How NFTs Changed the Art World

RCS: Carlos, I’d like to start by asking what it felt like in the early days of the NFT space, at a time when there weren’t the same forms of mediation and gatekeeping as there are now. Can we still distinguish a new decentralized art market from the old centralized model? ‍

Carlos Marcial: I wouldn’t be here talking with RCS and the former CIO of Christie’s auction house, if I hadn’t had the opportunity to tap into a global and “decentralized” art market that cared for my art. When I think about marketing, it’s all about attention and fine artists can’t escape that. If you don’t get eyes on your art, on your persona, on your biography, basically you don’t exist. The fact remains that NFTs were able to create a market for people like me in the Global South, in Mexico City — though I was raised in the Caribbean — to sell their art. For me, this has been revolutionary.

Otherwise, what would have been my options? I would have had to move to New York, to get a job in a restaurant near to the museums and galleries. And while I was waiting tables, I would be trying to gain the attention of people from those very institutions. With NFTs, not only have I been able to get the attention of collectors but also the people writing critically about NFTs, all from my home here in Mexico. That wouldn’t have happened without NFTs, especially as a digital artist. 

‍Richard Entrup: I think Carlos has eloquently summed up the impact of this NFT movement, which has allowed thousands of artists to sell their art who would otherwise have had no mechanism on traditional platforms. No longer do they have to rely on galleries and auction houses that have, historically, privileged the art of white men. So that’s the magic that must not be overlooked when we hear how many billions OpenSea did last month, or what the Beeple sold for, or how much money Christie’s made on NFTs last year. That’s great for them, but let’s not forget that the whole democratization and decentralization afforded by blockchain in the art world was and should be about the artists, not the middle men taking their cut.‍

CM: It’s impossible to have something that is so centralized, like the art world, become decentralized overnight. It’s a gradient and a process and we’re not even in the middle of it yet, we’re at the beginning. But even now, you have an artist like Osinachi in Nigeria, who is nonetheless able to work from home and connect directly with his collectors; you have Frenetik Void in Argentina; I’m here in Mexico City, all of us able to make a decent living from our art. So it’s a two-fold revolution. On the one hand, digital art finally became collectible, which follows the flow of cultural capital over the last twenty years into the digital realm. And on the other hand, you have a profound decentralization of that market.

‍RCS: As an OG of the NFT community who is based in Mexico, do you still feel like an outsider artist or do you even sometimes feel like a gatekeeper these days?‍

CM: I think I feel a little bit of both. To be honest, I don’t really like being called an OG, maybe because I still feel like an outsider or because I’m still attached to that persona. I’m just a normal guy here in Mexico City, which makes me feel like the outsider, but if I’m honest, because I’ve become well-known inside the crypto art scene I get a lot of Latin American, Mexican, and Caribbean artists approaching me, almost on a daily basis, who think I’m the one that will let them in. And right now, I’m in the process of putting together Metafisica, which is a SuperRare space, which I’m going to curate.‍

RCS: Richard, from the perspective of someone who’s worked in both art worlds, what do you think the auction houses intended by getting involved in the primary market given their experience in the secondary market? Was there a grand plan, and, if there was, has it been successful? ‍

RE: In 2018, we did the first blockchain auction at Christie’s. We used a company called Artory, run by my dear friend Nanne Dekking, which is still very much alive and well. That was a test, and we did it, but then it fell off and there was no momentum and subsequently no appetite to continue. At the time, there was no digital art being auctioned other than teamLab. The inaugural Christie’s Art+Tech Summit was dedicated to art on the blockchain, which was when Jason Bailey (Artnome) announced NFTs to the traditional art world. But for Christie’s, it was a way to attract new buyers of physical art. They weren’t seeing it as a native platform to attract people to buy digital art, it was only about attracting new art collectors to buy physical work. I think some of the auction houses still carry that mindset.

‍CM: I think the auction houses are becoming less relevant, but in the past, recognition from Sotheby’s or Christie’s felt like a validation. My mom is an art historian. So I grew up hearing about works by Frida Kahlo that were being auctioned off. That always captured the attention of my household. I’m not sure younger generations have that same attachment. If Christie’s and Sotheby’s came knocking at my door, would I accept? Maybe, you know, because, at least for me, they still hold some kind of cultural cachet. But then there’s another part of me that’s like, “fuck them,” I’m the platform now, I can do this by myself. ‍

RCS: Can we have cultural recognition, right now, without all the speculation?‍

RE: No, I think the fact that NFTs are tied to crypto is what is fostering this new generation of collectors — crypto billionaires who have nothing else to buy with their BTC or ETH, and don’t want to cash out to USD. People hear that NFTs are becoming mainstream and they view it as a get-rich-quick scheme. For all the great artists of the last 200 years, while they were living, their art was not selling for a fraction of what it is today. But now the process is expedited, globally, via the internet and NFTs, and that correlates with crypto speculation and an acknowledgement that NFTs, like crypto, are a new investment asset class.‍

CM: I think it also reflects the added value of incorruptible digital provenance, which has been such a long-term problem for the traditional art world. But I also can’t deny the benefits of speculation from my position as an artist who has now sold for seven figures. I was ready not to receive any attention. I was ready to die a poor artist. But, you know, NFTs came in and changed the whole dynamic.

