Despite ‘Crypto Winter,’ New York’s Art Scene Is Opening Up to NFTs

Many people have pronounced non-fungible tokens as dead, calling them a fading trend as a result of a reduction in sales and OpenSea’s wave of layoffs. Even Starbucks’ recent partnership with Polygon Studios — a leader in scalable and energy-efficient production on the blockchain — has been mocked since the announcement last week. The partnership offers Starbucks NFT holders access to a unique set of perks, ranging from a virtual espresso martini-making class to access to unique merchandise and artist collaborations.While these critics are right to point out the large decline in sales, there are also many signs of strengthening demand — and an emergence of even more use-cases for NFTs.At their core, NFTs are fundamentally about authentication and ownership. Distributed ledger technologies, often referred to “blockchain” for short, are good at decentralizing consensus-making and deciding what activity gets recorded. Whereas traditional digital ledgers in an organization are under the stewardship of a department, or often even a specific person, these distributed ledgers aim to decentralize decision-making, often among geographically disparate individuals connected by common interests. NFTs, which are stored on the blockchain, signal ownership of an asset. That is why art and music are such important use cases — their creators make original versions that are necessary to protect from fraudulent knock-offs, ranging from fake Gucci purses to Rembrandt paintings.Just last week, the William S. Paley Foundation announced that it would “auction off at least $70 million in art masterpieces this fall to expand the digital footprint of the Museum of Modern Art (MoMA) in New York and possibly acquire the museum’s first NFTs.” Even though MoMA contributed data from its full collection to Refik Anadol, a leading artist using methods from artificial intelligence, to build the NFT exhibition titled “Unsupervised,” it does not own any tokenized artwork on the blockchain.The interest from established institutions, like MoMA, in art NFTs is not an isolated occurrence but a building trend. The Artist Rights Society — an organization that helps artists with copyright and licensing — launched its own web3 platform called Arsnl on September 9. It began with a series of NFTs by Frank Stella, an artist widely known for his paintings from the 1950s and 1960s. In addition to the digital artwork, each NFT holder also receives the rights to the 3D images, which they can use to print physical models.The sale of not just artwork, but also rights, is substantial for the NFT community. At a time when many NFT projects have failed to delineate what holders are actually receiving, according to a recent Galaxy Digital report, clarity for the NFT holders is paramount. This has led to many disputes between NFT holders and the projects that they bought from, as well as some instances of fraud.Moreover, the move toward greater clarity is a leading indicator that the market is maturing: Potential customers are increasingly aware of the questions that need to be asked. That contrasts with the early days of the NFT boom when projects, like the Bored Ape Yacht Club, soared, promising that holders “own the underlying Bored Ape, the Art, completely.” These promises have not always been kept. The owner of BAYC, Yuga Labs “implicitly acknowledges that the NFT holder does not, in fact, own the art.” Many NFT holders have also grown discontent, leading A16z to propose several intellectual property templates for NFT projects so that founders adhere to best practices.Another example is Pace Gallery, one of the oldest and most established galleries in New York City. In 2021 Pace launched a dedicated NFT gallery called Pace Verso. While its aspirations have not yet come into focus, it’s obvious that Pace wants to embrace NFT technology and has already begun working with Art Blocks, a leading generative art web3 company, to showcase new artwork.Bitforms and Postmasters — two other galleries — are working with emerging and mid-career artists on a more hands-on basis in respect of NFT projects. In particular, they are allowing artists to lead NFT projects that coincide with their exhibitions, offering buyers and fans additional opportunities to interact with their creative content. Manfred Mohr — one of the artists working with Bitform producing mathematically oriented art — has talked about the importance of the physical manifestations of digital art.Lydian Stater takes yet another approach, focusing on the intersection of contemporary and crypto art that is neither located in the physical nor digital worlds, but is rather a hybrid of both. They also care deeply about helping to train artists to use these new digital tools and applications on their own. Lydian State recently unveiled a virtual reality space of their current exhibition.These trends tell us that NFTs are not just a passing fad — they are here to stay. The growing adoption of NFTs from reputable and established institutions demonstrates not only serious interest, but also a commitment of brand and vision.The emergence of all these use-cases also counters the narrative that people just buy NFTs to funnel money around to avoid regulation or other compliance requirements, particularly around securities. The U.S. Securities and Exchange Commission defines securities according to three features, but the most controversial is the “expectation of profit” among those who get involved. Although some NFT projects and tokens exist only because they are trying to circumvent regulation, many other projects that exist bring substantial value and equitable remuneration to the owners.Just as every organization is different, every NFT project is different. For example, we in Living Opera — a web3 multimedia startup — just launched a collection called MagicNFT Mozart that pioneers a novel approach to philanthropy using decentralized grant-making toward performing artists. Our initiative is hardly a “get rich quick” scheme; it is a collection anchored in engagement with the arts and philanthropy. Amid all the noise in the NFT market, many are making incredibly exciting discoveries and progress with applications well outside the digital landscape. Some NFT projects will survive — and those will be the ones that are truly creative and deliver long-term value to their holders. What we’re seeing in New York City alone is incredible momentum with the arts and NFTs, a trend that will continue.

Despite ‘Crypto Winter,’ New York’s Art Scene Is Opening Up to NFTs

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