In the 2018 HBO documentary “The Price of Everything” the filmmakers take a cursory yet incisive look at the contemporary fine art world, featuring prominent artists such as Jeff Koons, Larry Poons, Gerhard Richter, and Njideka Akunyili Crosby, amongst others. The eponymous film derives its title from Oscar Wilde’s 1892 quote, “There are a lot of people who know the price of everything and the value of nothing.”
The film features auction sales of Basquiat and Gerhard Richter for tens of millions of dollars apiece, a multi-story inflatable ballerina by Jeff Koons shocking viewers in Rockefeller Center, a solid gold toilet by Maurizio Cattelan installed in New York City’s Guggenheim Museum as an interactive work, all displayed to highlight the absurdity of contemporary art.
The main purpose of the film is to provide a glimpse into the lives of a few of today’s leading artists and collectors as they battle the incessant pressures of uninhibitedly expressing themselves through their work while stewarding artistic culture that ultimately is controlled by the interests of big business. An artist’s personal artistic reinvention and expression through her work can be strangled by the cold practicality of the financial interests within the art market. These struggles often boil down to one thing for artists and collectors: how to determine the value of pieces in the highly competitive and often nebulous contemporary art world.
Beauty is in the eye of the beholder. At least that is a platitude spewed by armchair philosophers as they wrestle with ideas on what imbues value on any form of artistic expression. Valuing pieces in the traditional physical art world has always vexed casual observers, collectors, and experts alike. Contemporary art has high historical annual volatility of 25.8%, pointing to the difficulty in objectively determining value. Additionally, approximately $200 billion is spent annually on physical art, of which $6 billion is estimated to be fraudulent or tainted by illicit activity.
NFT generative art is a nascent and rapidly growing ecosystem within the crypto world that has emerged as an alternative to the absurdity of the traditional art world. Using a new artistic digitally native medium, the movement fundamentally challenges our conception of what gives art its value and how society expresses its communal values through art.
NFTs Implement Programmatic Rarity and Community-Building to Create Value
NFT creators within the artificial intelligence generative art community are using algorithms and blockchain-based provenance to address issues of mercurial valuation and fraud. AI generative art platforms create on demand digital content that is stored immutably on the Ethereum blockchain.
Collectors can pick a style they like, pay for the work using crypto, and a randomly generated version of the content is created by an algorithm and sent to the collector’s Ethereum address. The resulting NFT might be a static image, 3D model, or interactive experience that is unique and exclusively owned by the collector in her crypto wallet.
Implementing inputs from the collector at the moment of minting such as her wallet address, gas price, block number, block timestamp, and transaction ID, allows the collector to be part of the creation process, each piece embodying a unique and irreplicable collaboration between artist, collector, and machine. Generative art pieces are thus intentionally introducing randomness as part of the creative process, creating a slot machine-like game where neither the artist nor the collector knows what the end result will be.
In the traditional art market, the works of dead artists often fetch a hefty premium, as the scarcity of these pieces are ensured. Jean-Michel Basquiat famously died of a heroin overdose at the young age of 27, and thus his roughly 600 paintings will always demand prices in the millions of dollars.
Similarly, generative art projects often programmatically enforce a supply cap on the total amount of pieces that can be produced, which typically has been ~10,000 unique NFTs per collection. Once all of the primary issuances are claimed and the supply cap is reached, collectors must turn to the secondary market to acquire the NFTs, with the NFTs often selling for many multiples above the primary issuance price.
Originally, the price to mint an Art Blocks Chromie Squiggle NFT was just 0.035 ETH (~$140) for one of the 10,000 total mints, and the price floor of the collection currently sits at ~11 ETH (~40,000).
Additionally, creators may include specific attributes of varying degrees of rarity, imbuing additional scarcity and value to NFTs that have those rare traits. This has led to composite rarity scores that collectors use to help quantify the value of a particular NFT.
Chromie Squiggles with the “hyper-pipe” trait, such as the one below, have a rarity score of 0.04% and have sold for as much as 750 ETH (~$2,900,000).
Chromie Squiggles are just one collection that successfully listed on the Art Blocks platform. Founded by Erick Calderon, also known as Snowfro, in November 2020, Art Blocks has quickly become the leading generative art marketplace and curation platform. Since its launch, the platform has booked over $700 million in generative art sales by over 15,000 collectors.
Art Blocks is home to the most prestigious generative art collections including Tyler Hobbs’ Fidenza (999 unique mints with a current price floor of 205 ETH or ~$800,000), Dmitri Cherniak’s Ringers (1,000 unique mints with a current price floor of 150 ETH or ~$590,000), and Khetil Golid’s Archetype (600 unique mints with a current price floor of 65 ETH or ~$255,000), amongst others.
