hen and how did you first discover NFTs? What were your first impressions?
Like most people, I began learning about NFTs in late 2020 when there was a lot of movement in the market and a number of significant sales took place. It was then that I first began reading more about NFTs and became immediately aware of their extraordinary potential within the art and collectible community. Blockchain technology has long been touted for its ability to revolutionise industries, and with NFTs that capacity was made real for art and collectibles, providing a seamless way to trade digital art for the first time, as well as an irrefutable chain of provenance for proof of ownership. For the auction business, this was a major development that could not be overlooked and has clearly proved its value in the market.
Why are you passionate about NFTs?
To me, NFTs represent an exciting new evolution in the history of art, in which purely digital art now has a technology, a tool, that can be used to buy and sell in a way that is secure and trackable. What’s more, there is such a strong community that supports digital art and NFTs, one that has created a whole new style in their art that I think is really energising to the art world. NFTs have also provided an outlet for many artists who have made a name for themselves with physical art, such as Urs Fischer, Damien Hirst and Takashi Murakami, to name a few, with a way to explore a new digital medium and expand their practices in exciting ways. And thinking beyond the application of NFTs to digital art, I think the technology behind NFTs has a tremendous amount of promise for the future, with widespread use across entertainment, luxury, music, film, gaming and much more. We have only really just begun to explore the ways in which NFTs can revolutionise collectibles and pop culture.
“The Art of Our Generation”: Justin Sun on NFTs
Last June, Sotheby’s held its first ‘Natively Digital’ NFT sale, co-curated with Robert Alice. How did you source the artworks? In what ways did the sale differ from those of other departments?
The first iteration of Natively Digital was designed to be a curated sale and marked the first time a major auction house brought together a group survey of the leading NFT artists to sale. The unique retrospective showcased a remarkable collection of early, genre-defining artworks alongside the latest conceptual and aesthetic developments in the space. Alongside Robert Alice, Sotheby’s Co-Head of Digital Art Michael Bouhanna provided an essential curatorial eye to build a sale directly with the artists that told a story about NFTs for the broader public, giving them a closer look at the history and context of NFTs, as well as the aesthetics and themes that had driven NFTs to global prominence and were driving the movement. While careful curation applies across Sotheby’s sales, Natively Digital was different, since we worked directly with many of the artists involved and built the sale together to present a community-first vision that was also educational to the wider art world who were not as familiar with NFTs at the time.
Why do you think Larva Labs’ CryptoPunk #7523 went under the hammer for $11,754,000?
The sale of Punk #7523 was truly a landmark moment for NFTs – when it sold for nearly $12 million it was the most valuable single Punk ever sold and remains the most valuable single Punk ever sold at auction. It was an astonishing figure and to me, represented the power of NFTs to galvanise the crypto and digital art community. It cemented the place of NFTs as a serious collecting category that had staying power.
What can you disclose about the buyer?
The buyer of Punk #7523 was Shalom Meckenzie, the largest shareholder of DraftKings, who went public with the acquisition immediately following the sale.
Which artworks in the sale did you consider important?
There were a number of really important, historic NFTs in the first Natively Digital. One example was Kevin McCoy’s Quantum, one of the earliest-known NFTs ever created and a work of art that has proved wildly influential within the community. Generatively built entirely by code, Quantum was years ahead of other NFT works that would follow in its footsteps. Then there was also the first, truly intelligent, conversive, self-learning artwork To the Young Artists of Cyberspace by Robert Alice. This work was a collaboration with AI company Alethea AI, and the iNFT [an AI-powered NFT platform] and represented one of the most technologically-advanced NFTs ever made. Fully interactive, guests were able to converse and speak with the artwork while it was on view in our galleries during the exhibition, and it spotlighted just how creative and cutting edge NFTs could be.
How would you describe your intended strategy for developing NFT sales across the EMEA region?
Our NFT strategy is designed to be global, because the NFT market is inherently global. The NFT community is built upon the concept of decentralisation, and since the community is digital by nature, there is no region that takes precedence. Our goal is to meet this digital community of collectors where we can, including launching a channel on Discord, creating a virtual gallery space in Decentraland and understanding how peoples’ tastes and preferences are defined by their digital-first mindset.