Most people in the Global South live paycheck to paycheck, right? Nor do we have a financial education; and that’s partly because we would need access to extra capital. To invest in art you need money and you need some kind of cultural education. But I think that is changing with NFTs, which have made art collectible for people from developing countries. Artists in the Global South also care deeply about our fellow artists. We are united. It doesn’t matter where we are, whether it’s Haiti or the Dominican Republic or Peru or Bolivia, for everyone this is a chance to leverage a financial vehicle perhaps for the first time.‍

RE: Carlos’s point also correlates with the crypto mission of democratization — letting everyone participate in the system. Anyone can buy a fraction, anyone can participate in this new world of currency. The NFT is just the proof of concept for that. Let’s face it, there’s still not a whole lot you can buy with crypto. But with Coinbase, PayPal and other exchanges popping up, and more companies and countries accepting it as currency there could be mass adoption and an NFT market everywhere there are eyeballs. It’s simply another digital marketing channel that supports engagement, conversion, retention, and ultimately, revenue. That’s why the big companies are getting on the bus.‍

RCS: More than a new market for art, it also feels like there’s a wholesale financialization of creativity that has taken place, not to mention a gamification of the art world, which centers on the ritual of the drop. We also see many artists who are themselves collecting in a way we’ve perhaps not seen in the past. Has the psychology of the artist fundamentally changed?‍

CM: When you go to art school, or when you go to film school, one of the things they never talk about is the market. So artists don’t understand how their art might become a financial instrument. And more than that, you have this quintessential image of the hungry artist who is never able to sell. But selling is an act of communication about why someone should care about my art, or care about supporting me or other artists. The whole digital culture around NFTs accelerates that communication.

‍RE: Auctions have always gamified competition, with people bidding against each other. That goes back hundreds of years, with wealthy people holding up paddles to buy fine and decorative art. But now there is a new form of art acquisition and gamification, especially with the PFP projects, which include a utility beyond the NFT itself. The thing about collectibles is that they engage a human need to collect stuff, whether it’s baseball cards, stamps, coins, comics, or in my case, Beatles memorabilia and fine wine. But by adding an auction component to the sale process, you also significantly increase the floor or hammer price of the object, because people start to compete with one another and drive the price up. The more gamification, the more demand, and the higher the prices.

When I was at Christie’s I tried to apply artificial intelligence to that process in order to determine the predictability of collectors who were participating in online sales. We were even trying to judge when a buyer might hover over the buy button during the online sale process, so that the auctioneer could say, “Hello Miami, we see you might want to place a bid” in order to encourage an online bid based on intent.

But also with many NFT collectibles, the purchase is only the beginning. You buy a Kitty, or a bunny, whatever it is, and you get access to this whole community with whom you can play games. There are now restaurants opening up in Manhattan that offer access to token holders. But that’s not the art side. The people buying on Feral File, like me, chasing works by Casey Reas or Refik Anadol, we don’t buy art to play games. We want to own it, we want to look at it, and we want to share it. But of course there are different types of collector.

‍RCS: Carlos, as an artist, do you feel like you’re competing with NFT collectibles in a way that traditional artists didn’t previously? And if so, how do you feel about this expanded field of art?‍

CM: I’ve tweeted before that maybe I’m the only crypto artist who doesn’t mind PFPs. Like Richard, I think collecting, and community-building through collection, is innate to us. As a crypto artist, I don’t mind competing with collectibles because I know that if I had been part of the traditional art world, selling works through Christie’s or Sotheby’s, then I would be competing with other assets for rich people’s money, whether houses in Miami or stocks on the stock market.‍

RCS: Is it a problem when fine art NFTs, at least at the moment, appear to be less financially valuable than collectible NFTs?‍

CM: I think history has a funny way of fixing such things. Or at least that’s what I want to believe. I think collectibles like Bored Apes become easy vehicles for speculation for wealthy crypto people. In a sense, they represent low culture, which thrives on speculation, while digital art relies on other forces to establish an artist’s work and reputation. But in a strange way I don’t mind because I know that fine art always takes longer to emerge.‍

RE: The fact of the matter is, the bulk of the sales right now are happening in the PFP community and the other 10% to 20%, as far as I know, are happening in the arena of traditional art. Artists like Carlos, Casey Reas, IX Shells, Mario Klingemann, Snowfro, and Jared Tarbell — they’re all getting decent prices for their work, but nowhere near the Apes and Punks just yet. That may change. Ultimately, you’ve got to look at the data. The top 50 projects are all PFP collectibles and Pokemon-type sales. That’s just the way it is right now. 

I happen to know a number of substantial art collectors in the traditional art world that have crossed over into crypto. They own Apes, Art Blocks, and native generative art, although that remains a niche community. 

‍RCS: Before the pandemic, it still felt like there was a division between fine art and the cultural industries, which included digital creatives who were not used to selling their work for large sums. But in recent years, our experience of all forms of art has been compressed into a single digital plane, and it feels like we’ve entered an age of transmedia art. Would you agree with that assessment?‍

CM: I like to call crypto art “post-postmodern art” because we’ve evolved from a modernist artist who doesn’t touch the markets to a whole different animal who is directly connected to the market; who decides when to drop an NFT; who talks directly to the collector; who is the platform. In post-postmodernity, we’ve moved from being an artist-shaman to being a platform, to being a Christie’s or Sotheby’s ourselves. And that’s a double-edged sword: You get more of the money but you also become too much of a promoter or marketeer. ‍

RE: I’m just wondering what would happen if Refik Anadol, or Beeple, or XCOPY created their own NFT exchange to sell direct. At the moment, they’re still selling through other exchanges or auction houses. But why wouldn’t they go directly to the consumer like Disney and everyone else? The whole beauty of blockchain democratization is that it allows artists to go straight to their audience without a middle man. Unfortunately, in the case of the music business, which tried to introduce this kind of democratization, musicians simply couldn’t sell directly to their audiences without a massive marketing engine. So Spotify and Apple control the market.

Who are the tastemakers in the NFT space telling people what to buy? I don’t rely on Christie’s or Sotheby’s to recommend new digital artists to me. But I would like to know what Carlos is buying.