Buying Digital Art on Blockchain
An how-to guide on collecting crypto-art on Ethereum-based platforms
The basis for this article is the material used for a lecture given at Christie's Education on art and blockchain on December 10, 2019 in New York Rockefeller Center, along with Anne Bracegirdle, Senior Director, PACE X and Angela Redai, VP, Strategy & Art Partnerships, ARTBLX before a visit to Kevin Abosch studio visit.
If you want to get your hands dirty and start a collection of digital art, you are in the right place. Make a fresh pot of coffee, put on light music, relax and get started!
Download Your Crypto Wallet and Fund It:
To start, like all traditional collectors, you will need a wallet and money in it. The digital version of this step looks like that:
Download the Metamask wallet with the Chrome Extension, this is your crypto-wallet
Create a Coinbase account where you'll be able to convert Fiat Currency (USD, EUR, etc.) into Ether or Bitcoin
Transfer some Ether to your Metamask wallet (only what you will use to buy digital art)
Online tutorial videos summarize these steps pretty well on Youtube
Trust Wallet is a mobile based wallet that is nice to display your collectibles
Some technical terms in your crypto wallet explained:
Gas fees are the fees you need to pay to the network to validate your transaction (keep the amount recommended) - People increase it to get transactions to go faster, but it is not necessary for art transactions
Private key: this replaces your password. Beware you cannot call or email Metamask to request a password reset. You will need your private key (12 words) to do that and it is not saved by the wallet. So save it well and don't share it with anybody.
Public key: this is your wallet address that you can share away for people to send you cryptocurrency or digital art.
Fungible tokens (ERC20): it is used for cryptocurrencies where all tokens are the same. Fungible means interchangeable.
Non fungible tokens (NFT or ERC721): artworks are unique and therefore require a type of token that cannot be interchangeable or "non fungible". This is the format used for digital artworks and on most blockchain-based art marketplaces.
What Are the Benefits of Blockchain for Digital Art?
For the first time, digital art could finally be scarce as blockchain stamps can identify 5 non fungible tokens that are the "real" artworks when unstamped copies, screenshots etc can still be used on social media, for promotions, etc. Only the 5 copies registered on the blockchain can now be transacted and because they are rare, value could be attributed. This is how the term "rare art" emerged.
At the same time, the timestamp and the recording of the different owners and transactions allow for provenance and authenticity tracking.
And for the first time ever, all elements are based on the same technology, which allows theoretically for the most efficiency: the artwork is digital with all proof of authenticity and tracking embedded, the artist and the collector have digital wallets and pay with digital currency.
Besides, royalties for artists can now be embedded in the transactions which automatically ensure that artists get a commission whenever their work changes hand. Code rules could help where the law is missing (the droit de suite is only available in France and a few other places).
How to Use and Navigate Blockchain-Based Art Marketplaces?
Now that we have the technology, let's see where we are and what has been built for artists and art collectors.
After a few projects on Bitcoin, it all started on Ethereum with the punks: Cryptopunks by Larvalabs was the first limited edition of collectibles (10,000 punks), created with different assortments of a set of accessories (beard, glasses, long hair, etc.).
After the punks came the cats: the Cryptokitties are digital collectibles based on the same cat model. It is still the most famous example that is still mentioned at most conferences to explain non fungible tokens. It was the most successful (not so much anymore), but I must tell you, it is the worst example you can give to an art person. When you say the word cat, you lose all credibility. "cat is not art".
Then appeared marketplaces that experimented with blockchain-based tools and invited "crypto artists" to create and sell their pieces. The format is very similar to platforms like artnet or artsy with a static image, the artist name, some information and a call to action to buy or place a bid. The price range is pretty low and the artists emerging mostly as the platforms cater to a blockchain-savvy community of artists and collectors. This is not to say that the art is not good, it is just not curated and therefore hard to know from the start what is worth collecting or not. I would recommend reading about and connecting with the artists who have amazing stories. Knowing the creation process and background of the works make them so worth it. Three examples are Superrare, Knownorigin and Opensea:
Opensea.io: This is the largest marketplace that lists all artworks from the other platforms along with a lot of gaming offering and gallery storefronts, such as Kate Vass Galerie. However it is hard to navigate for someone new to the field, but still the most comprehensive marketplace.
When you are connected to your Metamask wallet, hitting "bid" or "place an offer" will automatically connect the marketplace with your wallet for the transaction to happen.
Don't worry if it takes time the first time. It took me 3 hours :)
How to Grow the Market for Digital Art?
Some projects are trying to bring well-known artists into the space to advertise this new type of art, such as the project between Kevin Abosch and Ai Wei Wei earlier this year, called Priceless. Similarly, Snark.art is working on a very small number of projects with established artists who are working on projects distributed on the blockchain, such as Eve Sussman, who made a 10-min video in 2014 now owned by established museums and is using her Artist Proof to tokenize it and give ownership of it to over 2000 individuals. They are also working with Duke Riley, Volkmar Klien and more.
Named artists help to cut through the noise. Curation helps as well! Curation on blockchain-based platforms has been debated for a long time within crypto circles interested in art. Crypto maximalists are for decentralization of EVERYTHING, and therefore against the centralization that curation brings. In an ideal world, we would have peer to peer curation, token-curated registry, or something decentralized. But for that, we need a critical mass of people to sort through the mass of content we have at our disposal. Therefore we need a temporary solution and for me, the solution is CURATION!
Institutions and organizations appear to give a voice to specialists in this field. A few to mention:
MoCDA: The museum of contemporary digital art is an association of independent digital art curators organizing curated exhibitions around the globe. The last one was organized at the Tate Modern for a Tate Lates during Nam June Paik exhibition.
FIRST EDITION: Jake Brukhman from Coinfund invests in, creates and now curates digital art, and specifically first editions. The blockchain community worships the genesis block, "the first of ...", and therefore created a new valuation rule that did not exist in the traditional art market, knowingly valuing more edition 1/4 than 2/4, 3/4 and 4/4, when they all had the same value in a series of prints or photographs. It is fascinating to see new rules being created in this emerging market.
CADAF: The contemporary and digital art fair, whose first edition was held in New York in May 2019 and the second during Art Basel Miami Week 2019, also offers a curated selection of artists and galleries, with series of tours, workshops and panels to tell the stories of these amazing artists and works
Conclusion
Blockchain technology makes the digital art market possible with the introduction of scarcity, tracking, and value. However, the technology does not make a market. For this to take off, we need to bring more artists (supply) and most importantly more demand (collectors). Therefore education via curated exhibitions, tours, panels, conferences is essential. Curators are the vital storytellers that we need. And there is a lot of potential for new business models and new ways to experience digital art online.
The future of the art market is bright.
Additional Resources
Research Paper "There is No Such Thing as Blockchain Art" by María Paula Fernández, Stina Gustafsson and Fanny Lakoubay
"Art & Blockchain, Where to Start", article by Fanny Lakoubay