An NFT Sold for $69.3 Million in the Name of Art. Who’s Paying for It?

March 27th, 2021  |  Published in March 2021

Few had heard of Mike Winkelmann until reports of the $69.3 million sale of his digital collage, Everydays: The First 5000 Days, catapulted him to star level overnight, landing his name just behind those of Jeff Koons and David Hockney as the world’s third highest-priced living artist.  A self-taught graphic designer with a degree in computer science, Winkelmann has no ties to traditional galleries; and prior to this sale, he was virtually unknown to the mainstream art world.  So, how did the 39-year old from Charleston, South Carolina, finagle a blockbuster Christie’s auction that managed to move a piece of his digital “art crap” (as the artist himself so eloquently calls it) for tens of millions of dollars more than any painting by J.M.W. Turner or Salvador Dali?

Superficially, it sounds like a rags-to-riches fairy tale; but in reality, the sale was a publicity stunt at the tip of an iceberg with much darker social, economic, and environmental implications. Underneath all the hype is a complicated story that reads like the plot of a dystopic sci-fi cartoon.  Before his meteoric rise at auction, Winkelmann, alias Beeple, had already enjoyed status in some circles for his production of promotional videos and visuals for high-profile clients including Apple, Space X, Louis Vuitton, and Justin Bieber.  Meanwhile, the designer amassed a considerable following on social media by sharing a new Photoshopped image online every day.  Everydays: The First 5000 Days is a mindless, made-to-sell montage comprising all of Winkelmann’s daily “art crap” posts from the past 13 years.  Christie’s website boasts that the collage was “minted exclusively” for them on February 16, as though newness and mercenary intent somehow added to its value.

Mike Winkelmann, aka Beeple, “Everydays: The First 5000 Days,” 2021.  Digital collage.

Winkelmann’s digital collage is said to have sold for $69m.  However, it wasn’t the collage itself that Christie’s actually sold.  After all, the .jpg image and all of its constituents are available online for free. The file can even be downloaded in its original resolution.  The “artwork” is a .jpg, but the selling point here is that it is nominally attached to an NFT, or non-fungible token, a form of cryptocurrency that essentially serves as a digital certificate of ownership.  This is where logic begins to break down.  The NFT points to the piece, but bears no direct intrinsic relation to it.  In fact, many art-related NFTs do not even contain the actual media to which they refer, only extrinsic URLs that, in turn, become more potentially weak links in the chain of supposed “proof of ownership.”  Emphasizing this idea, a popular Twitter thread by UK software engineer Jonty Wareing points out that an NFT can suddenly disappear if servers go down, or become worthless if the companies hosting the NFT or its concomitant data go out of business.

In press materials, Christie’s deceptively refers to Everydays: The First 5000 Days as an “NFT-based artwork.”  In fact, the opposite is true.  The NFT is based on the artwork, not the other way around.  The image exists independently of the NFT, which is “minted” afterward. As Kevin Buist succinctly observes in Artforum, “The NFT is a financial innovation masquerading as an art innovation.”

Ubiquitous in art-related discussions, the term “NFT artwork” is now being thrown around as though it were a cutting-edge medium or the latest new artistic genre.  On the contrary, the NFT is merely an ancillary tack-on that allows a potential seller to connect the concept of “ownership” to anything under the sun, thereby enabling its referent—in this case, a digital image; in other cases, tweets, advertisements, video clips from basketball games, ad infinitum—to more easily be converted into a salable object of financial speculation.  But what does buying an NFT actually mean?  Not much, according to Christie’s own 33-page terms of sale, which asserts that ownership of an NFT carries no rights and comes with no warranties, even as it allows for the possibility for errors, hacks, defects, and security weaknesses. Caveat emptor.

According to Christie’s, 22 million viewers tuned in to watch the final moments of bidding on its website.  Following the auction, Christie’s and Metapurse, the company owned by Metakovan, the then-anonymous buyer, released a joint press release that reads mostly as a bombastic ad piece for Metapurse, which just so happens to be “the largest NFT fund in the world.”  Therein, Metakovan proclaims that Everydays: The First 5000 Days is “the crown jewel, the most valuable piece of art for this generation. It is worth $1 billion.” And he only paid $69.3 million? —What a steal!  Indeed, this is a piece of visual art so earthshakingly significant that its most vocal proponents’ talk revolves almost exclusively around its monetary value and the method of its sale, rather than its artistic merit.

Prior to the Christie’s auction, Metakovan’s financial interest in Winkelmann’s work already ran deep.  In a December auction on NiftyGateway, an NFT sales platform, the crypto wheeler-dealer paid $2.2 million for 20 of Winkelmann’s NFT pieces, fractionalized their ownership, and sold off shares, keeping the lion’s share for himself and cronies.  At one point the value of the bundle had increased 6000%.  The individual shares were initially offered for 36 cents; at the time of this writing, they’re up to $10.70.  Not a bad return on one’s investment!

