6 Ways that NFTs Represent Revolutionary Transformation of Art as a Collectible
NFTs are a digital incarnation of the collectible certificate that has existed for decades in conceptual art and other movements in contemporary art. As examined previously, the collectible store of value resides in a certificate (now crypto-tokenized), as opposed to the inherently reproducible art object to which a certificate points. Having that in common with pre-digital collectible art, NFTs do however represent revolutionary transformation, with 6 major novelties.
1/ NFT genres
In what may turn out to be, one day looking back, merely a time stamp of art dating from the present opening salvo, the world of NFTs can, as of this writing, be characterized by the prevalence of CGI aesthetic and attendant memes, including cyberpunk and vaporwave (retrofuturism, palm trees, neo-classical elements, vintage computers, skulls, rainbows, neon lights, pixelation, glitch), as well as the millenial design aesthetic.
With respect to medium, the new digital vehicle flexes its capabilities with a preponderance of “animated stills”: with the still image being characteristic of paintings, prints and other physical media, enter in its place the fixed-frame video without narrative per se, but rather animated in the details, in a seamless infinite loop set to ambient music. Animation and sound distinguish the digital art object from the offline physical print, but the sculptural, “objectness” of the art object persists, with a possibility for passive enjoyment, as with the painting that hangs in your entrance foyer, as opposed to more actively watching a movie or other narrative video.
2/ Drop Marketing and Open Editions
As primary market dealers, Nifty Gateway and Makers Place not only curate the artists whose works are offered on their platform, but also engage in active marketing with “drop sale” tactics borrowed from streetwear (Supreme et al). Collectors receive daily emails offering up a selection of NFTs being marketed for sale during specific 15 minute time windows. Gone are the days of prescribed editions. Enter the notion of open editions, which are available for sale via “drop” format for a limited time window, after which the edition is closed: the edition size is open, and limited to the number of editions purchased during the limited time window, each edition being sold for a fixed price (often $1,000). Alonside, a few additional works of greater scarcity are offered to address all levels of the pyramid: one or more unique pieces, and everything in between. The perceived scarcity, price stratification and induced momentum from the drop sales model are compelling, and are enabled by the dynamic digital market of instantly tradeable NFTs.
The edition structure itself and clever marketing are integral to the artwork with a ne plus ultra example of this new paradigm: Pak’s recent drop sale The Fungibles Collection, on Nifty Gateway in conjunction with Sotheby’s, speaks to these new aspects of fungible tokens and their marketing via the aesthetic simplicity of simple cubes — like a digital reincarnation of Sol Lewitt, crossed with Damien Hirst’s marketing savvy. Collectors were encouraged to purchase multiple units of the open edition Cube. In the typical fashion, a handful more scarce works were also on offer, however with the clever innovation that the ownership of these scarce works was automatically assigned after the open edition closed, based on objective criteria such as the number of Cube units of the open edition purchased, in a wonderful working example of smart contracts. For example, ownership of the unique piece The Cube was automatically awarded to the collector who purchased the greatest number of Cube units. Similarly, Complexity is an edition of 100 automatically awarded to the the 100 runners up in terms of most Cube units purchased.
3/ Smart Contracts
As a feature of being issued on second generation blockchains (most commonly as ERC-721 tokens on Ethereum), NFTs can be seamlessly integrated into smart contracts, which are elements of code that reside autonomously on the blockchain and transact automatically as a function of objective inputs: while not so good for embodying contracts involving components of human or subjective input (such as a contract for completing your home repairs), smart contracts are however perfect for financial contracts (such as options, swaps, forwards, or any other form of derivative, in addition to loans and credit), where the autonomous code can cause a financial contract to be settled automatically between wallets on the blockchain according to codified normative rules operating in an openly verifiable manner on objective data inputs (such as publicly available rates and market prices, or the number of Cube units purchased by a collector from the open edition), without any human input after the code is launched. Smart contracts, in conjunction with DAO’s, will eventually disrupt the role of banks as market-making counterparties to financial contracts.
4/ Secondary Market Velocity
By design, NFTs can be transacted instantly on the blockchain with immediate settlement between wallets. As such, the current speculative bubble bears witness to a secondary market whose cycles can be measured in days rather than years. Speculators are trading in and out of NFTs in the manner of crypto-currency day-traders, with the clever ones employing data-driven algorithms to scrape chat rooms and social media for leading indicators of collector interest.
The active marketing approach of drop sales and open editions is matched in ingenuity by the gamification aspect of NFT game platforms such as CryptoKitties, CryptoPunks… As opposed to buying a self-sufficient, independent artwork, these collectibles don’t make sense outside of a special dedicated community/world/game… In a nod to the ultimate drama of collectibles and speculation that was Tulip Mania (so easily forgotten by each new generation of speculator), the kitties can be bred with each other and their collectibility depends on a game construct centered around the desirability of certain genes and traits as the kitties are interbred. As with open editions, collectors are pitted against each other in a frantic scramble to out-consume each other.
6/ Crossing the Boundaries
NFTs span multiple categories of collectible: contemporary art, in-game collectibles, in-world virtual items, collectible as game (CryptoKitties, CryptoPunks), and entertainment collectibles (musicians, celebrities, sports). A tweet can be a collectible, indeed in theory any form of Intellectual Property could be tokenized— Jack Dorsey’s original tweet on twitter has been tokenized and sold for $2.9M. Since all are collectible in the same manner via token, the lines are blurred — are CryptoKitties not art?