Burned Banksy NFT Sets Art And Crypto Worlds Alight – Forbes

How much would you pay for a piece of art that doesn’t exist in the real world, but exists in the Metaverse?

The latest anarchic event to grip the art world saw an anonymous guild of ‘art digitalists’ buy an original Bansky then set it ablaze – but not before digitizing the work into a non-fungible token (NFT).

For the uninitiated, NFTs are unique blockchain-based digital assets that represent an increasing number of commodities, from art and real estate to collectibles like sports trading cards. This latest pyro-NFT event reflects an unfolding love affair between the art and crypto communities, and it is generating hundreds of millions of dollars and transforming art in the 21st century – the digital century.

From Sotheby’s to Superfarm

 The incendiary event itself has a historical precedent. In 2018, a Banksy painting entitled ‘Girl with Balloon’ self-shredded moments after selling for one million pounds (GBP) at Sotheby’s auction house. The painting, rechristened ‘Love is in the Bin’, could now be worth double in the arcane ways of working of the art world.

As for the recent painting set alight in Brooklyn, it marks the first time an artwork has been torched then sold in digital form, with Banksy’s agency Pest Control authenticating the event. Entitled Morons, the piece pokes fun at rich collectors for spending exorbitant sums on paintings.

The digital token representing Morons will be listed on Superfarm, a cross-chain DeFi protocol for NFTs. The anarchic art arsonists’ plan is to hold an auction where investors can make bids using cryptocurrencies. Although Banksy is not directly involved in the venture, the event organizers claim he is aware of the token event.

Sales of NFT-based art works have surged of late, having hit a record $8.2 million in the month of December. Ownership and authenticity are confirmed on blockchain, which provides a public, immutable record, so there is no ability for fraudsters to dupe investors into buying a forgery. Buyers also get to see how much an item previously sold for, who has owned it, and all dates associated with its sale history. Through the NFT model, artists can open their work up to a wider audience of crypto users looking to spend their digital assets.

NFTs utilize the same distributed ledger technology that enables bitcoin, a cryptocurrency that recently crossed the $1 trillion market cap after Tesla’s $1.5 billion purchase helped drive the price to new all-time highs. While each bitcoin can be divided into 100 million smaller units known as satoshis, NFTs are like snowflakes, no two are alike.

NFT Mania Is Heating Up

The NFT market generated over $350 million in sales over the past month, with Hashmasks, a marketplace specializing in unique digital portraits, the third most popular platform. The cryptocurrency market might be sizzling hot, but you might pause to consider the world of digital art before you dismiss art NFTs as a here-today, gone-tomorrow fad.

It might be difficult for some to grasp why art-based digital tokens have value. Alex Atallah, the founder of NFT marketplace OpenSea, believes if you spend hours every day on the computer, in the digital realm, then art in the digital realm makes tonnes of sense, because it is the world.

There is also the prospect of flipping NFTs for profit. Last week, Miami-based art collector Pablo Rodriguez-Fraile proved just how remunerative NFT investments can be, selling an NFT for $6.6 million that he acquired for $66,666 in October. The NFT – a 10-second computer-generated video clip curated by digital artist Beeple – showed a giant Donald Trump collapsing to the ground, his body adorned with countless slogans. 

Pablo Rodriguez-Fraile is also a co-founder of The Museum of Crypto Art (MoCA) with long-time friend and venture investor Colborn Bell. MoCa is the leading virtual reality art gallery of the Metaverse. Featuring a collection of over 3,000 digital artworks, the Museum focuses on the exhibition of artworks in native digital environments and the story-telling of artists, having completed six artist solo shows, and running an active incubator arts district where 15 artists have built their own exhibition spaces. 

“For those of us who have helped lay the foundations of this space, it’s fascinating, but not surprising, to see such an exponential amount of growth and interest. In leveraging emerging technologies and proving NFT use-cases through the display and amplification of artist’s narratives, we’ve helped to usher in a new economic model where digital artists are empowered to bring their creations to global markets and receive a more equitable share of revenues on primary and secondary sales,” says Bell.

A digital collage of Beeple’s daily artworks produced over a 13-year period was recently minted into an NFT and put under the hammer at Christie’s auction house. Entitled Everydays: The First 5000 Days, the collage has attracted over 100 bids, with the highest standing at $3 million. The auction ends on March 11, and it marks the first time a purely digital work of art has been listed by the heritage auctioneer.

It’s not just art, either. One platform, Original Protocol, just held an auction for the world’s first NFT music album by American DJ 3LAU. Collectively, the artist’s fanbase ponied up over $11 million for 33 NFTs constituting 3LAU’s album Ultraviolet.

In sport, NBA Top Shot has become the world’s most popular NFT portal, giving over 350,000 users the opportunity to acquire digital collectibles of stars from the National Basketball Association. In the last week, NBA Top Shot racked up over $100 million sales. Naturally, the NBA and Players’ Association are in on the venture, having inked a revenue-sharing agreement on each transaction with technologist Dapper Labs. 

