers”. This is too much money, not enough sense. It says. “Hey, look at me! I have so much energy (money) available, I can waste it at will on something I can’t even touch and still have more than enough.” Too bad none of them ever wants bragging rights for funding orphanages.
    The other possibility is that this is a new form of money laundering. Or both.

    1. JE

      If it really is the “Hey, look at me!” factor, how long until we see blockchain NFTs for funding orphanages? Wait….I just NFT-ed that idea and own it….care to buy it back for a cool million?

    2. Aaron

      We can’t fault Beeple for choosing to grab this opportunity and make like a bandit. As for the buyers, Ol’ Ben Franklin says it best: “A fool and his money are soon parted”. Until Fed decides to print and hand out more.

      As for the absurd prices, the “Greater Fool Theory” could explain it. As long as there is another person willing to pay even more, everyone hops on the ride and hope they can get off soon enough before the whole thing comes apart.

      1. TimH

        This reminds me of pet rocks… and the people that buy the green stained bamboo canes for plant supports when probably any rod that they have kicking around would do the trick.

    3. Basil Pesto

      I mean, very wealthy people want bragging rights for funding orphanages (and similar charitable institutions) all the time.

  2. JE

    This relates to a business a former classmate of mine started online, selling virtual sports memorabilia such as digital bobbleheads. I don’t get that either, but there is a secondary market for these apparently, with the added proviso that unlike a JPG or GIF, the bobblehead is linked to a specific piece of software to enable viewing that may or may not be maintained in perpetuity. Perhaps this is generational, and younger people can see the value in “owning” these digital tokens of a tweet, JPG, or bobblehead. It strikes me as the “top” of a decadent society about to be forced into drastic change as the complexity it has built itself on crumbles under its own energy footprint. Sign of the apocalypse #212,399,442,039 in an ongoing series…

  3. chantelle oliver

    I come to these analysis hoping someone will bring up Eurodollars/Shadowbanking in relation to the value of cryptocurrency -Eurodollars were the first virtual currency: Eurodollars are U.S. dollar accounting entries that are used to settle cash flows between numerous players outside the banking system supervised by the Fed. As such, eurodollars are not subject to U.S. banking regulations. The size of the Eurodollar market is unknown and what actually controls the global market.

    1. Susan the other

      I think crypto is definitely a challenge to sovereign money. The Fed heads in the EU and here (at least T. sec. Janet Yellen) have recently poured cold water on crypto currencies. They aren’t currencies because they aren’t “current” they aren’t “fungible”. So this NFT (non fungible token exchange) is something of a threat to the security and exchangeability of sovereign money. What’s the diff between an exchange for non-fungible tokens and an exchange for sovereign currency? Nothing except crypto can’t cross the blood-brain barrier and mingle with sovereign money on some balance sheet because the two have nothing in common to create a balance. The problem arises when a NFT needs to be exchanged into a sovereign currency to settle payments; purchases. As prices stand today they can be anything two people agree on. So that is an ongoing problem because nobody’s sure how to do such an arbitrary transaction and still protect sovereign money. So far crypto isn’t very fungible at all and it is being held in check. NFT and blockchains seem to be like a sort of holding company for these “assets” until they can be blended through some exchange involving crypto coins, legally, and a purchase confirmed. No? It feels like this NFT art exchange is a prank at best.

      1. Yves Smith Post author


        No, cypto is absolutely not a challenge to money. Bone up. It’s a speculative asset. And a vehicle for crime.

        Every transaction with a gain is taxable unless you want to engage in criminal tax fraud. And you still have to report.

        And max possible transaction speeds and volumes way too slow for commerce. Inherent reasons why I don’t have the energy to belabor.

        1. hemeantwell

          I think art is inherently social, while appreciation of art, at its most determined, can pluck what is private about the appreciation away from the social (trying to pull on Adorno, who among other things stressed the idea of art as a way of learning about both yourself and society).

          This stuff is off at one ludicrous extreme. It’s utterly market-driven, and the only virtue of the person who composed it is their tolerance of tedium. It is only of interest because it so clearly reflects a social condition.