Tyler Hobbs’ Fidenza 313, “The Tulip”, recently sold for 1,000 ETH ($3.3 million).
Reflecting on Art Blocks’ rapid success, Snowfro noted, “Art Blocks is becoming like a branded gallery, artists are becoming branded artists, and their outputs are highly desirable by people who want to own these pieces. Our vision is to transcend crypto with Art Blocks and community is essential to the experience. Many people owning pieces from the same collection gives them a lot to talk about and connect over.”
As a purely digital medium, generative art has enabled a new surface area for artists to experiment with artistic expression and engage collectors. Collections such as Loren Bednar’s Phase and FAR’s Infinites AI integrate motion to broaden the space of creativity and produce aesthetic appeal. Similarly, NFT experiments within gamification and metaverse applications will increase the utility of generative works in ways yet to be realized.
Infinites AI is a collection of 512 unique pieces that integrated inputs from the collector to generate breathtaking pieces utilizing motion to dazzling effect.
Determining the Value of Generative Art
The value of generative art is based on an interplay between imbedded attributes with varying degrees of programmatic rarity and how those elements come together in a way that is visually aesthetic and pleasing to the collector. Although the programmatic characteristics add quantifiable metrics that can be used to assist in the valuation of the NFT, generative art pieces still have an element of subjectivity driving demand.
Anthony Cesar, also known as AC, is a generative art collector, amassing a collection worth north of $50 million comprising works from several of the most valuable collections including Fidenzas, Ringers, Archetypes, and Subscapes.
Asked about the value of NFTs and generative art AC remarked, “what is the market cap of Global Culture? The world is moving increasingly online and on-chain. Google
AC’s business associate and prolific generative art collector, Bonafidehan, echoed a similar sentiment. “Winning blockchains like Ethereum will serve as a universal book of truth persisting for millennia. We may have created something that is truly eternal with culture assembling around the chain. These initial generative art pieces are cultural artifacts that will last as long as the underlying blockchain does, which in turn will last as long as civilization.”
When asked about the potentially dilutive effects of “copycat” projects and new collections attempting to cash in on the hype, generative art collector Dandelion commented, “I don’t view new projects as being dilutive, if anything they are validating of the space. They present a new surface area for people to be onboarded, and new collectors will then move upstream and value the original works even more highly. A CryptoPunk will always be a CryptoPunk regardless of how many digital avatar projects exist.”
Ushering In A New Era Of Art Appreciation
The NFT generative art movement is leading to greater appreciation of art and inclusion on a global scale. The traditional art world has notoriously become an exclusive club and investment class for the ultra-wealthy to speculate on and flip for profit, or perhaps more nefariously, to launder money or engage in tax evasion.
“Now, we have nerds with all of the spending power in the NFT community, instead of rich benefactors who inherited their wealth,” commented Artxcode founder Sofia Garcia. “Price transparency is massive. NFTs enable everyone to see how much collectors pay for their artwork and let the market choose rather than allow art dealers to leave artists in the dust. There is a change in the guard in who is able to collect high quality works.”
Twin Flames photographic art creator Justin Aversano relates the generative art movement to the WallStreetBets retail investor phenomenon. “Many tech and finance individuals are getting involved. Whereas they used to day trade Tesla
Early crypto investors who have experienced more than one market cycle will remember the 2017 ICO bubble, eliciting similarities to the current speculative fervor surrounding NFTs. Back then, ETH was the primary form of currency for investors to contribute to projects that promised some future utility, often raising millions of dollars with little more than a website and whitepaper.
Mindful of the current euphoric market conditions, Snowfro commented, “the current market dynamic has a lot of unprecedented speculation. I won’t sit here and say prices will always go up. However, we are onto something that could potentially be a new generation of art appreciation and understanding of digital art with algorithmic components that resonate with people who have a collector mentality. Our community has a saying, ‘came for the flips and stayed for the art.’”
Although the NFT generative art market may be inundated with euphoric sentiment, early stewards of the movement believe it is ushering in a new digital Renaissance enabling artists to reach a global audience and experiment with a new medium that is engaging collectors on a deeply emotional level.
Ultimately, the forms and types of art that are produced and highly coveted signals the fundamental values of a society. Calcifying around values of community-building, inclusion, and mimetic culture, blockchain-based NFT generative art has usurped the traditional art market in its ability to draw attention and capture the imagination of a global audience. The NFT art community has accomplished this by building an internet-native global community of avid fans, creators, and collectors that do not take themselves too seriously and prioritize fun and connection over physical material possessions.