Behind the scenes of an Art auction with NFTs

The sale of Art with NFTs (Non-Fungible Tokens) is not yet mainstream. It is still an emerging form of selling that is not always easy to understand, though it can be used for a range of products and services. I invited Valentin Lefebvre to talk about this topic. Before working in digital Art and NFT with his company La Découverte he had created a startup where he was designing mobile apps for about four years. This allowed him to build a strong network for his new venture. With this interview, Valentin takes us behind the scenes of an Art sale with NFTs, while giving some indications on the economic perspectives of this technological application of blockchain.

Behind the scenes of an Art auction with NFTs

An Art auction with NFTs
The subject of an Art sale with NFTs is pretty intriguing. As the artwork itself is downloadable, I offer it to you here dear readers: Ravishing by Esther Barend (worth €8,000 or $12,000 for the animation in NFT). You can see the animated version produced by La Découverte in the video below.

To me the concept of digital works which are duplicable, downloadable, and could be auctioned didn’t seem very plausible. Most of the time, the auction is carried out with cryptocurrencies – which are also virtual – on virtual platforms. To top it all, all we need to do is to  put this into the “metaverse” and we will have bought virtual works with virtual money in a virtual world on a virtual platform.

Through this interaction with Val, I have tried to understand and go behind the scenes of an art sale through NFTs. For our readers, I have enclosed the certificate of the sale carried out in October 2021 by La Découverte.

NFT sales boomed in 2021. The market reached $22 billion by the end of the year, reflecting the growing interest in these blockchain-based tokens from all sorts of players.

A definition of NFTs: Non-Fungible Tokens

NFTs are non-fungible tokens, so they are not exchangeable because they are unique. A Wikipedia page, for example, is non-fungible in the sense that you can’t exchange it for another Wikipedia page. It cannot be replaced. A Wikipedia page could theoretically be an NFT, but it turns out that it is not for sale.

Today, there are other things, tokens, files, and products that are for sale and exchange, especially in Art. The value of the non-fungible token is that it is a unique work and that it can be verified.

To take the previous example, when you create a Wikipedia page, it generates a history log, which is then verifiable and traceable. NFTs work in a similar manner.

NFTs seek to guarantee the authenticity of a work of Art through blockchain

NFT is verifiable, traceable and transparent. If you could buy a Wikipedia page or resell it, it would have some value. Blockchain is a decentralised means of verification. When an item is created, it is spread across different entities to make it difficult to fake. It is easier to manipulate a work that is in the hands of one person than it is to fake a creation that is spread everywhere.

This is the antithesis of copyright after all. To guarantee authenticity, you give the work to everyone

NFT is like sending a piece of code to as many people as possible. This piece of code is the same everywhere. If someone wanted to tamper with it, there are many others who have the original one. If these pieces of code don’t match, then it could be inferred that the work has been manipulated and is not authentic.

Selling Art with NFTs, how does it work?

Today, currencies are among the first uses that have emerged thanks to this blockchain technology. Bitcoin is well known, but others such as Ethereum facilitate exchanges and transfers. They have created non-fungible tokens in particular and a lot on the blockchain.

We understand a little better, but it’s still a bit obscure …

You have to be comfortable with the idea that you don’t understand absolutely everything you do. It’s like when you send an email or do anything that uses AI, there’s an underlying technology that you don’t understand. What matters is that we understand the usefulness of NFTs and find value in their use. If we understand where our data is going and which NFT belongs to us, everything is fine.

Authenticity of digital artworks with the NFT

To ensure the authenticity of my painting, I could have it appraised. But with a certificate, I could have written proof of the work’s authenticity and therefore its true value. At the end of the day , the value of the painting lies in its certificate of authenticity.

With NFTs on the blockchain, people buy a token that certifies the authenticity of a digital file. NFTs only apply to virtual works, they point to files that are in the virtual domain.

Buyers acquire works mostly with cryptocurrency on marketplaces with certificates of authenticity. Some platforms, such as Markersplace.com which we have chosen, accept credit card payments too.

Most of these platforms, however, deal in crypto only. These marketplaces use blockchain and cryptocurrency to sell digital certificates of authenticity that attribute the work to its buyer. The sale is registered in the blockchain, and is therefore verifiable, traceable, and public.

How did it all start?

