Home Digital art FTX’s Collapse Isn’t the End of Crypto and Fine Art NFTs – ARTnews.com

FTX’s Collapse Isn’t the End of Crypto and Fine Art NFTs – ARTnews.com

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The acceptance of NFT by the traditional art market has been difficult. While some projects have found financial success and critical acclaim, others have languished, unsold, and buried in a heap of visual noise. And, just as the art world was warming up to fine art NFTs thanks to thoughtful projects like Frank Stella’s Geometries on Artist Rights Society ARSNL Platform Where Peter Wu’s digital exhibitions at Epoch Gallerythe crypto landscape has apparently collapsed, casting a chill that many fear will turn into permafrost.

Unprecedented volatility in the crypto market – since bitcoin peaked at $68,000 last November, he and Ethereum lost 75% of their value – resulted in the collapse of the digital currency exchange FTX, a moment which many have compared to crypto’s “Lehman moment”.” As Co-Director of Cowan DeBaets Abrahams & Sheppard LLP’s Fine Art and NFT Practice Group, I have received a constant stream of questions from clients and friends asking if Fine Art NFTs have been completed since the demise from FTX.

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My short answer is no.

While the miscalculations – or probably more troubling reasons – behind the dramatic cratering of crypto should not be ignored, the enduring potential offers of blockchain technology regarding a myriad of innovative opportunities to enhance existing paradigms in the art world should not be ignored either.

Despite the rapid pace of growth and education about the existence and potential of Web3 technology, there continues to be confusion between blockchain, crypto, NFTs, and digital assets, resulting in the consumer confusion, especially in the art world. The key here is to understand that blockchain technology and NFTs use crypto to work, but it’s not the same as speculate on cryptos. So using crypto as a tool to save NFTs on the blockchain is a real function that justifies the real value if people want to keep saving information on the blockchain. This should be differentiated from speculating on the artificial value irresponsibly created by inflating a pious crypto future.

Also, NFTs are not magical entities that confer value where none existed before. NFTs are the digital equivalent of empty cardboard boxes that can serve as packaging for assets, utilities, or experiences. An immediately positive outcome of the crypto winter and the FTX bomb cyclone is the revelation that the wrapper is overstated as having substantial value on its own. The real the long-term value will be what is associated with the packaging.

Visitors view Non-Fungible Token (NFT) works during an exhibition titled Indo NFT Festiverse at RJ Katamsi Gallery, Indonesian Art University which combines art and technology in Yogyakarta on April 13, 2022. - RESTRICTED TO EDITORIAL USE - REQUIRED ACKNOWLEDGMENT OF THE ARTIST WHEN PUBLISHING - TO ILLUSTRATE THE EVENT AS SPECIFIED IN THE CAPTION (Photo by DEVI RAHMAN / AFP) / FOR EDITORIAL USE ONLY - REQUIRED ACKNOWLEDGMENT OF THE ARTIST WHEN PUBLISHING - TO ILLUSTRATE THE EVENT AS SPECIFIED IN THE CAPTION / RESTRICTED TO EDITORIAL USE - MANDATORY MENTION OF THE ARTIST WHEN PUBLISHING - TO ILLUSTRATE THE EVENT AS SPECIFIED IN THE CAPTION (Photo by DEVI RAHMAN/AFP via Getty Images)

Visitors observe Non-Fungible Token (NFT) works during an exhibition titled Indo NFT Festiverse at RJ Katamsi Gallery, Indonesian Art University that combines art and technology in Yogyakarta on April 13, 2022.

DEVI RAHMAN/AFP via Getty Images

In the world of fine art, this means digitally packaging meaningful artistic expression that will appeal to both digital and traditional collectors.

What is desperately needed are reliable, industry-specific standards and protocols adopted at scale, rather than piecemeal efforts tied to limited commercial ventures. Some standards and protocols may be generic and relevant in various markets, but we need more than a single solution.

After the NFT crypto-orgy of 2021, when boundaries between markets became porous to the point of non-existence, 2022 saw the re-establishment of market boundaries and the recognition that not all NFT projects are equal or universally relevant. The devaluation of the crypto will hopefully accelerate the return to more thoughtful approaches. Planning everything from individual projects to longer-term business strategies needs to take a more vertical perspective, taking into account the specific wants and appetites of consumers. It turns out that while there may be some overlap, consumers interested in video games or collectibles may not be the same as those interested in art projects or philanthropic ventures.

With numerous digital art projects being promoted to showcase at the upcoming Art Basel Miami, we can see that NFTs in the art market are far from over – they are in fact just beginning. Take, for example, the exciting projects commissioned by forward-thinking climate NFT marketplace Aorist.art, including those of Nancy Baker Cahill in conversation with Sophia the Robot, and Quayola’s Evening Effects. Or, the partnership between Tezos and Art Basel which will allow visitors to creating NFTs with German artist Mario Klingemann, which will generate AI portraits of visitors. This is without even mentioning the many independent projects presented in gallery booths and at satellite events.

Art NFTs are not dead, although we may need to rethink the term “NFT” so that it is less evocative to the general public of Ponzi schemes and indiscriminate speculation. Blockchain technology still offers great untapped potential to effect paradigm shifts in the art world, from trusted certificates of authenticity to enforceable implementation of profit sharing, automatic licensing and limitations on display. or the resale of works of art. With less speculation, real innovation, and thoughtful artist advocacy, NFTs can be the rocket fuel of 2023.

Don’t throw the baby out with the bathwater.

Let us focus instead on developing market-specific conventions that can serve as the basis for sustainable business practices; the development of more sophisticated, industry-specific business tools; and a compelling reason for art enthusiasts to care about blockchain’s potential to bring transparency, reliability, and fairness to a historically opaque and imbalanced marketplace.

Like the dot com bust of 2000, the crypto market’s exponential growth in such a short period of time was based on shallow and unsound financial principles and its implosion will pave the way for lasting evolution. Moreover, like the dot com collapse, where survivors laid the enduring foundations for online commerce, these strong values-based blockchain companies will emerge from the tundra to serve as the foundation for digital innovation. future.