When Jonathan Perkins, an entrepreneur with deep experience in web application development, decided to start a digital art business in 2018, investors were openly skeptical.
“We were laughed out the door,” Perkins recalled. Investors advised Perkins and his team to go into the gaming industry instead.
Four years later, the market for digital art and other digital crypto assets is booming – and so is business for SuperRare, a crypto platform co-founded by Perkins that specializes in digital art.
Global sales of non-fungible tokens, or NFTs – unique files of digital art, music or even tweets -- reached $18.5 billion in 2021, 570 times more than the year before, according to analysis firms Forkast and CryptoSlam. This year, NFT sales are expected to rise by another 70% to $30 billion, at least, estimates CryptoSlam, an NFT collectible data aggregator backed by Mark Cuban, Animoca Brands, Polygon, and other prominent crypto investors.
So why would anyone pay hundreds, thousands -- or even millions -- on an image of art that can’t be framed, hung on a wall or even touched by its legal owner? And yet, look at the market milestones: Last year, the artist known as Beeple sold a digital collage of his work for a cool $69 million at Christie’s auction house. Bored Ape #8817 – the most expensive to date of the Bored Ape Yacht Club series – fetched $3.4 million.
During an hour-long interview on TruthDAO’s "Crypto DeFined" show, available exclusively on Fireside, Perkins discussed the ever-shifting nature of the collectibles market – what drives it, what stalls it, and why. SuperRare’s co-founder also provided insight on some of the thornier problems that NFT investors are starting to encounter as demand accelerates.
Digital art is gaining acceptance. Digital art used to be traded only by crypto enthusiasts, but increasingly, Perkins said, it is being bought and sold by traditional art collectors – some of the same types who frequent Sotheby’s, Christie’s and other top art houses.
Skeptics, meantime, are turning into supporters. “For the first couple of years, many friends and family members were just like, ‘I have no idea what these guys are even doing,’” said Perkins. Now, “they're seeing headlines about it, and seeing all the success of the (digital art) market. My dad is on board.”
That said, digital art does require an early-adopter mindset. Back in the day, eight-track music tapes were standard. Then CDs came along and challenged the status quo. Early adopters piled on, the market followed, and eight-tracks eventually became obsolete. CDs were subsequently displaced by streaming music – that’s where we are right now -- and the innovation cycle continues.
Physical art is unlikely to go away. But Perkins believes digital art will one day be mainstream – early adopters are now piling in, and other parts of the market will eventually follow: “There's this transition happening with art” right now. “It’s certainly a bit more of a mental transition than, say, trading in your vinyl records for a CD player or Spotify streaming service because it’s a bit more conceptual.”
As the digital art industry has grown, so have fakes. That's why buyers need to research carefully before they buy. Counterfeit digital art has been "a hugely rampant problem for platforms that have taken a more open approach,” said Perkins. But not at SuperRare, which has stringent rules for verifying artists and their work, he said.
To avoid digital fakes, Perkins says investors should verify the authenticity of every piece of art that they buy on the blockchain -- a distributed public ledger of online transactions. If SuperRare is notified by an artist that a work on its platform is counterfeit, the platform will take it down and give the person who posted the work a chance to respond, he said.
Platforms are responsible for what’s on their platforms. Even though the crypto community has a hands-off, decentralized ethos, that doesn’t mean platforms don’t have a responsibility to curb bad actors: “Decentralized doesn’t mean anarchy,” Perkins said. “It just means powers or activities are distributed to multiple users or nodes, and this generally comes with greatly increased transparency.”
SuperRare takes its responsibilities to the public seriously:
“We didn’t just say, ‘anyone can do anything they want because it’s decentralized,’” Perkins said. “We’ve spent three to four years of building this culture of. . . authentic, high-quality art.”
Digital art, your kid’s finger painting or an original Picasso: The intrinsic value is in the eye of the buyer. Ask anybody who collects traditional art why they do it, Perkins said, and you’ll get a laundry list of reasons: ‘You might have a connection with the artist. If it's a living artist, you might want to support them. You might want to get your name in the newspaper as the collector who just paid the flashy amount of money for one thing. And you might want to have something that you can sell, maybe for more in the future.”
While having a physical item that can be framed and hung on a wall is one reason to collect art, people collect art for many other reasons. That’s why art that resides on the blockchain is still valuable, according to Perkins, even if it’s a harder concept for some people to grasp.
“Understanding the art market in the traditional sense is also kind of conceptual - like it’s a bit of a mind f**ck,” said Perkins. “Why would somebody pay these 7, 8, 9 figure sums for a Picasso, a Dali?”
Watch a replay of the entire interview here.