          Wazzat? Well, within the past few days Warhol has come up here. Warhol was remarkably clear about the perversity of his artistic intentions. When he said he wanted to be plastic, or like a machine, as part of his drive to be famous, he was forthrightly telling us that he wanted to be empty and free of routine human emotions and aspirations, floating above it all, basking in admiration, and implicitly throwing everything else in the toilet. In this sense his replicated soup cans were not some ironic rendering of commercialism because he did not wish to assert a humanistic challenge. He was going with the flow, and in that sense his art can be thought of as concordant with commercialism, the reduction of everything to exchange value, a delicious surrender to it. I don’t see much difference here, but it might be said that Warhol was more principled in his perversity, while this guy is just doing stuff.

        2. Susan the other

          OK – I’ll modify it to a “challenge to standard payment systems” and the whole idea of fungibility. Taxing non-fungible-tokens and those exchanges made in crypto for sovereign, I can’t figure out how crypto is exchanged for dollar values and how dollar values remain stable – if enough crypto is flooding into the system. Or even gradually. But, yes, of course tax the transaction – based on the sovereign currency value and paid in sovereign. But then again its a question of somewhere exchanging crypto or NFTs for sovereign and somebody is holding a boatload of crypto in some account that has no actual accounting associated with it. Or am I just overreacting? I think it is the beginning of a big mess. Of apples v. oranges. I just don’t get it.

          1. vlade

            It’s most definitely not a challenge to standard payments system, because compared to them it’s incredibly costly and doesn’t do much.

            It also drags in some unintended consequences, for example:
            – perfect tracability. All transactions are traceable. If you can find the owner of the wallets *), you can follow the trail. Perfect for a BigBrother governments.
            – perfect tracability also means stolen-property problem. There is quite a few jurisdiction where a stolen property, even if acquired in good-faith by an innocent third party, must be returned to the victim. Now thing about what happens when a BC is stolen and then used to pay something. Literally everyone in the chain can now be liable to the next persion holding the buck (as they can legally recover the losses from them). Fun!
            – transaction irreversibility. Duh. Anyone who works in a real world knows that this is as a bad idea as they come – and moreover, it doesn’t mean a bit when the legal transactions may be ordered by a court to be reversed.

            *) and to hide your wallet makes it hard to use. That may work for “saving” wallet, but not for one where you do your day2day spending. And then you still need to transfer from your saving wallet now and then.

            1. Susan the other

              But if the current payment system used by the US for dollars is required to adapt to this sort of traceability it becomes a burden. Certainly one goal for crypto or “nft” holders would be to have some certified value in US dollars (a form of fungibility). How does that get absorbed? And being able to trace it has nothing to do with the fact that it’s all meta-money in the first place. It’s like they are fabricating value, collateral, private property directly without investing in it to create it and so any relation to reality and every established value holding up capitalism is co-opted by a digitized idea. And then pushing their way into finance as a “store of wealth” when it is nothing but counterfeit value. How on earth can any settlement/payment system operating in good faith on established value, over centuries, deal with this nonsensical invasion? If crypto is a clever pressure release valve for an economy finally becoming so out of sync with its own evolution (having been too stingy to evolve in balance) that it is facing a form of spending inflation – because it is mobilizing to meet decades of neglected need – then it should at least have some intrinsic value beyond traceable digits. In the end when all the current growth is under control, will crypto and non-fungible-tokens have any more value than they do (not) today?

  4. The Rev Kev

    Is it a coincidence that just as people are realizing that we cannot use the amount of energy that we do at the moment because we are cooking the planet and that we should cut back with things like old gen light-bulbs, that new energy hogs are invented to thwart any efforts. Bit Coin is bad enough and currently uses the same amount as a medium size country but now they have come up with crypto art which also uses an inordinate amount of energy. Just in the way that an economist will tell you to ‘assume a can opener’, high tech is telling us to ‘assume limitless energy’. Maybe there should be a tax on such “inventions” that is equivalent to the energy that is used for their little play thing and make them pay full freight for it.

    1. Mikel

      Nothing apparently seems to matter except maintaining the illusion that more tech equals more “progress” and the marketing demand of always needing to present something as “new” and “the future”.

    2. Aaron

      Interesting hypothesis. There is quite a bit of capital invested in Coal, Oil and Gas.
      Investors need returns, and every field/rig has a break even volume. Substantial cuts in energy usage are indeed possible. Just putting better insulation in houses and weatherizing will cut energy usage quite a bit. But that will send a demand shock through the entire energy market. I wouldn’t be surprised if there is a behind-the-scenes lobbying to keep energy usage high in some way. Just like Airlines have lobbied to keep high speed rail from becoming a reality.