Mark Cuban, billionaire owner of the Dallas Mavericks, recently stated his belief that NFTs ‘could turn into a top three revenue source for the NBA over the next 10 years.’ If the NBA Top Shot buzz has passed you buy, one user, who paid $208,000 for an iconic Lebron James slam-dunk NFT, called the platform ‘day trading meets sports meets fantasy.’

“NFTs are nothing less than a new global entertainment category, on par with movies, music and video games, but with much larger revenue potential. Every consumer product company in the world will need to develop an NFT strategy in 2021, or regret the fact that they didn’t. If a consumer product can’t be eaten, it will be turned into an NFT.

“When augmented reality emerges in a few years, the digital items populating those virtual environments will also be NFT based. There is no escaping this phenomenon,” says William Quigley, Managing Director of Magnetic, and co-founder of Worldwide Asset Exchange (WAX).

Next-Generation Chains Clamor to Host NFTs

With NFTs being touted as ‘crypto’s next killer use case,’ it comes as no surprise that major blockchains are competing to entice developers to build on their networks. In the 11 years since Bitcoin launched, speculation, primarily on the price of cryptocurrencies, has been the primary use case for cryptocurrencies, a number of which are now being viewed as part of a portfolio diversification strategy.

Could NFTs really supplant trading as the main reason for blockchains existing – even if it’s merely to replace cryptocurrency speculation with speculating on the value of NFTs in the gaming, entertainment and art worlds?

Polygon certainly thinks so. The scalable blockchain network, which connects to Ethereum by way of a bridge, has been enticing NFT projects promising them an environment where non-fungible tokens can be minted, traded, and auctioned at near-zero cost. NFT projects such as Aavegotchi, Neon District Megacryptopolis, ZedRun, Chain Guardians, Decentral Games, Battle Racers, Doki Doki, and MyCryptoHeroes have already made the move to Polygon, whose infrastructure is suited to supporting high growth games.

Polygon isn’t the only chain making overtures to NFT projects. Elrond has also laid out its credentials for hosting the industry’s hottest new industry, having onboarded Terra Virtua with its range of NFT collectibles from Paramount Pictures, Legendary Entertainment, Unreal, and Unity.

“Once digital natives and savvy collectors will be able to meaningfully connect with art, movies, video games, or other forms of expression at a whole new level, the multi-billion dollar potential of the NFT industry will be unleashed,” says Elrond CEO Beniamin Mincu.

Last year, WAX announced an exclusive partnership with legendary Topps Trading Cards to release the digital versions of Topps’ physical collectible cards, as well as exclusive digital collectibles, on the WAX Blockchain.

“NFTs originated on Ethereum but they are rapidly migrating to purpose-built blockchains that can accommodate the consumer mass market at much lower costs. Ethereum is adequate for selling 100 NFTs at $1,000 each. But if you want to reach hundreds of thousands or millions of people, it’s not a suitable platform.

“Consumer brands like Topps Trading Cards, the musician Deadmaus, and video game developer Capcom – creator of the hugely successful Street Fighter series – all chose the WAX NFT blockchain to release their products. We have entered the era of specialized blockchains with general purpose chains like Ethereum ceding ground to those with more tailored solutions to the NFT market,” says Quigley.

In yet another announcement today, Hex Trust, which is licensed as a trust company in Hong Kong, launched its NFT Safe service to provide custody support to NFT collectors and investors within its Hex Safe platform. Hex says NFT Safe is a ‘world first’ service for providing collectors and institutions with safe custody of valuable NFT assets. The Hex Safe platform supports NFTs from multiple blockchain platforms, including Ethereum and its ERC-721 and ERC-1155 token standards.

Will the Bubble Burst?

What does this all mean, and where is the NFT craze headed? Those of a bullish disposition suggest that there is no natural end point: the future is digital and it’s coming into sharper focus every day. The value of NFTs is assured by their provable scarcity, which drives demand. The price of any good is, as it has always been, determined by what others are willing to pay for it.

The market bears, or rather the naysayers are not convinced. NFTs may be selling like hotcakes right now, but how sustainable is the model – aren’t all booms inevitably followed by busts? Can assets that are intangible ever be as valuable as those you can hold in your hand? Interestingly, the same arguments were once made about bitcoin, long before it reached dollar parity. At the time of writing, a single bitcoin is worth circa $50,000. To put that in context, today’s gold price is circa $55,000 per kilo.

Whatever happens with NFTs in the near term, the idea of burning and tokenizing a Banksy painting is something one suspects the artist would approve of. It’s easy to imagine a slew of artists and innovators jumping on the bandwagon and monetizing their output in the form of NFTs, inspired by this latest event. This may be a bubble, but it appears as if it is in no hurry to pop.

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