While there’s still some controversy surrounding the true date when Christie’s made its very first sale, the auction house’s official records point to December 5, 1776, at the house’s Pall Mall premises in London. Christie’s earliest auction catalog is dated the same month and year.
Founded by Scotsman James Christie, Christie’s is, by all accounts, a very reputable auction house. Its auctions include a very eclectic and diverse range of items. From 3,000-year-old sculptures to a leather armchair once owned by the French fashion designer Yves St. Laurent, or an Oppenheimer Blue Diamond and Da Vinci’s Salvator Mundi, Christie’s has seen its fair share of cultural (and very expensive) paraphernalia. (Salvator Mundi sold for an eye-watering $450.3m on November 15, 2017, thus becoming the most expensive painting ever. Despite this record-setting price tag, the painting’s authenticity remains in question to this day, and has never been exhibited publicly.)
Traditionally, when an item is auctioned, the highest bidder wins, and once the payment is made effective, the item in question is given to its new rightful owner. Christie’s (and all other auction houses, for that matter), has been operating in this manner since the beginning of its 255-plus history.
But on March 11, 2021, something unusual happened that broke this convention. On that date, a single-lot sale item at Christie’s wasn’t really there, in the true sense of the word. The item in question, Everydays: The First 5000 Days by American digital artist Mike Winkelmann (a.k.a., Beeple), made history when it became the first-ever auction house sale of a piece of art that didn’t even have a physical form.
The price tag? Just a whisker from a cool $70m. The non-fungible token (NFT) gold rush had begun.
The fascinating world of NFTs
The concepts fungibility and non-fungibility had, for a long time, been well outside the layman’s lexicon. But the landmark auction that made Mr. Winklemann one of the world’s three most valuable living artists overnight got everyone scrambling for the dictionary.
In short, fungibility means the possibility of using goods, items, or commodities interchangeably because they have the same value. Banknotes or coins, pieces of fruit, or a liter of petrol are good examples of fungibility.
Non-fungibility denotes uniqueness. Collectible items, including original oil paintings, baseball cards, art pieces, diamonds, and vintage cars can be considered non-fungible.
It is the latter concept that emerges as most interesting, as non-fungibility carries value. A lot of value, as The First 5000 Days brought to light earlier this year.
Before the seminal Christie’s auction, NFTs were a rather niche concept little known outside the crypto space. But since 5000… sold for $70m, the floodgates opened and, overnight, everybody aspired to become a digital artist and strike it rich. Some say that NFTs represent the next chapter in art history. Others refer to it as a fad, an illusory gold rush that will fade away into obscurity just as quickly as it rose to prominence. But if we put aside the hype and the quasi-mythical admiration for these digital assets, NFTs are significant for two very specific traits inherent to the underlying blockchain technology that supports them: Originality, and ownership.
Provenance is a notoriously difficult thing to ascertain. Some art pieces might be decades, even centuries old, and might have changed hands multiple times, for example. And who can say for certain that at some point in the timeline, the art piece hasn’t been copied, or counterfeited, and sold on as original? Salvator Mundi is a prime example of this. Someone paid a staggering amount of money for it, and, to date, the piece’s originality hasn’t been conclusively proved.
But NFTs can be irrefutably be shown to be originals, and be accurately attributed to whoever created them. The reason for this is blockchain’s immutability. Once a record is created, it cannot be amended or tampered with. In other words, the blockchain acts as trustable authenticating mechanism to determine the asset’s origin and ownership.
NFTs: Beyond art
So far, NFTs have mostly been associated with the art world. Amateur artists the world over are jumping on the bandwagon and hoping to create the next most-wanted item. Most won’t, of course. Once the hype dies down, NFTs are likely to remain as a curiosity that made one man rich once.
But NFT’s blockchain-related traits (originality and ownership) do pose a valid question. Could NFTs have other uses, outside art? The answer is yes, and here’s why.
Now, NFTs are:
- Non-fungible, i.e., unique
- Scarce, therefore valuable
With that in mind, what other uses could be associated with these digital oddities?
People love collecting stuff. Stamps, coins, baseball cards, dolls, comic books, war memorabilia, and a thousand other things, collecting is an international hobby. Some collectibles carry a lot of monetary value, but it’s that ‘I must have that’ feeling that most collectors crave. The feeling that they have something unique that others want. NFTs neatly fit into these two categories.
The Cryptokitties game came into existence on the Ethereum network in 2017. Each cryptokitty represented a cat, and each came with its own distinct trait. Fur pattern, eye color, etc. People soon started collecting cryptokitties, and wanted more of them. Some of the more sought-after cryptokitties became the Holy Grail of the blockchain, and when sold, they sold for a lot. (The most expensive cryptokitty sold to date, Dragon, fetched 600ETH -around $172,000- in 2018.)
Cryptokitties were the very first example of NFTs. Tradable, valuable, and unique. Since then, other games have appeared that use NFTs as tradable commodities. CryptoPunks and Decentraland, for example.
Blockchain (or crypto in general) wouldn’t necessarily be some of the words one would associate with the fashion world. But all that might just change with the advent of NFTs.
Fashion is more than just clothes. Accessories, complements, apparel, etc. are all part of the allure to look and feel good. Some of these accessories can be quite valuable. A Hermes handbag could cost upwards of €3,000, for example, and Gucci ones wouldn’t be too far behind. These much sought-after, high-value items have long since been the target of counterfeiting. Some estimates say that fashion fraud costs the fashion industry upwards of $500bn per year.
NFTs can play a crucial role in eliminating this scourge by creating blockchain-verifiable supply chain database that certifies that an item is original, and it has always been in legitimate hands, for example.
Purchasing property is a big investment, and for most people, probably the largest one they’ll ever make. Because of the high stakes involved, you want to make sure that the property you’re looking up can be legally purchased (i.e., it’s not subject to lien, foreclosed, or involved in illicit activity.)
Tokenizing property deeds is yet another potential use case for NFTs outside the art world. Realtors can move these tokenized assets onto the blockchain to ensure there’s no tampering or falsification.
Temporary craze or viable asset, only time will tell what the ultimate fate of NFTs will be. During the first quarter of 2021, NFT has become somewhat of a buzzword, and everyone wants to party with it.
When you think of it, almost anything can be turned into digital art: short films, trading cards, memes, stamps, dolls, in-game items, even tweets, anything that can be collected can be transformed into a must-have thing that someone, somewhere might want to pay good money for. The possibilities are endless, particularly considering metaverses and similarly expansive and boundless concepts.