 "The NFT is dead, long live the NFT? A look at its lasting legacy")
By Steven Kurutz
“It was a mania,” said Noah Davis. “But manias are fun.” Davis, the former head of digital art at Christie’s in Manhattan, was recalling one of the wildest crazes ever.
In his role, he helped facilitate the sale in 2021 of a work by Mike Winkelmann, better known as Beeple. Titled “Everydays: The First 5000 Days,” the piece was a collage that was sold as a unique digital file, or “nonfungible token.”
An anonymous bidder bought it for $69.3 million. And paid for it in Ether.
Before the record-setting sale, Davis, 35, did not own a laptop, was not on social media, and did not know that the abbreviation ETH stood for a type of cryptocurrency. After the auction, he was fully on board.
“I became totally immersed in the space,” he said.
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A lot of people, many of them young and male, got caught up in buying and selling apes from Bored Ape Yacht Club or Pudgy Penguins, to name two popular NFT collections featuring cartoonlike, computer-generated artworks. The digital collectibles, which traded for tens of thousands and in some cases millions of dollars through online marketplaces like OpenSea, were heralded as the future of art and a new form of community.
Collectors spent $230 million on NFTs of NBA video highlights; one person bid $560,000 to win an NFT of a New York Times reporter’s column about NFTs. The owners of a Bored Ape NFT used the image as their online avatars, as if to signal their membership in an exclusive club. They received perks like tickets to ApeFest, an exclusive party in New York where entertainers like Chris Rock and the Strokes performed.
On an episode of NBC’s “The Tonight Show Starring Jimmy Fallon” at the peak of the NFT rush in 2022, Paris Hilton and the program’s host showed off the Bored Apes they had bought. Yuga Labs, the company behind the characters, was valued at $4 billion, roughly equivalent to the amount Disney paid for Lucasfilm, the owner of the “Star Wars” and “Indiana Jones” franchises.
The boom couldn’t last — and didn’t. The rise of NFTs was linked to soaring cryptocurrency values. Yet while crypto prices have rebounded and hit record highs after a two-year slump, NFTs have not recovered and have endured a decline in value and cultural relevancy.
“The space is so dead,” said Zeke Faux, the author of “Number Go Up: Inside Crypto’s Wild Rise and Staggering Fall,” a book that chronicled the crypto bubble in merciless prose.
Much of the frenzy was motivated by financial speculation, rather than enthusiasm for a new art form, in his view. “If the core appeal is getting rich, when you stop getting rich, you lose interest,” Faux said.
Prices were already sinking in 2022, when Faux paid $20,000 for a Mutant Ape, part of a spinoff collection from Yuga Labs, so that he could attend an ApeFest party while researching his book. A similar NFT had gone for $40,000 weeks earlier.
Today, the price of the least expensive Bored Ape, known as the “price floor” sits at around $70,000, according to NFTpricefloor.com. In April of this year, it was down 90 percent from its peak in 2021, although some NFT values have risen along with cryptocurrencies. Mutant Apes can be had for around $12,800. Other NFT collections have had steeper drops in value from the 2022 highs.
A representation of cryptocurrency Ethereum appears next to the Bored Ape Yacht Club collection displayed on a screen.Credit...Florence Lo/Reuters
Markers of cultural popularity, such as internet search traffic, sales volume and the issuance of new NFT collections (or lack thereof), indicate flagging interest. And the entrepreneurs who rushed to issue and market NFTs in 2021, earning millions overnight, have struggled to recapture their initial success.
In October 2023, Yuga Labs announced layoffs amid a restructuring effort as it tried to pivot to the metaverse with a game called Otherside. Earlier this year, after more layoffs Yuga’s co-founder Greg Solano, said in messages to his team the company had “lost its way.”
This past summer, Faux found himself at a party in Nashville to celebrate a new NFT collection, Taproot Wizards, which featured 2,108 unique drawings of neon-colored wizards.
“It was on the rooftop of a bar,” said Faux. “They were giving out free wizard hats. The place was packed.”
That doesn’t sound like the “dead space” that Mr. Faux described. He chalked it up to circumstance: the party was held during a large Bitcoin conference in Nashville where Donald Trump spoke.
Nevertheless, Faux, who described NFTs as “a fad that was doomed to fail,” remains surprised that they continue to hold any value at all.
One area where NFTs have not become an embarrassing reminder of a cultural fad is the art world. At this year’s Art Basel Miami Beach, which begins this week, fairgoers can mint their own NFTs, as part of the exhibition “Humans + Machines: NFTs and the Ever-Evolving World of Art.”
In 2023, Sotheby’s established the record for an artwork that was generated by an algorithm. “Goose,” part of a digital series called Ringers by artist Dmitri Cherniak, sold for $6.2 million. Another work in the Ringers series was acquired by the Los Angeles County Museum of Art, which accepted a donation of its first blockchain art.
In the last two years, even as auction prices have generally come down, “there’s been a growing recognition for this medium by institutions and museums,” Michael Bouhanna, 33, head of digital art and NFTs at Sotheby’s, said. “It’s in a more educational phase.”
Last month, Davis traveled to Marfa, Texas, to attend Art Blocks, a festival hosted by the generative art platform. It was no doubt a gathering of the faithful. “All that speculative, explosive energy is now gone,” Davis said.
As for Davis, the digital art expert who handled the record-breaking Beeple sale, he left Christie’s soon after to work on the branding for CryptoPunks, one of the earliest and most enduring NFT collections, which is owned by Yuga Labs. A year ago, Mr. Davis parted ways with the company to co-found Fountain, a brokerage for digital art that connects buyers and sellers.
In 2021, at the height of the craze, an NFT appeared on a LinkNYC screen in the East Village neighborhood of Manhattan.Credit...Dia Dipasupil/Getty Images
This year, Fountain brokered the sale of two works that topped $10 million — a rare CryptoPunk alien NFT and an even rarer set of 10 Autoglyphs, a generative art project released by Larva Labs in 2019.
“I vastly prefer it this way. If it catches on in its purest form, not in the meme coin casino form, artists are going to have a lot more freedom to transact and the entire financial industry will be changed.”
Sounding like a gambler, he added, “It’s a risk I’m willing to take.”
The rise and fall
> The digital collectibles, which traded for tens of thousands and in some cases millions of dollars through online marketplaces like OpenSea, were heralded as the future of art and a new form of community
> Collectors spent $230 million on NFTs of NBA video highlights; one person bid $560,000 to win an NFT of a New York Times reporter’s column about NFTs
> The boom couldn’t last. The rise of NFTs was linked to soaring cryptocurrency values. Yet while crypto prices have rebounded and hit record highs after a two-year slump, NFTs have not recovered