    3. Susan the other

      Maybe a severance tax payable only in sovereign money. And to make it more painful make the exchange into sovereign very costly to them as well. To grant crypto status as a tax-paying medium of exchange would be a big mistake. A total breach of security. But even forcing a severance “tax” on their use of energy is iffy. Certainly they should be charged a huge premium for the energy they are using.

      1. drumlin woodchuckles

        Legislate and regulate ( and mean it and do it) that electricity up to some ” decent comfort survival level” will be charged so much per kwhr, and electricity above that amount will be charged more per kwhr, and even more above an even higher threshhold will be charged even more more per kwhr and so forth.

        Also, institute Hansen’s carbon-fee-dividend charged at the mine mouth and well head against every unit of fossil carbon to be sold by every would-be seller of fossil carbon. And forbid imports from any country which doesn’t do the same thing.

        Between these two approaches, we should be able to price-torture the spread of these NFTs and their Siamese Twin the Crypto Currency down to less energy-demanding levels.


    This is one of the better pieces I have read on the subject. I come to pretty much the same conclusions, but from a slightly different direction.

    One key concept is that the value of a collectible (as contrasted with utilitarian) object is arbitrary. Why is a first edition Great Expectations worth, all else being equal, more than a second edition? Because book collectors collectively agree that first editions are cooler than second editions. It certainly isn’t the reading experience. If a collector wants to actually read the book, he will purchase an inexpensive reading copy. Or nowadays, just download it Project Gutenberg.

    This leads to the second key concept. The value of a work of art is only loosely connected to its artistic merit. I don’t mean this in a “modern art sucks” way. It is true of any work of art. The Mona Lisa is priceless. A copy of the Mona Lisa is kitsch. This is true even if it is a really, really good copy: so good that it requires carbon-14 dating to tell the difference. Or consider those fake Rothkos from a few years back. They were worth millions, when buyers thought they were real. But when a chemical analysis shows that some of the paint is modern? They are worthless. But they are the same painting either way. The price difference would be nonsensical, if it were artistic merit people were paying for.

    So what are they paying for? The consensus among art collectors that it matters whether this is an original by the master. A copy of an original, or a copy of the master’s style doesn’t cut it, no matter how flawless the copy.

    This becomes a problem when the medium is inherently copies. This is why a lithograph might have a limited print run, with the plates then destroyed and each copy numbered and signed by the artist. One step further removed is a print of a photograph. It is worth more from the original negative made by the photographer, or at least under his supervision, than is a later copy from the same negative, much less via a more indirect route. Establishing provenance becomes everything.

    Which brings us to digital art. One can argue that the process of making a print from a photographic negative is part of the creative process that only the photographer can get exactly right. I don’t endorse this argument, but it is at least coherent. But digital art is a computer file: ones and zeroes. Any sense of one version being unique, and uniquely connected to the hand of the master, is gone.

    NFTs are an attempt to restore this uniqueness, and therefore something for the collector to buy. Will it work? If collectors with money to spend collectively agree that the NFT has value, then it does, same as with any other collectible. Is this absurd? Yes, but only incrementally more so than traditional collecting. Will it work? Interesting question. There are a lot of people with a financial interest in making it work. These include collectors with money, looking for a place to spend it. So it might indeed stick. Earlier NFT sales, like the Forever Rose, had the air of people working to establish that the market existed. With the Beeple sale, assuming it is real and not a stunt, this is real money, suggesting a real market.

    Is this a Good Thing? Setting aside the environmental concerns of blockchain, it is a way for artists to get paid. That clearly is a good thing, but I very much doubt it will change the reality of a tiny number of artists being big winners, with everyone else living on scraps. Nor will it change the secondary market players cashing in even more. So in that regard, meh.

    1. BobbyK

      The Mona Lisa is priceless. A copy of the Mona Lisa is kitsch. This is true even if it is a really, really good copy: so good that it requires carbon-14 dating to tell the difference. Or consider those fake Rothkos from a few years back. They were worth millions, when buyers thought they were real. But when a chemical analysis shows that some of the paint is modern? They are worthless

      So this begs the question: “If the forager was so talented it takes carbon-14 dating to prove a forgery, why can’t this forger become a master in and of their own right-and have their paintings sell for millions?”

