If you’ve watched the news in the last year, you’ll inevitably have been exposed to the latest of crypto acronyms… NFTs, AKA “Non-Fungible Tokens”. You’ve probably also been surprised by the jaw dropping prices that are being paid for these digital artifacts. It’s just a JPEG, right? Yes and no.
Beeple’s digital collage titled "Everydays - The First 5000 Days" sold for $69 million at a Sotheby’s auction in March 2021. To date, this is the high watermark for an NFT sale, but what made this specific NFT such a desirable asset to own? Why would anyone pay this much to “own” something that doesn’t exist in the physical world?
To put it simply, it’s art. And as such, let’s compare Beeple’s collage to something more familiar from the artistic world – Vincent Van Gogh’s “Starry Night”, as well as something less familiar, Damien Hirst’s “The Physical Impossibility of Death in the Mind of Someone Living.” Here are the three pieces of art side by side.
“Ok, but Beeple’s NFT is just a JPEG…”
Yes, it is, but “Starry Night” is just oil on canvas. Damien Hirst’s “The Physical Impossibility of Death in the Mind of Someone Living” is just a dead tiger shark in a tank of formaldehyde.
“But I could just copy and paste it to have my own…”
Yes you could. You could also ask any local art student to do a version of “Starry Night”. It’s not that sophisticated of a painting to counterfeit. Putting a dead shark into a glass tank of formaldehyde could also replicate the Damien Hirst experience in the home, should you wish to recreate such a thing.
“But you can “own” a painting…”
Well, you actually just own the title of provenance that goes with the painting (or dead shark) to prove it’s genuine, and an original, and that you purchased it. NFTs do the same for Beeple’s “Everydays”.
What makes art, or indeed anything valuable we can probably distill it to a handful of factors – scarcity, historic context, and memetic value.
Van Gogh’s “The Starry Night” was painted between 1889 and 1890, representing a time when the artist was struggling with mental illness. It has become not only one of the most recognizable examples of his art, but of all modern art. Estimated value – over $100 million.
Hirst’s “The Physical Impossibility of Death in the Mind of Someone Living” is famous for its stretching of the definition of what art can represent, along with being one of the most instantly recognizable installations from “L’enfant terrible” of the British art scene in the 1990s. Estimated value – $12 million
Beeple’s “Everydays” isn’t just any digital image, but a collage of thousands. In fact, it’s the culmination of 14 years of work, literally the first 5,000 days of the prolific artist’s daily digital creations. With a social following of over 2.5 million people, Beeple is infamous in today’s art scene, and the auction of this artwork through an internationally renowned auction house, Christie’s, cemented its place in art history. Current value – $69 million.
That a JPEG collage, or a dead shark, or some oil on canvas can fetch these values may seem ridiculous, but they do and the value that people attribute to art has been this way for millennia. Humans attribute value to all manner of scarce or contextually unusual objects … rare metals and stones, elephant tusks, historically significant documents, signed urinals, dead sharks, and digital content. The intrinsic value is that whatever asset this happens to be, it is the only one.This is the meaning of “non fungible”, it cannot be exchanged for another, even if it looks identical – NFTs can transform any digital content from one of many to one of one – “a” JPEG becomes “the” JPEG, and that is why they can command such eye poppingly high values. Their value can also be zero – not unlike any thrift store with badly recreated copies of Van Gogh’s. Again, scarcity, historic context, and memetic value.
Value in all objects is a truly human construct – beauty is truly in the eye of the beholder.
Global Head of Research