It looked like an art type barbecue last week in London. There, the well-known British artist Damien Hirst (57) stood poking in a fire between his polka-dot paintings, wearing large fire-resistant gloves. But Hirst didn’t fry meat, he burned thousands of dots paintings, which will only live on ‘digitally’. Namely as NFTs, digital property deeds. ‘What a weird day’, said the artist himself.
Hirst launched his series The Currency, ten thousand dot paintings, in the summer of 2021. He offered them as NFTs for $2,000 each. Owners who wanted to could trade the NFT for a ‘real work of art’ this summer; those who didn’t want that, only had the NFT: those works of art set Hirst on fire. More than half of collectors chose to exchange their NFT for a physical work of art. And with that, Hirst’s publicity stunt seems – unintentionally – to mark the end of the NFT hype.
The market for NFTs is steadily declining. Whereas in January 17 billion euros worth of NFTs were traded, in September that was only 478 million euros, according to data from Dune Analytics, a Norwegian platform that tracks NFT prices. That is a decrease of 97 percent. Take one of the most talked about NFTs of last year: the first tweet from Twitter founder Jack Dorsey was acquired for $3 million by Iranian crypto entrepreneur Sina Estavi. He brought this NFT back onto the market this year. The highest bid is currently 133 euros.
The price development of Hirst’s NFTs is also noteworthy. They were offered in the summer of 2021 for 2,050 euros, were good for tenfold in February this year and about 6,150 euros are now being offered. There is a good chance that those who have obtained a physical polka dot painting will be financially better off in the long run (and at least have something to hang on the wall).
OpenSea, the platform on which Dorsey’s and Hirst’s NFTs’ tweet are presented, is the market leader in NFTs. They also feel that buyers’ enthusiasm is declining: 20 percent of employees were laid off last summer.
The NFT craze started in March 2021, when a virtual artwork by Beeple (the stage name of American designer Mike Winkelmann) fetched 50 million euros in an online auction. An annual survey by the Swiss bank UBS and art fair Art Basel shows that 74 percent of collectors bought artistic NFTs last year. The researchers predicted that the craze would hold out this year, especially among millennials and collectors in Taiwan, Singapore and the United Kingdom. In fact, in 2021, a piece of engineering that enables NFTs was voted “most powerful in the art world” by a leading international art magazine.
However, there has always been criticism of NFTs. For example, digital property deeds proved to be susceptible to fraud and theft. The environmental damage of NFTs was also often mentioned, because blockchain technology consumes energy. Moreover, the expectation that the NFT market would make the trade in (digital) art more transparent and democratic was not fulfilled. Gatekeepers such as exclusive NFT platforms and auction houses quickly managed to bend the trade to their will. Auction house Christie’s still seems to have faith in the NFT market and last month launched ‘Christie’s 3.0’ as its own platform for NFT auctions.