      1. Richard Hershberger

        Several possible answers: (1) Copying and creating are distinct skill sets. A flawless copyist may be completely at sea trying to make something new. (2) There may not be a market for paintings in the style of the old masters. Or maybe there is. Who knows? Has anyone tried? (By way of comparison, consider the compositions of Alma Deutscher. To be blunt, they sound like second-tier Mendelssohn. On the other hand, even second-tier Mendelssohn is good. Will Deutscher stick? It is too soon to say. So far, her extreme youth dominates the narrative. We will have to see, once she ages out of that, while also watching to see if your composing matures.) (3) Perhaps there are lots of guys painting in the style of the old masters, but this is so out of fashion that the art world ignores them and they are known only to a small an unremunerative circle of aficionadi.

        1. Susan the other

          What is being created is almost meta-value. And an argument that it might be plausible that making the image digitally is a savings of resources. Clearly, not the block chaining of the pedigree, just the actual art process. I think it is way interesting – the only things that bother me are the integrity and security of sovereign money and the excessive use of energy for the blockchain. It’s almost even meta-meta value.

      2. Zamfir

        Why a forger can’t become a master themselves? Because people pay for a unique and famous piece of history. They are not paying for the quality of the work (at least, that’s a minor part of it).

        There is a market for high-quality paintings in the style of old masters, from various ages. It can pay a good living to skilled artists, but not millions. Thousands, perhaps tens of thousands per painting.

        Someone paid a few million dollar for a bag of moon dust, which looks like a bag of dust. An old master is like the bag of dust, plus it happens to look nice so it’s easier to show off.

        1. Richard Hershberger

          Fascinating! I wonder about the legalities. What is the difference between a reproduction and a forgery? Suppose Landis had not signed the paintings, but had sold them for some reasonable amount as reproductions, the buyer adding the signatures and selling them as originals.

    2. Zephyrum

      The value of an NFT being unique would make more sense if you couldn’t just duplicate the target “art”, perhaps with trivial changes, and list it under another NFT on the same or different blockchain. “My copy was color-corrected by the noted colorist Koto.” Or simply write a program to relist NFTs.

      1. Richard Hershberger

        My guess is that there is a contract–probably a social contract, but perhaps a legal one–with the artist that he won’t do that. Anyone else doing it would simply be regarded as a forger, perhaps even legally. This is in much the same way that we have to trust the artist that only a limited number of lithograph prints were made.

        1. juno mas

          …and that trust is easily broken.

          I bought an Artist Proof (lithograph) that years later I attempted to sell. As I was presenting the “rare” ,hand-colored lithograph to the potential buyer one of his assistants exclaimed he had something like it. Turns out the artist made numerous copies using photographic printing techniques well beyond the original, closed lithograph run of 50. My numbered artist proof was still “rare”, but not to the extent I expected. No sale.

  6. Deltron

    I wonder if a certain percentage of these transactions are for other black market exchanges. For example, if you’re someone who owes $20m for a heroin transaction, ask your seller to create a gif for $500 of a coder and graphic artist’s time, and then pay $20m for that gif. Now you’ve just cleared a black market transaction through a legal pathway.

    1. MK

      That is true in the real world art market going back hundreds of years, so why not digital? May even be easier!

      1. Greg

        Had exactly the same thought – high end art sales are known to be a vehicle for money laundering. Not having to fuss about with actual physical objects just makes this easier, and crypto is also already associated with money laundering. The noise about ‘art’ and its appreciation by anyone is just spin.

    2. Phillip Cross

      Bingo! Buy this gif and get a free kg of heroin!

      I thought it was a scam by people who want to charge us to “mint” images onto the blockchain. Then they can extract rent from artists, and pretend there is finally a real world use for all the Etherium they are hoarding. A twofer.

      With the money laundering aspect is a threefer!

  7. tegnost

    One thing I haven’t seen is that in order to make an NFT you have to pay. I have a friend who decided to try it. According to this person, two weeks ago it cost $40, 1 week ago it cost $100… I think that is for paying the electricity cost of connecting with the blockchain or something, more knowledgeable persons encouraged to fill in the blanks for me…

  8. dummy

    We might be surprised to find out that behind all this crazy schemes where people seem to be throwing money away, some tax avoidance or money laundering is in process.
    People who have millions can afford to hire smart counsel even if themselves are dumb, which I highly doubt it.

