In July 2021, Damien Hirst issued an NFT collectionof 10,000 hybrid print-NFTs called The Currency. However, there was a twist. Buyerswere given a choice in that, going forward, they will have to decide to keep either the physical print of the works or the NFT digital copy. If they choose to keepthe NFT the corresponding physical work will be destroyed. If they wish to keep the physical artwork, then they will have to surrender any rights to the digital version i.e., the NFT. The Currency collection was more than six times oversubscribed with each of the artworks selling for $2,000 worth of Ethereum, as this was the digital currency buyers had to use to pay. The collection netted $20million! However, although since July 21st (the date one had to submit payment), thevalue of Ethereum has risen from $1,773 to $3,121 (an increase of 76%), this pales into insignificance since, of the 1,571 digital artworks which have been sold, one has fetched over $120,000 - a 60-fold rise on the initial $2,000! In additionto this, over $26million of Hirst’s NFTs have been traded in less than a month.
Damien Hirst - The Currency. Source: Heni Analytics
Number sales and price of The Currency
Whilst Hirst and the buyers of his art have made a lot of money, there are potential ramifications for the art world and, indeed, art galleries and museums globally. No doubt there will be both winners and losers if we are to see owners and creators of art follow Hirst and begin issuing NFTs backed by their paintings, sculptors, and other artifacts. After all, these days it is becoming much easier to attract the attention of a global audience on-line as opposed to selling an artist’s works via a physical gallery inLondon, New York, Paris etc. Furthermore, it is now possible for owners of existing art and desirable artifacts held in museums globally to not only sell a digital representation via an NFT but, potentially each time the NFT is traded, the owner of the IP/art will receive a % of the sales.
Number sales and price of the Currency. Source: Heni Analytics
Hirst’s NFTs are riding a wave of interest around NFTs in general with over $2.5 billion worth of NFTs being sold in the first half of 2021. Forthose who would like more NFT statistics, you may find Non-Fungible.com helpful. As the below chart shows, it is not just sales of new NFTs, but secondary sales are growing too. This is important if we are to see institutions becoming involved since a deep and active secondary market in an asset class is essential. Not only does it allow trading to happen without substantially moving the price, but prices can be relied upon when valuing those collections and fundsthat may invest in this new asset class.
NFTs are arguably helping the owners of IP to commercialise what they own and thus bring them into the global digital economy. However, there is a challenge - copywrite. Buying an NFT based on an artwork does not necessarily confirm copywrite ownership. Using a smart contract which governs an NFT could specify how proprietary rights, including copyright, are transferred upon sale of the NFT. Importantly, another factor is to ensure that, as the creator of IP, the IP is registered. This, too, is vital for a buyer wishing to be sure of authenticity i.e., does the seller have the right of ownership?
Sales of NFTs April 2021 - August 2021
The Uffizi Gallery in Florence has already sold a Michangelo NFT for $170,000 and now the Hermitage Museumin St Petersburg, Russia, has announced it will be issuing NFTs of several masterpieces from its collection - including a painting by Leonardo da Vinci. Clearly, whilst this may be bad news for your local art gallery which relies on people to visit in person, NFTs do offer a new way for owners of art collections to monetise their assets should they choose to embrace this new digital market. It also potentially enables artists to have a greater share of the income of their creations. NFTs can also be issued so they generate a share of the proceeds from future sales. Therefore, as they are traded it can create the potential for an on-going income stream to be generated - which, no doubt, will be of interest for artists, galleries and museums alike.