Art Basel sees new interest in NFT works of art

Art Basel is a premier Miami Beach event, showcasing the best of modern art, which has typically existed in the physical realm. After a hiatus in 2020 due to COVID, Art Basel returned this year with a strong crypto flavor as the culture surrounding non-fungible tokens (NFTs) made its mark. Thousands of people attended various crypto conferences and NFT networking events throughout Art Basel week. One of the Miami Beach Convention Center’s most popular exhibits allowed visitors, including myself, to create an NFT on the Tezos blockchain by submitting their video image to an artificial intelligence algorithm for interpretation.

Despite all the media attention, it’s easy to say that NFTs sold for millions of dollars are a passing fad since they’re just pixelated punk and animal cartoons. In fact, artistic NFTs typically don’t store images on a blockchain, but instead display them via a link to a website. These NFTs are only unique because their special file (or hash) data, ownership history since inception, and sales data are all stored on a blockchain. So how can a unique file ID, transaction data, and a web link to a pixel character be so valuable, and how did the culture surrounding these tokens come to dominate Art Basel?

I would say the answer is not in the digital images that NFTs display and can be easily copied. The answer also does not lie in the usefulness of the provable authenticity and ownership history that DFTs offer to the art world. Instead, the real value of NFTs and the reason they have exploded onto the cultural scene lies in the social networks they create. We already know that Internet 2.0 social media networks like Facebook, LinkedIn, Twitter, and Instagram are extremely valuable. But these networks are walled and centralized gardens of which you (and your personal data) are the product. Today, art NFTs lead the decentralized blockchain social media groups of Web 3.0 that are owned by users. The best might continue to be extremely valuable as their influence grows.

For example, NFT collections often have associated Internet groups or “channels” on Discord or Telegram. By linking a wallet to a channel and proving ownership of an NFT from its associated collection, a holder can gain access to exclusive groups that provide the same functionality you might use in a Facebook group. For NFT collections whose holders include early crypto investors, access to these groups can be a very valuable networking tool. NFTs can also be used to access exclusive social gatherings in real life. For example, during Art Basel week, various NFT communities hosted parties where holding an NFT from their collection was the required ticket for entry. Also, NFT communities are starting to buy actual galleries and other places for their holders to enjoy. In many ways, NFT communities are becoming the digital social associations of the future.

For example, at the Bitcoin conference in May, I connected with a fellow NFT collector who got me a front row seat on the first day of the crowded event. Later when I visited Money 20/20 in Las Vegas, I met an NFT holder from several major collections. We connected easily as the NFT world is still relatively small and those who participate are eager to share their NFT experiences with other collectors at all levels. He invited me to join his group of friends on his personal Discord channel and I finally met these traders, entrepreneurs and other professionals in person at Art Basel. My good friend from the Bitcoin conference joined us as well and we had a weekend that I will always remember no matter how much dollars my NFT collection may someday be worth.

I wouldn’t have enjoyed these new friendships and rich experiences without the value of the NFT community. The next time you hear about an NFT Cartoon Dog or Gorilla being sold for tens or hundreds of thousands of dollars, try to see the underlying social network that has created such immense value.

Copyright © 2021 Nelson Mullins Riley & Scarborough LLPRevue nationale de droit, volume XI, number 347

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