  9. Skip Intro

    Love this: “Some crypto artists, who have felt excluded by the mainstream art world, say they have found more support in the crypto community and can now earn a living making art.”

    i.e.: Some artists who couldn’t sell to savvy collectors have found an enthusiastic following among crypto-hucksers looking to ride and pump the next hype-wave so they can get out of their Ponzi coins while they’re worth something.

    1. Basil Pesto

      yeah, this article had a bit of a vibe of blagging through a high school presentation, coming up with observations in the hope that one of them sticks (exemplified by the ‘art is social!!!!’ line that Yves took exception to. In the sense that any two people on the planet may like given thing x independently, and then discover that one another exists and both like thing x thereby moving them to discuss any and all things x, where x = literally anything, then literally anything is social by that definition. Prisons are just social clubs for murder aficionados). ‘Excluded by the mainstream art world” oh noes!

      I think the paramount thing to keep in mind when discussing this weird phenomenon is that it’s a phenomenon of commerce, not art. Certainly not the creation of art, from which no one can be excluded, unless they are living under the most draconian conditions.

  10. Pay the Piper

    All of these NFT articles are interesting, but none dive into whether actual dollars have exchanged hands. Yes, $69 million is a lot, but as we all fawn over it, we forget that (based on my understanding of the NFT “markets”, correct me if wrong) it is $69 million worth in Ethereum, or some other crypto, right? I suppose Christie’s got paid $$ for brokering the sale, but will $69 million actual US dollars appear in Beeple’s bank account, or is it locked in his Ethereum wallet? If I was successful in selling my newly minted NFTs for mere hundreds USD in equivalent crypto, when will I get my beer money?

    1. Zamfir

      My understanding is that the buyer is a busines partner of the seller, so the money presumably goes back to the buyer through some back channel.

      The technical term is “painting the tape”. Make some highly visible, highly priced transactions between friends. And then you hope that some outside suckers consider this “market value”, and buy at similarly high prices.

      1. Zamfir

        Edit, I am not even sure that “sucker” is correct when it comes to the art market. Buyers do understand what’s happening, in general.

        There’s a weird dynamic where rich people are quite willing to pay high prices for somewhat arbitrary objects, as long as other people agree that those objects are indeed desirable and valuable (and other seemingly similar objects are not).

        This auction is an attempt to establish beeple whatevers as such objects. I don’t think it’s evidence of succes yet, but all the media attention is helping.

        1. Phillip Cross

          Look into the people that make the b20 NFT cryto art token. They bought for 60m and Christie’s got 9m in ETH. They also bought all the other beeple stuff before this, and I’m not convinced beeple and b20 are at arm’s length.

          It’s just tape painting.

  11. Roquentin

    This is no different than baseball cards, Beenie Babies, or Pogs. I can remember at the peak of the respective fads when those went for lots of money too. Everyone is just hopping on the bandwagon right now because they heard someone else made a lot of money and don’t want to be left out. It’s absurd. I have such contempt for everything attached to blockchain, almost Nouriel Roubini level contempt.

    1. eg

      Yup — it’s tulip bulbs and South Sea certificates all the way down …

      See Charles Mackay’s “Extraordinary Popular Delusions and the Madness of Crowds”

  12. fresno dan

    This article does a fine job of trying to make sense of NFTs, aka crypto art. But as far as I am concerned, this is too many years of super low interest rates producing peak bezzle.
    But so much of everything going on in the markets has to do with the fact that rich people have too much money and nowhere to put it…so it finds its way into investments or new and exciting markets.
    When I first looked at the graph Wealth by Wealth Percentile Group I missed the RED line at the bottom, is was so inconspicuous. So for most people, all the increase in money/wealth has no effect what so ever on their lives. All of the supposed increase in wealth, GDP, etcetera is only to ever richer people trading with other ever richer people. So the stimulus keeps most people from drowning in the cold ocean of modern economics, but doesn’t get them any closer to shore, as they tread water for survival. While all the life preservers of low interest rates are hoovered up by vampire squids to construct tropical islands for ever more novel Veblen goods to conspicuous sybaritism.

