“Everyone during this time, everyone I knew, was saying, ‘You gotta make an NFT,’” says the painter Max Denison-Pender, recalling the tulip fever that spread through the art world at the beginning of the 2020s. Its peak was marked by one seismic event. In March 2021, the venerable auction house Christie’s sold its first wholly digital artwork, Everydays: the First 5000 Days, by the artist known as Beeple, for $69.3 million in cryptocurrency, making it one of the most expensive works ever sold by a living artist; by contrast, Jeff Koons’s stainless steel sculpture Rabbit (1986) sold for $91.07 million in 2019 at the same auction house.
Everydays was a vast collage of individual digital works that its creator had been posting online at the rate of one a day since May 1, 2007. But there was little reason to believe that the art world had found another Warhol or Picasso. The Telegraph’s chief art critic dismissed the work as “a symptom of the desolation of digital culture”. Whatever you thought of it as an artwork, though, its price tag drove the art market into a frenzy. By December 2021, the digital artist Pak had sold a single artwork, Merge, split into 312,686 NFTs, for $91.8m at Art Basel. And it wasn’t even any good. It was an uninteresting monochrome digital image of spheres that suggested planetary (or molecular) distance.
But that was then, and this is now. In September this year, Christie’s quietly shuttered its specialist digital art division. Sotheby’s hasn’t entirely walked away from crypto art sales, but was left red-faced in 2022, when an NFT seller withdrew all lots as buyers waited with paddles in hand, then posted two hours later that he was “taking punks mainstream by rugging Sotheby’s” – a term for when crypto developers attract investors to a product, then disappear. The NFT boom has long since turned to bust, doing much damage to the reputation of digital art in the process, and one can only look back in amazement and ask, what the hell happened?
What Is an NFT?
No one needs another attempt to explain what an NFT (non-fungible token) is – widely recognized as a cue to stop reading – but here goes: it’s a sort of digital cloakroom ticket that tells you, “That is my coat” or rather “my Beeple”, but instead of getting lost in one of your pockets, it’s stored indelibly on a “blockchain”.
Still here? Phew. The technology was actually new and kind of interesting, but it was money that allowed NFTs to breach the blood-brain barrier between crypto and fine art. And what followed was not good.
One Bored Ape for $3.4 Million, Please
Long before the Beeple sale, there had been experiments that blurred that line, such as CryptoPunks, created by Canadians Matt Hall and John Watkinson in 2017. The iPhone app developers created a computer algorithm that randomly generated 10,000 pixellated heads of “punks” based on a specific set of hairstyles, hats, skin tones and accessories, so that no two were the same.
They were numbered and ownership of individual punks was given away free to anyone with an account on the Ethereum blockchain. When the Mashable news Web site wrote about them in June 2017, it noted “you can just claim whichever ones are still available (as of Thursday, there’s plenty)”. In March 2021, CryptoPunk #3100 sold for $7.6m; in June, #7523 went for $11.7m; and in February 2022, #5822 (Alien with bandana) changed hands for $23.7 million. The NFT boom was in full swing.
As art, they were not uninteresting: there was a sort of conceptual purity to them. And there had been a long history of “generative art” – work created by computers – dating back to the 1960s and 70s. But the artworks also functioned as “collectables” – like Pokémon cards – and soon there would be more of those, many more, typified by the Bored Ape Yacht Club – humorous portraits of ape characters that were influenced by the graphics of hip-hop and the humor and artwork of underground comics. Like the CryptoPunks, they were created by algorithm and launched in April 2021; by October, a Bored Ape with a rare “gold fur” characteristic had sold for $3.4 million at auction.
Money was piling into the market, and globally recognized artists took notice. Damien Hirst created The Currency – 10,000 unique dot paintings each with a matching NFT – which made $89m when it was released in 2022. The conceptual element of the hustle – and Hirst fits happily into a tradition of hustler artists that includes Warhol, Dalí and Anthony van Dyck – was that buyers had to choose between the physical artwork and the NFT. Just under half chose the NFT, and Hirst burnt their paintings at his Newport Street Gallery in south London that October. “It feels good,” he said as they went up in flames. One suspects that most of us would have felt that way about the funeral pyre, too.
“I Was Never a Fan of the NFT Craze”
Not everyone was convinced. Miami art adviser Karen Boyer recalls, “I was never really a fan of the NFT craze. I liked how it was a new medium for artists and that they were exploring something new. [But] the speculators in the market just created a mess. People were producing anything they thought they could sell. A lot of artists started making NFTs, just because I think that they wanted to make money. And I don’t blame them…
“[But] I remember being on a panel during Covid and a question came up about NFTs, because it always did at that time – at museum events, cocktail parties, everywhere – and my answer was, ‘if I had a client who asked me, if they had $69 million to spend, should they buy a Beeple or should they buy a Warhol and a Basquiat and a Joan Mitchell and a Helen Frankenthaler and a Robert Motherwell…’ and they were like, ‘OK, OK, we get the point.’”
In the Eye of the Volcano
One could, though, soon buy an NFT by Jeff Koons, Marina Abramović or Takashi Murakami. Denison-Pender was ahead of the curve. In 2021, at 23, the artist was painting using the “alla prima” – “at first look” – technique, in which new layers of paint are added while earlier layers are still wet. The whole concept of an NFT seemed antithetical, but there was one aspect of it that appealed to him. Since early childhood, he’d been dreaming of traveling to space, and had an idea that an NFT might be a way of attracting the attention of the Japanese billionaire Yusaku Maezawa, who had announced his plan to take eight artists on a journey around the moon.