This phenomenon goes back a long way and became more popular in the last two years. One of the first, to my knowledge, was crypto kitties, in the US. Algorithms created different versions of a drawing of a little cat with variations at each iteration, and this created a number of distinct little images, but on the same model. People started collecting them as a game, and could even trade them.

The phenomenon later developed around A rt, as it was easy to work, save and reference back to JPEG, Video or GIF files. There is an emergence of digital Art through NFTs, it even becomes the first acceptable legal vehicle for cryptocurrencies.

Who was the first artist to engage in NFTs?

There are many of them. The first known artist to do it was Beeple who made an auction at Christie’s in March 2021. He made news because the auction closed at $69 million for a mosaic of his images.

Mike Winkelmann (aka Beeple) is a computer graphic designer. He has been designing an image every day for years, collecting 5,000 in total. This mosaic is a digital collage of all the images he has made over the last ten years, which is called “The First Five Thousand Days”.

What did the buyer get for $69 million?

He is the owner of a certificate of authenticity of what everyone else can have. Just because you have a picture of the Mona Lisa does not mean you own the Mona Lisa. The NFT is the certificate of authenticity.

The NFT is a token, a non-fungible code that cannot be exchanged for another code. This code certifies that on a certain day at a certain time, a certain creator sold this work to a certain person and that this work belongs to him

So finally I can download it, since everyone can have it!

Yes, you can. The owner of the certificate can display it because it is his. He will thus create a gallery and a virtual museum, and will charge visitors to come and admire the works he has bought.

It raises a lot of questions, and can be exciting as well as scary. It’s another way of broadcasting, being visible, and selling stuff

As an anecdote, we sold an NFT a fortnight ago at an  auction. I fell in love with a painting by Esther Barend, a Dutch artist. I contacted her and proposed my idea of transforming her work into some digital animation.

I bought the rights to be able to make this animation from a painting. The result is a video to which we added music that we had bought. In the end, it becomes a composite and a new work per se. It’s different from the original painting, and is a rendering in itself. We sold it online on an NFT marketplace with crypto for more money ($12,000) than the original painting (€8,000 only). As a matter of fact, it was sold in a gallery for a little more than 3.4 Ethereum or $12,213 that day.

Who made the visual animation?

We hired a “motion designer” to create this animation.

We are not artists. We are more like DJs. Typically, a DJ is not a musician, but a creator who takes music as his raw material. As for us, we take painting and music as raw materials and mix them with animation.

It becomes a composite and new work, which we sell.

How did the Art NFTs auction go?

It was a first for us. It was quite exciting and uncertain at the same time. The auction lasted 48 hours, started on a Monday night and ended three days later on a Wednesday. It was online on Makersplace.com which is operated from San Francisco.

We wanted to bid around $1,000 or $3,000, but due to the time difference, some smart guys came on the page in advance and started bidding. This happened as the design had already gone online. They started at $200 or $300, so from then on, one couldn’t stop the sale or change the price. After various exchanges with the platform they advised me to set the end date of the auction, and then the real bidding started.

Who are the bidders on this NFTs Art sale

It’s not just anyone. These are people who are actively involved in the business, as one can’t buy Ethereum like that, it’s a slightly long process. On top of it, you need to have a good amount of it, as €12,000 is a decent sum. Some bidders are anonymous, as you can bid anonymously with your credit card, in dollars or in crypto. The first evening, we finished at 900. The next day we were at 4,800, then it went up to 6,000, 8,000 then 10,000 and at last, one buyer named Jenny Guo won the auction at €12,000 or 3.4 Ethereum.

NFT Art Sale

If you don’t believe Jenny Guo spent €12,000 in Ethereum to acquire Esther Barend’s paintng, here’s the irrefutable proof, straight from the Blockchain.

What is your vision: is it entertainment for billionaires and start-ups or something that will make Art available to the masses?

We are operating in a niche within a niche. In the crypto world, there are NFTs and Art, and in Art, our positioning is at the top of the range for works that are intended to be rare, precious, and expensive.

It will develop, but remain a niche for people who have a lot of money and want to enjoy themselves while being collectors

Our buyer is a digital collector. She will continue to expand her portfolio of digital Art. We are a French brand, in sophisticated A rt, rendering beautiful and high quality works that are rare. We don’t produce many of them and these works are expensive and in unique editions. We are in it for the long haul.

For your information and perusal, here is Avolta’s January 2022 newsletter on NFTs.

Yann Gourvennec
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