Navigating NFTs in art

This is the transcription of the talk at Soho House, Mumbai given by us in June 2022. 

Let us discuss NFTs in the context of art. Why art? When people talk about NFTs, everybody talks about flipping it the next day. The same goes for the physical art space; people wish to buy art and then flip it. It’s actually not that easy buying art from a traditional auction house, you’d be down 35 % on day one. It is not necessarily an investment vehicle; of course, there is a lot of money to be made but if you approach it purely from an investment angle, you might make mistakes.

Art has remained a trillion-dollar market well before the advent of digital art. It is also a recognition of human creativity. Physical art comprises decorative art and modern art. Decorative art means something you like putting up on your wall but has no investment value since not all artworks can be resold. There has to be some indication of creativity, there has to be something new. 

What have been some of the global art movements?

Global Art movements

Broad categories in Indian art

  1. Early Indian Art 
  2. Medieval Art 
  3. Mughal and Colonial Era Art
  4. Modern and Contemporary Art

We draw a commonality between the types of art mentioned above by identifying the presence of a creative movement as defined by the participation of many artists in that particular creative movement. To add to the complexity, art is made using various ways and on various mediums. Listed below are some of them: 

Art various mediums

Various art mediums Art Mediums

The point is that Digital Art is just a natural progression, a change of tools, and a change of medium and newer styles or movements

Getting to understand Digital Art 

Bill Viola

Digital Art however began in the 90s. The author remembers attending a seminar on Video Art by the artist Bill Viola while in college in the mid-1990s. The problem however with digital art is that copies can be made with high fidelity. In the case of physical art, you can have a Husain or a Picasso on a canvas, but making a copy with high fidelity is difficult. Whereas in a digital space one can just copy and paste. 

Entering the NFT space 

NFTs or Non Fungible Tokens are a new technology phenomenon allowing clear ownership and easy transferability of digital art which is unique or in editions. In understanding NFT, one simply needs to understand digital art. NFTs are ideal for creating digital versions of collectibles like art and trading cards. Other examples include digitizing our identities and providing ownership of things such as real estate. NFTs are often based on the Ethereum blockchain, in the form of ERC-721 tokens. These tokens can be bought and sold on various NFT marketplaces.

What are Smart Contracts?

Smart contracts clarify the ownership of the artwork and the fact that the physical ledger is now a part of the blockchain. This whole ledger which was there in somebody’s gallery is now on the internet and there are various consensus mechanisms to see how they are updated and the entire information as to who owns this artwork and how many editions of the artwork exist are on a blockchain; that is the technology that NFTs bring about. That is the game-changer.  

A Digital Art Movement (Circa 2017)

  1. The Profile Picture Project or Social Icons: Companies like Twitter or Instagram are possibly going to allow you to link your Metamask account and then search the list of NFTs that you have and then you can legitimately use one of the NFTs on social media as your social media icon.
    1. CryptoPunks: One of the first projects to be released. It was initiated in 2017 being an important movement in digital art. The blue line denotes the average price of the crypto punks in the last two or three months. While the price of Ethereum has surely fallen, the price of these NFTs has been relatively stable. The point to note is that an NFT is not a cryptocurrency, it is a smart contract that has an underlying asset and in this case, we are talking about art. While a lot of cryptocurrencies have been slammed on the market; some of the popular NFT projects have held their prices.

What about originality? What if somebody tries to duplicate or copy these?

The point trying to be made here is that while buying NFTs one must do thorough research in terms of originality. While these things are being sold in the market, it is difficult to note who’s selling and who is buying it. Let’s say you are interested in M.F. Husain but you want to buy an artist’s works that are almost identical to the horses Husain makes and get these at 1/10th of the price but they never survive as they lack creativity. 

To add to the complexity, not all NFTs are sold on Ethereum. Some of them trade on prestigious websites like Variable, OpenSeas, Nifty Gateway, and more. You will see other projects on other blockchains on various websites; which is why before rushing to buy anything, one must do their research. Even in India, the NFT craze led to Amitabh Bachchan launching his own NFT and selling 6 editions of it.

Understanding the legalities of NFTs 

In NFTs, we come to the issue of copyrights and the legalities. Copyrights in the case of NFTs include: 

  1. NFT license - This means that you can use the image for your own commercial interest (up to a limit) but the IP still remains with the creators of the project.
  2. CC0 , etc

Key takeaways for NFTs

Returns can indeed be huge.  NFTs have made art into a stock/ tradeable asset; what that means is that you do not have to go to a gallery, you can go online and create a meta mask wallet after which the trading happens. 

Complexities too exist in terms of copyright. What can one do with the image; can you create clothing out of it or can you make a film? Research is imperative in the case of both digital and physical art since the issues are the same. It is essential to avoid replicas and buy original art. 

The point is that the curator’s eye is extremely important. Even to buy NFT art one must do the basics; that is research, read, visit museums and be a part of communities. 

Prinseps was the first auction house in India to sell NFTs

The inspiration was that in the 1950s, Gobardhan Ash stepped away from realism and made caricatures as you may, very simple artworks that denoted an expression, a characteristic, or a trait. Lot number one was hence the physical artwork while lot two was its NFT. We did not accept any cryptocurrency but only fiat. All the NFT lots were sold out on an average of 25,000 Rs each.  A success in spite of the unclear regulatory environment in India which forced us to only sell in FIAT.

Any questions?