How to invest in art NFTs?

Not a day goes by without talking about NFTs, these digital identifiers that artists, auction houses, specialist platforms and galleries have taken over. How does it work and what can we expect from it?

According to a report by Chainalysis, $40.9 billion was spent in 2021 on the purchase of NFTs (Non Fungible Token) or non-fungible (non-exchangeable) tokens, these unique and inviolable digital identifiers that make it possible to identify any digital file. authenticate (image, video, sound, tweet). They cannot be altered, serve as a certificate of authenticity and provide digital proof of provenance and ownership of the files they are associated with. NFTs are stored in a blockchain, a unique, decentralized, transparent and fraud-resistant transaction register. But how to invest in an art NFT?

Exorbitant prices

Since the March 2021 sale of an NFT by designer Beeple at Christie’s for $69.3 million, records have multiplied in Anglo-Saxon auction houses. Also on specialized platforms: On December 6, Nifty Gateway distributed a set of 250,000 NFTs from artist Pak for a total of $91.8 million, which would make him the most expensive living artist in the world if one considers this collection to be a single work … The enthusiasm is so great that the French auction houses launched themselves into the race in March 2021 (Ader, Rossini, Aguttes with the first SMS in the world who received €132,680 in the form of NFT on December 21). But French law forbids them to sell “intangibles”, they only sold NFTs linked to “physical twins”: photos, videos…

Three billion crypto art

The market for these art or crypto art NFTs, defined as ” artistic creations of which at least part of the work exists digitally on a blockchain , was $2,542,028,317 as of December 31, 2021, for 77,307 sales to 122,311 buyers, according to market analytics platform co-founder Gauthier Zuppinger. † These numbers are a first estimate regarding the Ethereum blockchain. To this must be added the volume of crypto art sales from other blockchains and that of the auction houses Sotheby’s ($100 million), Christie’s ($150 million) and Phillips ($6.19 million). ‘ says the specialist.

Collection of NFTs from Yuga Labs, sold for $1.6 million by Sotheby’s, on September 9, 2021.

A volatile market

How does that work in concrete terms? A collector/investor who wants to acquire an art NFT needs to install a crypto wallet (crypto wallet) on his computer or smartphone, convert Euros into Ethereum cryptocurrency. Then connect this crypto wallet to a specialized platform like Opensea, before buying a crypto art that it can resell to other people registered on the platform.

Dream on, NFT made by 25m42, presented by Hofa Gallery, in London.

Dream on, NFT made by 25m42, presented by Hofa Gallery, in London.

The crypto art market is still very volatile, with an average resale after 63 days for an average resale profit of $7097 in 2021 (9 December figures from Fanny Lakoubay, crypto art and NFT advisor at LAL Art Advisory, explains: “ Generative series (Profile-pic projects, collections of digital characters automatically generated by algorithms such as CryptoPunks or Bored Ape Yacht Club) sell out extremely quickly and are the subject of short-term speculation by a small number of people. have made the bulk of their fortunes in crypto currencies and concentrate the majority of the largest purchases. This makes the market very unstable and there is more supply than demand. The market is expected to shrink and the value of most of these projects will be close to zero. On the other hand, the crypto art market whose works are created by digital artists (such as XCOPY, Kevin Abosch or Pascal Boyart) should stabilize in the long run. Lucky collectors who invested a year ago saw the value of their crypto art collection rise by 300% at a fixed rate in Ethers. For collectors looking to invest today, it is in their best interest to purchase young digital artists such as these artists in residence at Vertical Crypto Art, but this is still a very young market. According to a study by the analytics platform Nansen for the Financial Times, this unregulated space is prone to fraud, scams and market manipulation, not least because the real identities of buyers and sellers are difficult or even impossible to ascertain.

Screen Test (Pearl), 2021, auctioned on Foundation © Courtesy of the Artist and Almine Rech

Screen Test (Pearl), 2021, auctioned on Foundation © Courtesy of the Artist and Almine Rech

On the side of the galleries

A few French art galleries have embarked on the adventure in 2021 with average results: Almine Rech on the Nifty Gateway platform, Kamel Mennour on the SuperRare platform. The Art Basel Miami Beach fair tried to host a “curated” exhibition of digital NFT works last December, but it’s clear that crypto art is escaping the actors of the traditional art market, with the exception of an auction house like Sotheby’s that opened last October. launched its own NFT selling platform During the first quarter, two new marketplaces will try to attract traditional collectors: Artprice© with (following its competitor Artnet with in December) and CADAF.

Clear, Bellum Tempus (2021).  Thanks to the artist

Obviously, Bellum Tempus, 2021, sold for 9,999ETH ($23,757) through Kamel Mennour Gallery. Thanks to the artist

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