March 31, 2022 - 10:30am
During perhaps the worst start to a year for risky investment assets, the international art outlet Art Basel has launched a detailed report entitled The Art Market 2022. The report explores how sales in traditional art, which according to a U.S Congress report remains the ‘largest unregulated market in the United States,’ had recovered to pre-Covid levels, rising from $50.1 billion in 2020 to $65.1 billion last year.
Yet this recovery was overshadowed by a rampant 36,900% increase in sales in the emerging marketplace of ‘digital art’, a fancy description for NFTs, or non-fungible tokens, which Investopedia describes as ‘assets on a blockchain with unique identification codes and metadata that distinguish them from each other.’
It’s likely by now that most people have heard of NFTs. It has become an obsession of establishment media, with the latest entry coming from veteran New York Times journalist Kevin Roose, who published a 14,000-word, long-form piece entitled ‘The Latecomer’s Guide to Crypto’. Unfortunately, the piece was not (as claimed) a ‘sober, dispassionate explanation of what crypto actually is‘, and resulted in a heavily edited rejoinder from a number of prominent crypto-sceptics.
The reality is that Roose has joined a long line of other journalists — either due to conflicts of interest or a techno-optimist urge to paint all emerging tech as the inevitable future — who have ignored the dark truth about NFTs and crypto more generally. Since the original idea behind crypto was to evade institutions and the rules imposed on them by what the Cypherpunks — the cyber-libertarian group credited with inventing cryptocurrency — believed were oppressive governments, there is a huge space for fraudulent behaviour. It’s no surprise, then, that the NFT space itself is now ripe with deception and fraud. As one of a few crypto-sceptic articles pointed out, the NFT ecosystem has become a ‘a complete disaster’:
Worse, since the start of this year, the NFT bubble has slowly been deflating. As Fortune reported earlier this month, which is still holding true today, the average sale price of an NFT hovers near $2,000 compared to over $6,800 at the start of this January. That’s roughly a 44% drop in price, according to data from the NFT tracking service, NonFungible.
Despite this, the biggest crypto influencers continue to peddle euphoric proclamations akin to what you’d usually witness at the top of highly speculative bubbles. Just take RealVision CEO Raoul Pal, who described crypto as bigger than the internet, or VCs, who are envisioning NFTs as part of subprime-mortgage style “CDOs” — a pool of combined mortgage assets sold as an investment.
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SubscribeThanks for the warning, although most sane individuals must have known from the very start that ‘digital art’ etc’ was rubbish.
However as a prominent English philosopher said some years ago “ Most people would rather die than think and most do”.
Time to get my imaginery loom out and weave more invisible cloth to make clothes for those that are so special that only they can see their beauty. For surely now that the price has gone down it must go up? I know that it use to be the case that if it goes up it must go down but that was before crypto gravity. Even without that will the price not inevitably go up because people are so frightened of missing out they will pretend they know what they are doing? Or will something else become the fashion?
So does that mean my UnHerd subscription will never be profitable after all?
Crypto currency and NFT are all subject to greater fool markets. Get in early, wait for the frenzy as fools rush in, cash out. The greater fools lose. Crypto currency has some purpose but until it is widely accepted in exchange for a tangible good it’s simply a digital key of no real value.
I was at an IT event and the topic of the day was NTFs. As I work in the arts, it was not surprising that most of the people who thought this would protect the arts were under a certain age. I wouldn’t say how old, but definitely younger than me. I’ve been watching this new hype, and like most modern art, it’s most likely overpriced junk that’s not worth the investment. Sticking an NTF label on it doesn’t change that, and since most people can’t tell the difference between good and bad art, it’s no surprise that people have fallen for this new fad. Buyer beware!
from https://crypto-academy.org/bored-apes-price/ (Jan 2022)
“the Bored Ape Yacht Club is now the most exclusive non-fungible token collection in the market.Currently, they have a floor price of Ξ92. With the current price of Ethereum, you have to pay around $242,000 to join the club. This makes it impossible for middle-class citizens to join in.” These NFT’s are charitably described as unattractive cartoons. Example at link. Price down 10% as of March, bargain!
Thanks but no thanks.
“the average sale price of an NFT hovers near $2,000 compared to over $6,800 at the start of this January. That’s roughly a 44% drop in price”
$6,800 down to $2,000 represents a 70.5% drop.
A pile of bricks in the Tate Gallery – a Rothko where the curators can’t work out which way up it should be.
Art and more relevantly the value of art is always subject to huge debate – prices are set by the “honourable company of art curators” and intellectuals with no real reference to the real world or underlying value.
NFTs are simply a digital extension to this – agreed its a very new market and people are still working out the rules – but beware dismissing something because its not of our generation, but something of the next generation.
Never ever invest in financial products promoted by videos of shouty young gits with suspiciously perfect teeth.