He came up with a project to film himself painting the lava flow at the top of the active Fagradalsfjall volcano in Iceland, then fly the artwork into the cone and have it consumed by the lava, immortalizing the escapade as a short piece of video art linked to an NFT. It was dangerous but – sweating inside a flame-resistant suit with alarms going off to warn him of rising levels of toxic gases – he painted himself painting the volcano and daubed “Take me to the moon @Yusaku2020” on the work, which he was able to send to its fiery end with the help of a drone company in Reykjavik. “So then I was like, OK, well, let’s whack it up on [NFT trading platform] Open Sea.”
“I didn’t expect [it] to do well,” he admits. “But then lots of crypto magazines got interested… they coined it ‘the hottest NFT’, by definition. And then, to my surprise, the bids started and someone put 30 Ethereum on it, which translated at the time to $125,000.”
It seemed so outlandish that he thought the notification email must be spam – “so I closed it, then the next day I got the same email, I was like, ‘Wait. What?’” He accepted the bid. “And I said to my brother, Charlie, ‘Right, we’re gonna travel the world.’”
Criminal Elements
Back on the blockchain, the influx of crypto money was eye-watering. Buying and selling CryptoPunks, for instance, has generated around $3.8bn since their creation. (That’s about five years of UK government funding for the Arts Council, and all the artistic endeavors that it supports.) But when NFTs crashed, they crashed hard. With the promise of easy profits came scammers and fraudsters. Some just minted NFTs for other people’s artworks and sold those.
In May 2022, the Deviant Art Web site said that it had indexed 345 million NFTs and sent out alerts to its users for 245,000 works that had been stolen. The blockchain doesn’t check who owns the copyright, and NFTs could be minted by anyone, using a pseudonym. Analysis by the British firm Elliptic found that $100m worth of NFTs had been stolen by July 2022. (This formed part of a larger trend in global crypto scams, with Reuters reporting that $9.9bn was stolen in 2024.)
Anonymity allowed the unscrupulous to use “wash trading” to create and sell NFTs to themselves to artificially inflate prices, then cash in by selling to genuine buyers, creating the opportunity to launder ill-gotten crypto gains into cash. Wash trading was suspected in some high-profile sales, but the global nature of the blockchain makes it hard to police. Confidence collapsed. The bubble burst and people started losing money: a 2023 report suggested that 95 per cent of all NFT collections were now effectively worthless.
Yet some of this was simply down to poor investments, according to Magnus Resch, who wrote the book How to Create and Sell NFTs – A Guide for All Artists, back in 2022. “The same rule applies as in the art market at large. Art is a bad investment for most people. Digital art is still a tiny fraction of the market, and most of the artists who were hyped didn’t last. Only a handful did. Long-term value in art still comes from networks and validation through traditional galleries.”
Even the work of “name” artists suffered. At their peak, Takashi Murakami’s Flowers NFTs were selling for $200,000-plus, the current floor price is around $500. Some people lost a lot of money. “Most investors who made or lost significant amounts in NFTs don’t really want to talk about it publicly,” notes Resch.
Gold Rush Fever in the Art World
The NFT craze was by no means the first or only example of gold rush fever in the art world, and some of the most dramatic examples were also linked to new sources of money. In the 1980s, as Japan became one of the fastest growing economies in the world, collectors there spent an estimated $6-19 billion on art, especially favoring Impressionist works, driving prices to new highs, and bagging treasured masterpieces like Van Gogh’s Portrait of Dr. Gachet, which sold for a record $82.5m in 1990 to Ryoei Saito, just before the Japanese economy crashed.
In the 1990s, meanwhile, dot-com entrepreneurs bought up conceptual and tech-related works by the likes of Jenny Holzer, James Turrell and Sol LeWitt before the dot-com bubble burst, but they were soon replaced by the “hedge-fund guys” who inflated prices for contemporary art in the years leading up to the stock market crash of 2008. The single-artist auction of new works by Damien Hirst, Beautiful Inside My Head Forever, famously achieved more than $200m on the day that Lehman Brothers collapsed.
The Death of Digital Art
For Resch, the technology will survive, although the term NFTs is now “burned” – “I believe every painting will be registered on the blockchain in 10 years, creating a universal standard of provenance.” The technology, he assures me, will ultimately replace even the book-form catalogue raisonnés that are used to prove the authenticity of works by major artists.
Resch also thinks digital art as a medium will recover from the negative effect of the NFT bubble, with museum-level artists such as the 40-year-old Turkish-American artist Refik Anadol – who has exhibited large-scale generative AI works at the Serpentine in London and Guggenheim, Bilbao – continuing to be held in high regard and holding their value.
As for Denison-Pender, the remarkable upshot of his NFT endeavor was that it allowed him to paint jaguars in the Amazon rainforest and gorillas in Rwanda. Painting with a local artist in Zambia, he felt his perception shift, that the world was bigger than him, and he was determined to put something back. In February, a film of the two and a half months he spent painting soldiers on the frontline in Ukraine will be shown at the Imperial War Museum, with the paintings sold on the night to raise money for “windows and tourniquets”. The NFT had changed him.
The relationship between art and crypto, meanwhile, continues, although as Boyer puts it, in the world of fine art collectors, “No one really talks about NFTs any more”. And the idea of art as an investment for crypto millions received a twist with the sale of Maurizio Cattelan’s infamous duct-taped banana to the Chinese cryptocurrency entrepreneur Justin Sun in November 2024. Sun bid $6.2m to win Cattelan’s work at auction at Sotheby’s, New York, then held a party at which he ate the artwork, peeling and chomping it in front of a crew of crypto influencers. Bored ape style, one might say.
Chris Harvey is a London-based writer
