TOBY SHAPSHAK: Art prospers amid blockchain boom

If you haven’t already heard about them, nonfungible tokens (NFTs) are the hottest thing since, well, Clubhouse. The audio-only app, which eschews recordings for live-only conversations, is perhaps a fitting comparison for NFTs, and equally ethereal.

An NFT is the closest we’ve come so far to creating digital ownership of something digital. A token is named for something on a blockchain, and as the name implies, it represents something — in this case, a digital piece of art or music. Fungible means something that can be exchanged for something else of the same kind.

An NFT therefore is a kind of ownership token that can’t be swapped for something else. If you own the NFT of the new Banksy images flooding the market, then it’s legally yours.

Among the many things you can buy with NFTs are Twitter CEO Jack Dorsey’s first tweet (bidding has reached $2.5m on auction) and art by Elon Musk’s girlfriend Grimes, who has sold works for $6m using NFTs. Kings of Leon have just released their new album via NFT.

But here’s the thing: because the items are digital, they can be copied. And technically, there’s nothing different about the copy from the original.

So why pay $6.6m for a 10-second digital artwork which cost $67,000 last October when it was first bought with NFT? "It should not be hard to see why digital artists are jumping on to the NFT movement: it is a chance for them to make tens or hundreds of thousands of dollars for artwork that many people class as mediocre at best," The Observer says. "Similarly, the motivation for the buyers and traders is surely grounded in getting rich quickly. Most cryptocurrencies have little to base their values on: bitcoin is barely used as a real-world currency — it is bought by people hoping it will be worth more in the future. Its value lies solely in the fact that other people value it."

Digital ownership is creating an exciting new outlet for speculative money

That’s a pretty good description of investing, be it NFTs, bitcoin, tulips or art at any time through the ages.

I’m thrilled that artists have an easy way to sell their art and get paid handsomely for it. My grandfather Rene was an artist who lived in the Chelsea Hotel and paid his rent in art at the famous New York establishment. Zurich has a similar establishment, a bar and restaurant which fed the city’s artists and has a rich history of its benevolence on its walls. I had dinner there with a Miró behind me.

There’s a regular refrain that artists need to think like business people. No, they don’t. And shouldn’t. Artists need to think and feel and create like artists. That is their role.

It’s interesting how art and NFTs are therefore so intertwined, as art reflects the token that allows it to be sold. But as The Observer highlights: "NFTs at least have some kind of scarcity and real-world link, however tenuous. So, in the middle of a blockchain boom, it’s a new and exciting outlet for speculative money."

At least some of it is going the artists’ way.