Shortly before buying “Everydays” for $69.3 million, Vignesh Sundarasan purchased 20 of Winkelmann’s NFTs for $2.2 million and fractionalized their ownership into “B20 tokens,” selling off shares while keeping the lion’s share for himself and cronies.  Price-volume analysis of this B20 token chart strongly indicates that the market was heavily manipulated by major shareholders before, during, and after the March 11 auction.

Money talks; and in huge sums, it sings siren songs that lure unsuspecting hordes to buy into mirages of credibility.  With his $69.3 million purchase, Metakovan was not only parlaying his initial bet on Winkelmann’s work, he was also funding his own advertising campaign. (After all, how could Winkelmann’s NFTs suddenly have appreciated so much in value that the same collector would pay $69 million for one NFT just two months after buying up 20 of them for $2.2 million?) The auction fanfare performed a crucial role in contributing to the burgeoning frenzy around art-related NFTs, from which a fund like Metapurse clearly stands to benefit.  As a leading blockchain platform and the main producer of non-fungible tokens, Ethereum—whose cryptocurrency, ether, was used for the sale—also garnered publicity, and perhaps other, less visible pieces of the action.  It costs $40-100+ to create an NFT on Ethereum, plus additional fees if pieces are sold.  A growing number of artists are jumping on the bandwagon, which should translate to more revenue—and higher stock prices—for Ethereum.  Per his own website, Metakovan, an early investor in Ethereum, has ties to one of its founders.  It doesn’t take a financial expert to spot the limitless potential for collusion and manipulation at every level of this sale.

Exactly how Metakovan plans to leverage his latest acquisition is unclear, but reading between the pleonasm in a series of blog posts, he will likely install it in a virtual museum and hustle people to buy in for shares.  Metapurse claims that its mission is to “decentralize and democratize art,” but merchandizing images that are already available to the public, dividing shares, and selling them like stock does the opposite. It pumps up public perceptions of value where there is none, contributing to a pipe dream that everyone has a chance to make it big, which, in turn, enables early investors and those who hold the most shares to reap astronomical profits at others’ expense.  To do away with the very concept of ownership would be democratic and decentral.

On March 13, independent journalist Amy Castor exposed Metakovan as Vignesh Sundaresan, an India-born, Singapore-based entrepreneur who founded Coins-e, a cryptocurrency exchange platform that defrauded its customers out of their money several years ago.  A few days after Castor’s revelation, Sundaresan and his business partner unmasked themselves, offering ample excuses for why they had kept their identities secret.  A characteristically grandiloquent blog post on Metapurse suggests that they ultimately deigned to reveal their identities out of the goodness of their hearts, for charitable reasons: “The point was to show Indians and people of color that they too could be patrons.”  It sounds as if the public should be grateful to them for nothing other than disclosing their names.

In light of his commitment to social justice issues, it’s interesting that Sundaresan would tout someone like Winkelmann as “an artist for our generation”. The white male artist’s handiworks hardly reflect contemporary social mores. Indeed, many of the sketches comprising Everydays treat women, people of color, and members of LGBT+ communities alike with scandalous contempt.  Saving us all from having to slog through the quagmire of “Beeple crap,” Ben Davis of Artnet has compiled some choice examples from Winkelmann’s website.  One double portrait bears text reading, “It’s fun to draw black people!” Another stereotypical drawing is derisively captioned: “A fat nerdy Chinese kid and his imaginary friends”.  Were he truly concerned about people of color, perhaps Sundaresan should have chosen a different artist.  Unsurprisingly, Winkelmann also frequently resorts to misogyny, portraying women with varyingly insulting degrees of explicitness.  Especial vitriol is reserved for Hillary Clinton; one of many puerile drawings portrays her nude with male genitals, beside text reading, “Hillary for President.”  Not all his work is figurative, however. The meme-like caption for an abstract montage reads, “if i was one of them fancy-dancy elite art homos i’d call this ‘light study v1,” disparaging other artists and gay people in one fell swoop.

Yet in his own words, Winkelmann doesn’t even consider himself an artist.  “So, I don’t really like the term ‘artist’ because it sounds very pretentious and douchey,” he says with rising inflection in a post-auction Youtube interview with Business Insider.  “Like, I would never be like, ‘I’m an artist.’”  His avowed antipathy for the art world and all it stands for certainly hasn’t stopped him from promoting his work and extolling the merits of NFTs—and also calling himself a “digital artist” whenever it suits him.

In a recent BBC interview, when pressed as to what value collectors obtain by purchasing NFTs of his artworks that are already available online for free, Winkelmann compared his work to that of Leonardo da Vinci.  “If you were to go and take a picture of the Mona Lisa and share it online, do you think the Mona Lisa would become less valuable because you did that?” he asked.  His analogy is ludicrous, because the Mona Lisa is a one-of-a-kind, physical piece, whereas Winkelmann’s images exist only on computers in potentially infinite, interchangeable multiples.  A photo of the Mona Lisa is not da Vinci’s art, it is a reproduction of the original that can only truly be seen at the Louvre.  A reproduction of Winkelmann’s art is the art; to see a .jpg on the computer is to see his art firsthand.  Ownership of a physical artwork has value because it is securely attached to the work.  To own a painting is to be able to hang it on one’s wall, lend it, or sequester it in a storage unit.  To own Winkelmann’s NFT comes with no such rights, rendering said ownership virtually meaningless.

