In February 2021, Christie’s auctioned a work by the digital artist known professionally as Beeple. The piece was called EVERYDAYS: THE FIRST 5000 DAYS. It stitches together the first 5,000 individual artworks from Beeple, which mainly take the form of vectors and gifs. In its essay for the auction, Christie’s refers to the work as “one of the most unique bodies of work to emerge in the history of digital art”.
Bidding started at $100. The work eventually sold for $69.3 million. Adjusted for inflation, this is more than artworks from people like Roy Lichtenstein and Mark Rothko. Pressing EVERYDAYS: THE FIRST 5000 DAYS into the history books more firmly was the fact that it was the first NFT (non-fungible token) that Christie’s ever auctioned.
Comparatively, 2022 has been a pretty bad year for the crypto market. Many cryptocurrencies have fallen by roughly half their value since November 2021. Bitcoin, the most popular crypto coin by market capital, is down 41 per cent year to date at the time of writing. Ethereum is down 34 per cent. But even by crypto standards, the NFT sector has seen especially big losses.
An NFT can be thought of like a zip file on a computer, inside you have an asset (the artwork in this case) and you have data, including code which acts as proof of ownership over the folder (the NFT itself). This is the item that holds value, as opposed to the art (which can be modified, updated, or changed entirely by the creator), though of course the artwork or creator of the artwork does strongly inform the value of the NFT. Typically, NFTs are purchased via the native cryptocurrency for the blockchain they are created on. So an NFT created on the Ethereum blockchain, will likely be purchased with the cryptocoin Ether (ETH).
As prices of a cryptocurrency falls, so too does the value of an NFT which uses its currency. In July, a rare CryptoPunks NFT purchased for the equivalent of $10.3m was sold for $3.3m. As of April 2022, it was reported that the NFT market had lost over half its all-time high value (which was achieved in 2021). The Wall Street Journal reported in June that sales (as in volume of sales) were down 92 per cent “from a peak of about 225,000 in September” 2021. While most assets (including stocks and shares) are seeing red arrows compared with last year, the stark deprecation and general scepticism around NFTs is prompting many to wonder whether that crypto-bubble is about to burst completely. Google searches for NFT are also down roughly 85 per cent since January 2022.
“I kind of think the bubble already burst,” says 36-year-old Brittany Pierre, a photographer and digital community builder based in Chicago, who discovered NFTs in lockdown. “I had just gotten fired from my job because I was depressed and I wasn’t doing any work. I was scrolling and a friend of mine had just posted how she made $70,000 off of one photo which she sold as a NFT.” From there Pierre decided to learn about NFTs. Her first sale was for $300.