    1. eg

      “All of the supposed increase in wealth, GDP, etcetera is only to ever richer people trading with other ever richer people. So the stimulus keeps most people from drowning in the cold ocean of modern economics, but doesn’t get them any closer to shore, as they tread water for survival. While all the life preservers of low interest rates are hoovered up by vampire squids to construct tropical islands for ever more novel Veblen goods to conspicuous sybaritism.”

      This is some glittering prose right here — bravo!

    1. Geo

      Funny but also frustrating! :)

      Sadly, that actually highlights one of my biggest frustrations with art: Artists are rewarded with doing the same thing over and over and over. A teacher in art school said, “if you want to be a successful artist there are two ways: Do one thing more than anyone else has ever done it, or do one thing bigger than anyone else has ever done it.”

      He was right. Whether it’s fine arts, music, movies, whatever. The “industry” wants something it can sell and audiences want something expected. Sorta like how chain restaurants do better because people know what to expect from them. It might not be high quality but it’s a known quality.

      Actual innovation, ingenuity, and creativity are less important than recognizable style. There are exceptions of course (Stanley Kubrick in film, Andy Warhol in art, to name a few). But it’s rare for any artist to switch up their style and be rewarded for it. Like Bob Dylan pissing off fans when he went electric, artists are expected (and rewarded) for churning out “product” that is commodifiable.

      It annoys me so much because, personally in my own art, I prefer to explore new forms in each piece I do and have been told numerous times over the years to stick to one thing as it would be better for my career. The advice isn’t wrong, it’s just boring. Art shouldn’t be safe and reliable.

  13. Sutter Cane

    That’s a lot of words to say “The emperor’s new clothes are beautiful, and I can definitely see them!”

  14. Watt4Bob

    Too much money, combined with the internet has ruined many ‘markets‘, why not give them a chance with art?

  15. Sastun

    This is a bit of a long-shot, but I wonder if some dimension of this is ultimately tied in with trying to broaden the scope of digital rent-seeking? Obviously the folks ‘on the ground’ probably don’t have this end in mind, but any long term success seems to me to necessitate either the opportunity to rent-seek or provide exclusive control.

    It’d be the same battle fought and lost between platforms and copyright holders for video & music. You can’t tell me that there aren’t folks watching the free-distribution of memes and images on facebook or reddit side by side with advertising and thinking to themselves “god, these suckers are just giving it away”. After all, any pro-social behavior is really just a lost opportunity to extract value. And how else to create exclusive control but by requiring platforms to only host NFT verified images?

    Now, even if this is the darker motivation behind of some of the hype, I don’t think it could succeed, at least not without utterly crippling the basic functionality of the internet as we know it. I mean, you’d have to be a totally despicable, heartless ghoul to ravage a public good for the sake of trivial economic returns and power over the kind of content that’s shareable online. Why you’d have to convince people that it was for the greater good and meant to stop the spread of dangerous content like child pornography or russian propaganda.

    Oh family-blog.

    1. Pay the Piper

      I don’t think that is long shot at all. I think it is the whole point: Seeking a way to extract rents from things that really shouldn’t deserve or need rents. All in the name of creating some sort of viability for cryptocurrencies.

    2. Zack Blabbath

      convince people that it was for the greater good…

      & Of course, for one’s greater greed. “Innovatively disrupt established art markets” as selling point to reel in naive “content creators” with the promise of a cut of the potential millions to be made.

      The internet is increasingly a Roach Motel.

      Personally, I tried using Instagram to help market my own work to no avail. A complete waste of energy (didn’t pay for their “services” though). I realized this when I myself tried to recall art I had seen even a day or two before & got so distracted in back-scrolling I forgot what I was searching for in the first place. It’s like an “eternal now”,or a kind of memory hole.
      If I was looking to buy art I’d want to see it in person, very much like everyone who’s ever bought from me/ commissioned work.

      I think NFT could be a play to more easily separate creators rights to their own work. Someone (or even a bot) could scrape work off your site & claim it as a “found image” they re-purposed for their own.

      1. Sastun

        “…selling point to reel in naive “content creators” with the promise of a cut of the potential millions to be made.”

        Exactly that has happened with music streaming. I’m not fresh on the full details but an episode of trashfuture discussed in depth the role spotify has had in killing the indie artist.

