As we dive more into a historical and contextual evaluation of the various explorations of NFTs in the arts & culture world, it is worth first taking a look at the volume of dollars traded within the various verticals of non-fungible token exchanges. While art accounts for a staggering $2.7 billion dollars in traded revenue, it is dwarfed in comparison to the amount generated from NFT transactions in collectibles, which is estimated as $8.4 billion dollars. Amongst these two use-cases we can also compare others, which include gaming at $5.1 billion, explorations of Metaverses at $513 million, and a broader category of utilities, estimated at generating $530 million in dollars traded.

But what is the entry-point for players in the arts & culture world to get involved in NFTs? What makes them take the plunge? If we trace the current money flow of auction houses, galleries, foundations and institutions, and evaluate which projects those revenue streams go on to fund, we can see a trend for kickstarts initiated to first feed into PFP projects - also known as profile picture projects, collectibles, or 10k series. This is largely due to the fact that PFP projects provide a soft barrier to entry, and a gentle introduction to the mechanisms common in Web3 parlance, such as drops and governance models behind the project which might involve voting systems or exchanges. We saw a large influx of younger enthusiasts get involved with crypto through such projects, which afforded them a chance to deep-dive into the algorithms that generate features for these profiles from a set of various components. After these initial low barrier entrances are crossed, funds tend to reach into generative art (see artblocks.io) where these generative algorithms are used in collaboration with artists and their existing artwork, to imagine new ideations of their pieces and combine these with the mechanisms of drops to form temporal collectible projects. Finally we reach a stage where funds reach into explorations of crypto art, and start to converge towards contemporary art as the possible next step.

Before decisions about which marketplace to use can be made, or which methods of engagement should be developed, one should consider carefully which blockchain suits their use-case best. For example, we see ethereum offers several marketplaces through a number of methods, some of which include OpenSea (permission-less), SuperRare (invitation-only), and ArtBlocks which specializes in generative art. However there are environmental repercussions for using this blockchain. In 2021 a number of reports started emerging which documented the sky-high electricity and energy consumption of the mining farms which were cropping up in response to transactional on-chain demand. These farms, which are powered by coal-plant energy, were requiring these plants to be reopened to sustain the mining and transactions on these blockchains. Additionally, the gas fees incurred were also proving to be a deterrent for newly inducted artists into the Web3 world.

Tezos on the other hand offered a truly sustainable alternative to the previously mentioned blockchain, as it followed a Proof of Stake model in comparison with the Proof of Work model used in ethereum. However, they were not the only ones (as Polkadot, flow, layer2 joined forces in the transaction verification model of PoS). The distinguishing factor of Tezos which drew in users onto this chain was the fact that it is self-amending, and therefore, contains a fully-closed and continuously progressive ecosystem. The marketplace equivalents are discussed as open, such as objkt.com which is similar to OpenSea in that they are host all NFTs ever minted on the Tezos blockchain which are subsequently aggregated, compiled, and collected to serve as the Ebay of NFT marketplaces, so to speak. These huge and hungry marketplaces can be messy and chaotic, and offer an explanation as to why curated spaces can lead to more directed experiences.

This leads us into discussing the blossoming emphasis of curated marketplaces offered on Tezos, such as a\terHEN, Organic Material, and Cadaf, all of which offer selections of contemporary and digital artists. Finally, we see examples of specialized marketplaces, such as Arago for photography, OneOf for music, and Fx (Hash) for generative art - where a user can buy an NFT as part of a series - or rather bet on one NFT to mint - and the artwork is then processed, revealed to the bidder in real-time and discovered through this collective experience. As it is yet still small and burgeoning, Tezos is admittedly a fragile ecosystem, however it is organic and truly community-driven.

The first half of last year can be characterized by the auction houses that served as forerunners and took the first leap into managing their artwork through NFT marketplaces. Some saw eye-watering milestones passed, ie The First 5,000 Days, by Beeple, selling for $69 million in March 2021, while others, like Christie’s marketing flop of a scavenger hunt involving 9 CryptoPunks scattered throughout a physical space, were met with chagrin from both the art and Web3 world.

It is very interesting to understand the timeline of NFTs in the art world as it coincides with global world events. For instance, the Uffizi Gallery in Florence became a pioneer, especially in such a slow-to-iterate and traditional art world, when they decided to mint NFTs (jpeg, png) of their paintings and present hand-make certificates of contract ensuring ownership to the NFT buyer in an effort to raise funds to continue during the pandemic.

