Traditional Auction Houses Have Made Progress in NFT And Become The Forerunner of Global Digital Art NFT Collection
2021-12-25 12:22:42 Reading

 The explosive growth of NFT began with an auction.

NFT, that is, non fungible token, can record the ownership of various virtual items on the blockchain to form a traceable, non tamperable and irreplaceable "digital asset". The uniqueness of new technology coincides with works of art, bringing subversive changes to contemporary collection. In March 2021, at Christie's auction house, digital art NFT "Everydays: The First 5000 Days" sold for $69.34 million, setting a new record of digital art NFT transactions, but also making the word NFT strong into the public's view.

Noah Davis, an expert from Christie's post war and contemporary art department, said that Christie's has been tracking the growth of NFT market since 2020 and found that its sales increased significantly in the second half of the year. It is judged that it is the right time to enter this market.
Subsequently, more and more artists, collectors and galleries began to trade digital art NFT on the NFT encrypted art platform. With these works of art "sparking" with a string of codes, the soaring value of geometric multiples also attracted the attention of traditional auction houses such as Sotheby's, UK EARL INTERNATIONAL AUCTION LTD and Christie's. The giants of auction houses have shot to include NFT works of art in the auction category.

In April, Sotheby's auction house and NFT auction platform NiftyGateway jointly held the first online NFT auction. A group of NFT works by anonymous artist Pak were auctioned, with simple geometry and high conceptualization. For example, the work named "Pixel" really has only one gray pixel, and the total auction amount of this group of works reached US $17 million. In October of the same year, Sotheby's also invested in NFT studio MOJITO to develop and launch a selected NFT platform called "Sotheby's Metaverse".

Also in October, UK EARL INTERNATIONAL AUCTION LTD, which is quite mysterious in the auction industry, quietly sold and spent 50 million to complete the acquisition of NFT company REVA. REVA will be responsible for the development and application of NFT business of UK EARL INTERNATIONAL AUCTION LTD and create its own NFT ecology. The valuation of this Silicon Valley based NFT start-up suddenly reached more than 500 million.

In the face of this acquisition, REVA said, "traditional auction always has a limit for users. We can help it lower the entry threshold, make it simple and interesting, and provide space for the brand to become its own brand. In general, we are full of enthusiasm for decentralization and hope to help users enter this field, which is a good channel."

In addition, traditional auction houses have also carried out many activities around NFT, but it is worth noting that all three auction houses announced this year that they will begin to accept payments in virtual currencies such as bitcoin and ether.

On December 16, Sotheby's announced that its total auction turnover in 2021 reached US $7.3 billion, a record. Among them, the auction turnover of NFT collections reached US $100 million. Sebastian Fahey, managing director of Sotheby's central Europe, said: "When Sotheby's first entered the world of NFT earlier this year, it was clear that so far, we have only scratched the surface of this new media and NFT potential. For me, this latest market innovation is one of the most basic and exciting innovations so far. We are in a unique position at Sotheby's to apply our expertise and curation to the emerging art world of the digital primary generation."

Data show that 78% of NFT bidders at Sotheby's auction are novices, and more than half are under the age of 40.

Coincidentally, on the evening of December 20, Christie's released data showing that its total turnover in 2021 was US $7.1 billion, a five-year high. In 2021, Christie's sold more than 100 NFT works, with a total turnover of nearly US $150 million, accounting for 8% of Christie's total contemporary art turnover in 2021. Among them, 74% of those who participated in the auction participated in Christie's auction for the first time, with an average age of about 42. Relatively speaking, encrypted works of art are particularly attractive to a new generation of young collectors.

Noah Davis, a post-war contemporary art expert at Christie's, also said that after a year of forcing the art market to go digital, they all felt that this was an inevitable trend, although it was a bit disturbing. As a mechanism, NFT has enough potential to change the existing art ownership establishment model. He is looking forward to seeing artists use this technology to create a world full of new creative opportunities. In turn, he also looks forward to seeing how this will subvert the art market. "

For the reasons and business logic of traditional auction houses involved in the NFT field, many respondents mentioned that on the one hand, influenced by the global COVID-19, the Internet trading and digital network payment system penetrated into all aspects of people's lives. At the same time, traditional auction houses, which are highly dependent on offline activities, gradually moved the auction online and began to "touch the net". On the other hand, this is to meet the needs of the auction house's own business transformation in the digital age and to meet the needs of users in today's NFT market.

"2021 is a crucial year for NFT encrypted digital art NFT." In an interview earlier, the relevant person in charge of Christie's said: "through our good performance in NFT auction, we can confidently say that NFT collection category will continue, and the market of NFT encrypted art is now developing very vigorously."

NFT works integrate the attributes of blockchain technology and digital art. They are suitable for online auction, and high prices can increase performance. In the face of performance growth, these traditional auction houses should also face the changes of NFT to the rules of the traditional art market. For example, every time traditional works of art are resold, the artists themselves usually don't get any income. Christie's and Sotheby's have been sued for this. The NFT market will give artists a maximum royalty of 10% each time they resell. The traceability of the blockchain itself makes it convenient for artists to master the flow of works and continuously obtain income.

As Charles F. Stewart, chief executive of Sotheby's, said: "We believe that blockchain can be used to expand the ownership of digital assets in the future. People have great attention and interest in NFT. Most of our existing customers and collectors are talking about these art categories, but we are also in contact with a large number of new audiences who are very concerned about this category. Sotheby's mission is to promote the acquisition and ownership of excellent art and luxury goods, so it is meaningful to pay attention to and develop this field .”

According to the report of market research organization Chainalysis, the market scale of NFT has reached at least US $26.9 billion in 2021 and will continue to grow in the future. According to Collins statistics, the usage rate of "NFT" increased by 110000% in 2021. After defeating a series of candidates including "Metaverse" and "vaccine", it was elected as the vocabulary of Collins dictionary in 2021. Meanwhile, NFT's search volume in Google also soared to an all-time high.

In the face of such a huge market, traditional auction houses have begun to layout NFT art auction. On the one hand, they cooperate with NFT platforms such as OpenSea, and on the other hand, they invest in NFT companies such as REVA and MOJITO to build their own platforms. These measures are the recognition of NFT art trading market. On the one hand, NFT art has the characteristics of tradable circulation and appreciation, which also makes it have collection value; On the other hand, it bears the painstaking efforts and achievements of the creator and has unique commemorative significance. In addition, the continued popularity of the 'Metaverse' this year has contributed to the fire, and NFT is considered to have considerable development prospects. It is expected that the popularity of NFT will continue for a long time in the future.

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