        Link to episode

        Within their conversation they talk about the function of apps like spotify (and presumably your experience with instagram is similar) to homogenize and pacify the experience of consuming art. When art becomes a thing you scroll past or put in the background instead of a thing you explore and engage with in a real social way it ends up just impoverishing artists, in part since consumers don’t have the same buy-in they might have used to.

        You get a million more possible eyeballs but all of them are glazed over, that’s the scam.

  16. oliverks

    Wow you don’t own the copyright. I didn’t realize that. That doesn’t make any sense. What prevents the copyright owner from selling another NFT for the same work?

    1. Zamfir

      Reputation? Like selling a numbered series of a litho or a photograph. Technically, nothing stops the artist from starting a new numbered series, except for an (often unspoken) agreement not to do this.

      Of course, that means that whole techno circus is unnecessary flair, because they could just pinky-swear for the same practical effext. Then again, unnecessary flair is the point of the exercise.

      1. oliverks


        I think you are right. It is a way of social signalling. If I have this much money, you should take my call and invest in whatever hair brain scheme I have.

    2. vlade

      When you buy a painting, you don’t buy the copyright, they are two separate things. The copyright remains with the author (so, for a fraud, it’s the author that sues). So, for example, if a picture of the painting is used in a catalogue, it’s the artist who gives permission, not the owner.

      It is a common misconception that the owner owns the copyright, but the copyright, unless explicitly passed on is always with the author. Some jurisdiction do not allow the author to transfer their copyright ever – all they can do is to give right-of-use (exclusive or not).

      1. Zack Blabbath

        What if authorship itself is made uncertain? As in:” hey bro, I found this source on the ‘net & re-purposed it um, different, like & so it’s actually mine now”.
        Reminds me of Prop 22 in California that (to my understanding) redefines what an employee actually is.
        As if the employer to can make the word employee or contractor means whatever they want it to?

        Maybe the long-term goal is to transfer all ownership & control & licensing &c rights to the platforms?

        “All your Intellectual Property are belong to us!”

    1. Peter

      It is also a cheaper way to launder money. Both for the auction houses and the cartel. No transport no insurance or duty taxes. It’s a no brainer. As clean as it gets.

  17. chuck roast

    Is this a Giffen Good? A Giffin Good is supposed to be a cheap, non-luxury good whose price increases with popularity or demand. Basically an inferior product.

  18. jerryDenim

    Sounds like the equivalent of buying a deed to a piece of Martian land. You get a piece of paper saying you own it and and you can brag to people you own a piece of Mars. Maybe the value goes up and you can sell your deed to someone else, maybe you can’t. You can see it in a publicly accessible image from the Hubble telescope available online like anyone else, but everything else about your purchase is abstract and intangible. You have very few options to enforce your claim if Elon Musk lands a spacecraft on your “property” and declares himself emperor of Mars. Maybe I could see see the logic in gambling on a penny-ante NFT if it were attached to a marquee name, but paying more than the price for a masterpiece from a famous traditional artist for a digital image from a computer science guy? Seems insane, but I’ve been wrong plenty of times before.

  19. john brewster

    While this $70M sale made the NYT, there have already been (fill in your favorite emoji) sales of NFTs of 24×24 pixel computer-generated cartoons (called cryptopunks) that have reached close to $7M. Yes, 576 pixels of 24 bit color resolution. Lets see, 7 million divided by 13,824 bits is about $504 per bit. Something’s not kosher here.

    I agree with other commenters who think its partly too much money chasing too few goods and partly some kind of money laundering or “painting the tape” scam. Doesn’t anyone remember MBS paying half a billion dollars for a Da Vinci of dubious provenance (Salvador Mundi)?

    1. Peter

      The Salvador Mundi transaction was in my opinion a laundering scheme MBS was just the public face behind the deal.

      Maybe it was his pay off for offering Aramco. I wonder how his great liberal city building project in the sand is going?

      Reading about the NFT scenario made me think of that. Then again we are all just commenting on cave shadows projected on a screen As George Carlin reminded us. There’s a club and we ain’t in it.

  20. occasional anonymous

    A much simpler explanation is that a. art in general is pretentious nonsense, driven by rich people posturing to each other about how ‘cultured’ they are, and b. crypto in particular is filled with idiots.