Nevertheless, “a painting is never going to change, it’s just going to slowly decay over time,” Winkelmann remarked in the aforementioned interview, seemingly suggesting that his NFTs will last hundreds of years, improving all the while.  Sure, Mike, paintings decay, but they never become obsolete.  What’s to prevent NFTs from obsolescing like floppy disks, cassette tapes, CDs and all sorts of file formats for defunct programs?  Hard drives and blockchain technology can hardly be deemed as durable as canvas and oil.  Files become corrupted.  Websites go down.  Programs and operating systems become outmoded and ultimately useless in relatively short time spans.  Many a file is thereby lost or rendered inaccessible.

Most people familiar with contemporary art will recognize the falsity of Winkelmann’s claim that before NFTs, there was “no way to collect” digital art.  Intangible art forms such as performance pieces and digital photos have long been sold, collected, and otherwise monetized, with financial value based on their scarcity and/or supplementary physical materials provided by the artists.

The concept of proving ownership is nothing new.  Notarized contracts, certificates, provenance records, and other materials served the purpose before NFTs.  Writing for The Verge, Jacob Kastrenakes reports that NFTs typically contain very little information and rarely spell out direct, enforceable agreements between buyer and seller.  Attorneys recommend supplementing these so-called “smart contracts” with traditional written contracts, warning against technological malfunctions and legal unenforceability of NFTs.  Once the current speculative bubble runs its course, the NFT may be absorbed into the art market as one of various tools to assist in proving ownership; but in the grand scheme of things, it’s unlikely to have a lasting impact for most artists and collectors, because it doesn’t really do anything that wasn’t possible before.

This isn’t to say that NFTs don’t offer advantages.  They certainly are helping some artists find markets for their work, and they may benefit the financial viability of digital art in the long run.  However, other artists are notably less enthusiastic, broaching major issues that cryptocurrency companies and industry leaders have yet to address.  Of particular concern is the environmental impact: an astonishing amount of energy is consumed by the complex computer calculations involved in generating tokens and verifying transactions.  In “The Unreasonable Ecological Cost of Cryptoart,” Memo Akten estimates that the footprint of a single NFT, from minting to transfer of ownership, is equivalent to the power expenditure of a European resident for 40 days.  After selling out one edition of NFTs, French artist Joanie Lemercier backed out of subsequent releases, citing crypto-art sales platforms’ lack of transparency with regard to energy consumption.

Security, theft, and copyright infringement are equally urgent concerns.  Artist Everest Pipkin points out that crypto-art marketplaces offer no intellectual property protection and little legal protection, making them a free-for-all for fraudsters.  Anyone can mint and sell practically anything as an NFT, creating a nightmarish debacle for artists whose works are being appropriated, converted into NFTs, and sold by plagiarist scammers.  Once an NFT is minted, there is no way to remove it from the blockchain.  Even NFTs themselves are being stolen by hackers.  Blockchain technology was supposed to lend transparency and accountability to art markets, but instead it has created fresh opportunities for opaque, questionable, and illegal dealings.

Such considerations are extensions of a larger debate surrounding the sustainability and ethics of cryptocurrency.  At its core, the NFT craze is an outgrowth of the market mania for digital currencies such as Bitcoin and Ethereum, highly speculative mediums of exchange largely unbolstered by real value.  Much of the wealth in cryptocurrency is concentrated in a small number of accounts held by so-called whales, who dominate the marketplace.  Many critics, including David Gerard and Andy Day, feel that these ultra-wealthy dons are exploiting the art world as their latest hunting ground to feed the crypto frenzy, seeking to inflate their own bubble in order to further their financial interests at the expense of artists, collectors, and credulous investors.

Raising the stakes of commodity fetishism in the name of art, the NFT frenzy seems a logical endgame for the current cycle of a tumescent art market already precariously perched on speculative hype.  But if the regular art market is like the tulip craze of 1630s Netherlands, the crypto-art mania fueled by the likes of Sundaresan is like the Emperor’s New Clothes.  Better yet, it’s like the Emperor’s New Clothes opened up as a stock exchange, generating hysteria to create more and more new garments for the profit of the Emperor and his court.  Who is the Emperor, anyway?  No one really knows; he’s anonymous and invisible, just like his clothes.  No matter, everyone wants a piece of his raiment so magnificent that all anyone wants to talk about is its price.

In buying Everydays, Sundaresan acquired a piece of history.  But how that history will go down in the books—and in the ledgers—remains to be seen.  When the music stops, the person sitting on a Koons sculpture will be at least be left with something to hold onto.  When the crypto-art bubble bursts, work such as Winkelmann’s could dissolve completely into the ether.

–Annabel Osberg

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