How do you invest in art NFTs?

Not a day goes by without talking about NFTs, these digital identifiers that have been taken over by artists, auction houses, niche platforms, and galleries. How does it work and what do we expect from it?

According to a report by Chainalysis, $40.9 billion was spent in 2021 on the purchase of NFTs (non-fungible token) or non-fungible (non-fungible) tokens, these unique and inviolable digital identifiers that make it possible to authenticate any digital file ( Image, video, audio, tweet). Unmodifiable, it serves as a Certificate of Authenticity and constitutes digital proof of the source and ownership of the files associated with it. NFTs are stored in the blockchain, which is a unique, decentralized, transparent and tamper-resistant record of transactions. But how do you invest in NFT art?


expensive

Since selling designer Beeple at Christie’s in March 2021 to NFT for $69.3 million, records at Anglo-Saxon auction houses have doubled. On niche platforms, too: On December 6, Nifty Gateway scattered a collection of 250,000 NFTs by artist Buck for a total of $91.8 million, which would make him the world’s most expensive living artist if he considered this collection to constitute a solo work. … Enthusiasm is that the French auction houses launched themselves into the race in March 2021 (Adir, Rossini, Agutes with the world’s first SMS awarded €132,680 in the form of NFT on December 21st). But the French legislation, which forbids them to sell “intangible goods”, only sold NFTs associated with “physical twins”: photographs, videos …

Three billion cipher art

The market for these arts, or NFT for crypto arts, defined as ” Artistic creations that are at least partly digital on the blockchain , as of December 31, 2021 to $2,542,028,317, for 77,307 sales to 122,311 buyers, according to Gauthier Zuppinger, co-founder of market analysis platform NonFungible.com. ” These numbers are a preliminary estimate regarding the Ethereum blockchain. To this should be added the volume of crypto art from other blockchains as well as auction houses Sotheby’s ($100 million), Christie’s ($150 million) and Phillips ($6.19 million). says the specialist.

A batch of NFTs from Yuga Labs, sold for €1.6 million by Sotheby’s, on September 9, 2021.

volatile market

In specific terms, how is it done? A collector/investor who wants to have a technical NFT must install a crypto wallet (Crypto Wallet) on his computer or smartphone, and convert Euros into Ethereum cryptocurrency. Then connect that crypto wallet to a specialized platform like Opensea, before buying crypto art that they can resell to other people registered on the platform.

Dream on, NFT Created by 25m42, Presented by Gallery Hoffa, in London.

Dream on, NFT Created by 25m42, Presented by Gallery Hoffa, in London.

The cryptocurrency market remains extremely volatile: it resells on average after 63 days, with an average resale profit of $7,097 in 2021 (figures released December 9 from NonFungible.com). Fanny Lacobay, crypto art and NFTs consultant at LAL Art Advisory explains: Generative series (profile projects, digital character sets automatically generated by algorithms like CryptoPunks or Bored Ape Yacht Club) are selling very quickly, being the subject of short-term speculation by a small number of people. The bulk of their fortunes came from cryptocurrencies and they focused the majority of their major purchases. This makes the market very unstable and there is more supply than demand. The market is expected to decline and the value of the majority of these projects will be close to zero. On the other hand, the cryptocurrency market whose works are created by digital artists (such as XCOPY, Kevin Abosch or Pascal Boyart) should be stable in the long term. The lucky collector who invested a year ago saw that the value of their cryptocurrency group increased by 300% at a steady rate in Ethers. For collectors who want to invest today, it’s in their best interest to buy young digital artists, like these Vertical Crypto Art-based artists, but this is still a very small market. According to a study by analytics platform Nansen for the Financial Times, this unregulated space is vulnerable to fraud, fraud and market manipulation, not least because it is difficult or even impossible to discover the actual identities of buyers and sellers.

Screen Test (Pearl), 2021, Auctions on Foundation © Courtesy of the artist and Alaine Riche

Screen Test (Pearl), 2021, Auctions on Foundation © Courtesy of the artist and Alaine Riche

On the side of the galleries

Some French art galleries embarked on the adventure in 2021 with average scores: Almine Rech on Nifty Gateway, Kamel Mennour on SuperRare. Art Basel Miami Beach last December attempted to stage a “curated” exhibition of digital NFT works, but crypto art is clearly slipping away from representatives in the traditional art market, with the exception of auction house Sotheby’s which launched last October its NFT metaverse sales platform. sothebys.com. During the first quarter, two new markets will attempt to attract collectors of traditional antiques: Artprice© with artprice-nft.com (after competing Artnet with nft.artnet.com in December) and CADAF.

Clear, Bellum Tempus (2021).  Courtesy of the artist

Bellum Tempus, 2021, apparently sold for $9.999ETH ($23,757) by Kamal Munawwar Gallery. Courtesy of the artist

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