    1. NotTimothyGeithner

      People use to pay for “indulgences”, so isn’t it time for crypto-prayer?

  21. responseTwo

    Sounds like cabbage patch dolls to me. Remember those? Maybe they’re worth more now.

  22. Thuto

    The vortex of NFTs will pull in many a digital artist with the promise that the other side of the singularity is the promised land of milk and honey. Even if this whole thing does take off, the winner (a few winners at best) takes all dynamics of digital markets will simply replicate themselves ie. a few top artists will gobble up all of the spoils while the rest live off scraps. Streaming was supposed to usher in an era of musicians of all stripes living off their art and breaking from the monopoly and chokehold of major labels, well, the top artists (still largely affiliated to the majors) are still responsible for 90% of all streams (43k artists out of more than 3million are responsible for 90% of all streams on the platform). No prizes for guessing where the bulk of streaming payouts to artists end up, yep, with the superstar artists at the top of the food chain, not the struggling indies who scrubbed together just enough to book studio time.

    The same thing will happen with this gold rush, there’ll be an explosion in the supply of digital art (much like the 60k songs now uploaded to spotify everyday) and 90% of those poor artists will spend the little they have (it’s not free to mint a NFT) and make the platforms rich, and the suckers on the buy side will still only have all out bidding wars for the top 10% of artists, leaving the rest with dashed hopes, to say nothing of out of pocket for the cost of minting the NFTs.

      1. Thuto

        Yes of course, there are startups like Audiomovers that help artists produce music remotely amongst other things, but most artists still prefer the tactile feel of a studio if they can afford it. Anyhow, try not to miss the larger point of my comment, which is that the economics of this new NFT art sales market will accrue disproportionately to the top artists.

  23. Glen

    Sorry, i just don’t have the cryptocurrency to indulge in this.

    If necessary, i will continue to bury coffee cans full of cigs, ammo, and TP.

  24. RMO

    “Nothing new or interesting here. We already know they are bad for the environment. Some of us are trying to fix it,”

    “Yes, yes… we all know this new business of gouging out children’s eyes and selling them is bad for the kids but some of us are working on possible programs to get them inexpensive glass eyes as replacements or a way to ensure that no child has to lose more than one of their eyes – and the business has been good for the gougers, many of who had to previously struggle in low wage jobs. They’ve found a sense of community too. It’s easy to sit on the sidelines and criticize. What are you doing to help?”

  25. Halcyon

    Back before COVID stopped everything, I used to go to the Royal Academy of Arts Summer Exhibition in London every year, which exhibits some of the finest works of modern art that the RA members and friends of friends have managed to produce in the last twelve-month. As in many exhibitions there’s a brochure listing prices and the number of copies are available or have been sold. There, I would find pieces for two awards. One was Genuine Artistic Achievement of the Year, for the best piece, and the other for Charlatan of the Year, for the most overpriced or oversold piece which required the least actual effort.

    A few years ago, I remember marvelling at how dozens of people were willing to pay £1,000 a pop for a potato print – the kind you’d make at school, just three potatoes dipped in different colours of paint and pressed onto paper – spurred on by some pretentious description about how “this piece finds us where we first relate to art, creating our own first artwork.” I figured dollars to donuts some modern artist had heard “my five-year-old could do that” and was having an ironic in-joke for themselves.

    Little did I know the depths of arrant madness that existed elsewhere in the art world, and now with this nonsense. How can I ever award charlatan of the year to someone who went to all the trouble to dip a potato in some paint and charge £1,000 for it when you can now apparently earn millions selling a link to someone else’s tweet?


    I’ll have an idea. I can’t tell you what it is, because I haven’t thought of it yet. But if you send me a hundred thousand dollars (which also exist only as an idea), I’ll declare you are the owner of my idea.

    Even exchange: My idea, which has no physical existence, for your money, which also has no physical existence.


  27. techpioneer

    It seems to me that a factor in evaluating this phenomenon should be acquisition cost. If I want to own THE Mona Lisa, I either need to come up with the market price, say, a billion dollars, or I need to hire an army of thieves capable of thwarting the French military and all of their security services. Acquisition costs are, obviously, very high.

    If I want to own an NFT, maybe I can just hire a bunch of very smart hackers from low wage countries, and hope for the best.

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