The Future of Art is Digital
Digital art is an artistic work or practice that uses digital technology as part of the creative or presentation process. It has been around since the 1960s and is often described as multi-media art. The challenge with accruing value for digital art, is that is can be easily copied, there is no way to build a market around it because you can’t prove authenticity. Blockchain is emerging as a solution to create authenticity and scarcity for digital art, for the first time in history, enabling a viable digital art market. Blockchain allows digital art to be authenticated so you can to prove ownership, it creates scarcity, and it creates a transparent and liquid market. Blockchain has enabled a new form of digital media that has value and can be traded.
Just like we’re seeing Bitcoin take share from Gold as a store of value, I think we’re in the early stages of a shift from traditional to digital art. Let’s dive in.
The Next Evolution of Art
Take a look at this piece of digital art.
It’s AI Nude Portrait #1—a $13k piece of art. Three years ago it sold for $76. Two years ago $310. A year ago $3500. 9 months ago $13k. Robert Barrat a 20-year old AI artist created it.
Now that I have your attention, I’ll explain how digital assets work on the blockchain. Let’s walk through an example using a recent artwork I purchased on SuperRare, a digital art gallery. The piece is called TWENTY20'ed by Ryan Selow.
Ryan produced a still image and then added it to SuperRare in the form of a token which verifies authenticity and ownership. You can think of the token and the specific artwork as one of the same. Now that it’s created, the artwork/token starts its life on the blockchain, and can be purchased by collectors.
Once I purchased the artwork (for 0.35 ETH), the token was transferred directly to my wallet, while the corresponding funds were moved to his wallet. ETH is the native currency of Ethereum – a blockchain ‘world computer’ where the artwork is stored. Thanks to the blockchain, neither the funds nor the asset are ever held by the gallery or any other third party.
Now I can keep the artwork in my collection or I can sell it, not unlike physical art. The piece is living in my digital gallery on SuperRare but I’m also planning to buy the Samsung Frame to showcase the digital art at home.
TWENTY20'ed by Ryan Selow
What’s it Worth?
When I started going down the digital art rabbit hole, I wasn’t convinced whether this form of art had any value. Sotheby’s has a comprehensive framework for valuing art, including factors like rarity, authenticity, condition, and provenance. There are also other factors that affect physical pieces like size and medium - for now let’s focus on the first four factors and see how the art valuation methodology can be used in digital art.
Rarity: With art on the blockchain, you can prove the asset is one-of-a-kind and thus rare.
Authenticity: With a piece blockchain-based digital art, you can evaluate authenticity by simply looking up the transaction data, instead of having a paper “certificate of authenticity”.
Condition: The asset is located on a database so water damage is never going to be an issue.
Provenance: The asset has provenance, or a historical ownership record, which is also available in the transaction data.
It’s fair to say before blockchain entered the picture, it would have been impossible for digital art to meet the traditional valuation framework. Blockchain has reintroduced the concept of scarcity to digital art that the internet made ubiquitous.
Now that we’ve established digital art can hold tangible value, let’s make a case for why it’s worth collecting, and some of the advantages over traditional art.
Advantages of Digital Art
Resale value & artist royalties: According to SuperRare, on average blockchain-based digital works have seen an 888% increase in price. Additionally, unlike the traditional art market where the artist has no ownership once the piece is selling in a secondary market, on SuperRare, the original creator of an artwork gets 3% of each secondary sale in the market as a royalty. This is a huge win for artists as they get exposure to future upside.
Online collection management: Physical items can be hard to store and transport. As our society becomes more nomadic and remote, owning internet-native digital items allows you to bring your collection with you anywhere in the world.
Programmability: Just like how Tesla sends software updates to their cars, artists can send updates to their art pieces. Matt Kane’s Right Place & Right Time, changes every day with the bitcoin price volatility.
However, it's not all good news, there are still some significant downsides in this emerging market. Most notably, collectors must accept the perspective of owning a digital work and not a physical object to hang on the wall, which has not been the accepted norm in history to date. However, as homes are becoming “smart” and connected to the web, it’s not inconceivable to think digital picture frames will become the norm. A single screen on a wall can periodically cycle through different pieces of art at the predetermined direction of the art collector.
A New Mental Model
The mental model in physical art is currently, “I own it so only I can see”, but with digital art it’s becoming, “I own it and everyone can see”. These artworks remain infinitely reproducible and visible to all, but only the purchasing collector owns what the artist will call the original, the unique token of the work.
This is what excites me the most about digital art, you can make the asset available to the entire world and it doesn’t make it any less rare or valuable. In fact, as a collector you want as many people as possible to be downloading and enjoying the artworks that only you provably own because this is how the artwork gains value. It’s not unlike individual collectors lending their physical artwork to museum shows; more eyeballs equates to more $$$.
Hackatao, one of the most successful digital artist duos said it best — “Everybody sees it, only one owns it”.
Looking into the future
Galleries and artists everywhere are struggling with COVID cancelled exhibitions and art fairs, but in times of crisis people turn to the arts, so tech savvy art-lovers are turning to digital alternatives. More and more it feels like the future is digital but that doesn't mean there won't be a place for physical art which will always be cherished and valued. These two worlds don't need to compete, but compliment...there is room for both.
I’m really excited about the potential of digital art, so much so that Arianne & I are slowly building a collection. It’s still the first inning and there is something really exciting about getting involved on the ground floor. Maybe we’ll find the next Picasso or Warhol in this “crypto” art movement, you just never know!
Until next time,
Justin