The Ancient of Days NFT, from the Economics for Blockbuster project slated for release in 2023 is an interesting exposé into exploring the power of the community as well as how museums and culture finance themselves through this technology. Co-owning a national treasury being kept by a museum means that rules must be defined, like how is it working? What is the statute of co-ownership or the roles as a co-lender or co-owner?

The Nagel Draxler Gallery, in partnership with Keney Shakner an artist and curator, was being commended for their receptivity in hosting the NFT exhibition or ‘crypto kiosk’ as it was called, labeled as NFTism. They admitted that while they didn’t exactly understand all its implications, they were curious to explore NFTs and said, ‘let’s just try and see where it goes!’

Still others, such as Damien Hirst’s The Currency 10k series has been speculated this it was a cash grab rather than a genuine launch.

Hokusai - the British Museum - was also criticized in their exploration of NFTs, as they were called out to be engineering scarcity of digital postcards taken from public domain images. Each time an NFT was resold on the secondary market, 10% of proceedings went to the museum and 10% went to La Collection. Auction houses might do well to follow the example of Sothebys in partnership with SuperRare, and explore and iterate before marrying a tech startup. Not only can this reduce risk for more traditional institutions but it can also help to un-blur the line between what a marketplace is, or a gallery, and the platform itself (see for example the partnership between misa.art + institue.co).

And even still, other institutions like Art Basel Miami, a quality museum exhibition in terms of design and curation, trialled an experiment as to test whether live minting could be done in a gallery setting - each visitor could open a wallet in the gallery and receive a live generation of a self-portrait.

To conclude the second part of last year, museums, galleries, and art fairs caught the hype and joined the conversation by trying to tap into the crypto money pool, which was especially driven by the loss of revenue due in large to the pandemic. Is is still a great laboratory of experimentation!

The mis-hap of early January 2022 rocked the arts & culture sector when ZKM Centre for Art  and Media in Karlsruhe realized what happens when a simple copy/paste error occurs, and the sometimes devastating loss that might occur especially when you don’t control the address and/or lose the key. Needless to say, 2022 started rocky. The year also demonstrated loss, this time in terms of social reputation, when The Belvedere launched an art tech fractional ownership in partnership with Gustav Klimt by The Kiss. The launch was problematic in that The Belvedere didn’t engage their own community and tarnished their reputation as the campaign was not so well thought through. Further scandal occurred the following month when the sell of 100 CryptoPunks was cancelled at the last minute by the auction house as well as the seller, yet probably, most large in part, due to the Russian invasion of Ukraine. However, we see some barriers in regulation being removed to allow more innovation between the art & culture and Web3 world, for example The Burnt Auction in Paris which was the first full NFT sale to occur. We keep our eyes peeled for some approaching projects, for example the PFP project by Takashi Murakami in May 2022, followed by Jeff Koons’ NFT launch - ‘To the Moon’.

As more and more people begin working at the intersection of arts & culture and Web3, it is important to keep an ear trained on reputable voices, especially the galleries that have been working with digital art for some time.

Some Web3 ‘beacons of hope’ and new means of exploration and engagement we can look to for inspiration include ways of exploring new curation protocols, decentralized governance, new sales mechanisms, crypto art residencies, economic alternative, and artist tokens & DAOs.

We see some overlaps between established museum values, such as purpose, accessibility, open content, inclusion and democratization going hand-in-hand with values of Web3, interoperability, open-source, affordability, and decentralization. In both spaces, we again can find a merging of interests as new models of governance, curation and income are explored. However, there are also negative values to beware of in the new world of the Web3 space that unfortunately carry some of the relics of what we hope to loose when moving from an old world model dominated by Web2 principles, such as speculation, scarcity, identity theft, exclusion, technocracy, and a high carbon footprint. Accordingly, an emphasis on evoking strong ethics behind NFT use-cases should be maintained in the arts & culture world. Ultimately we are still dealing with a market-driven and money-driven environment and the majority of tools are yet to be dreamed. Auction houses, institutes, foundations, museums, platforms and mega galleries alike would do well then to stay open to exploration whilst maintaining ethical principles.

A question was posed during the WAC fellowship discussion, which was ‘How do we pay respect, homage to the art itself?’ While of course everything on the blockchain is public and auditable, those with a vested interest in maintaining a positive image - for example some of the auction houses that hit scandal in their NFT explorations - have very good PR teams, and so it is difficult to find truth in the news as by the time the events reach us, remote biases have already been piled on top of each other. Traditional galleries, auction houses and cultural institutions rather might be looking forward to having their more traditional frameworks working with new technical partners in project specific collaborations, rather than tethering themselves for a long time to a technical partnership in such a rapidly evolving space.