Does the demographic of collectors in these regions differ from those in the US?
The buyer spread we’ve seen is remarkably global, with strong shares across Europe, North America and Asia. And across all regions, we’ve seen a tremendous number of younger collectors engaging with us as nearly half of buyers in our NFT sales are under 40.
CryptoPunks: The Next Frontier in Art and Technology
How are you developing the Sotheby’s Metaverse and its LFC Heroes Club?
The recent launch of LFC Heroes Club was a major moment for Sotheby’s Metaverse, as it marked a first-of-its-kind collaboration between Sotheby’s and a sports club, greatly expanding the audience of Sotheby’s Metaverse into Liverpool FC’s passionate supporter base, around the world. Our collaboration with Liverpool FC was also the first time we’d worked so closely with a brand to provide a full-service creative concept, from the sale structure (auction and limited editions) to artwork development, and much more. In doing so, LFC Heroes Club was our first opportunity to expand on how we’d been offering NFTs by tapping directly into the club’s community base and charting a path forward for the future possibilities of how Sotheby’s Metaverse could work with other brands to develop unique sale concepts that fit their audience. The success of LFC Heroes Club will also undoubtedly help set the tone for how we can collaborate across a variety of different brands and franchises in the future.
'I see NFTs as a once in a generation opportunity to create a bridge between the world of digital art to the physical art world and vice versa'
What are your predictions for the NFT market in the next five to ten years?
I see NFTs as a once in a generation opportunity to create a bridge between the world of digital art to the physical art world and vice versa. And while it’s difficult to say exactly where the NFT market will be in five or 10 years, we’ve only been actively involved in the NFT market for a year, and I see much more potential in the coming years as widespread adoption of NFTs continues to change not only the art world, but other areas of interest across entertainment and pop culture.
Are you noticing that NFT collectors are starting to collect contemporary art and other forms of art?
There is a growing crossover between digital art collectors expanding their collections with physical works of art, as well as traditional collectors accustomed to paintings and sculptures becoming more comfortable with collecting digital art and NFTs. Looking across our NFT sales to date, we’ve seen a tremendous number of new bidders and buyers in those sales. Yet, more than one-third of all buyers are existing clients, collectors who have crossed over from the physical art world to embrace the digital.
'There is a growing crossover between digital art collectors expanding their collections with physical works of art, as well as traditional collectors becoming more comfortable with digital art and NFTs'
I think this is significant, because it shows that NFTs and digital art have appeal to a wide group of collectors and art enthusiasts. And we’ve seen similar trends among the digital collectors who are embracing traditional artworks. Most notable among them is the acquisition of Alberto Giacometti’s La Nez from the Macklowe Collection last November by cryptocurrency and blockchain entrepreneur Justin Sun. We also saw the crypto community rally around the collectibles market in the lead up to the sale of the Constitution in November, and while Constitution DAO [a decentralised autonomous organisation] was ultimately not the winning bidder in that sale, their efforts have greatly influenced how DAOs can be used in the market. In fact, just days after the sale of the Constitution, a collector who heads a ‘research’ DAO fund called ‘Abolition in Progress’ was the buyer of the Declaration of the Anti-Slavery Convention, a founding document of the American abolitionist movement that was issued in 1833 at the first meeting of the American Anti-Slavery Society in Philadelphia.
While the selling price was considerably less than the Constitution or La Nez, it continues to show how the digital and physical worlds are converging in the market right now.
What is your response to critics who liken the surge of interest in NFTs to crazes such as ‘tulip mania’ in the Netherlands during the seventeenth century, who see NFTs merely as unpredictable assets or investments?
The NFT market over the past year has certainly had an unprecedented rise in terms of the art market. But, I would caution against comparisons to ‘tulip mania’, or criticism that it is purely a speculative market. Digital art has been a part of the art world for decades, since the earliest computers of the 1960s, and the technology of NFTs has only finally caught up with the conceptual practices of the pioneering artists who helped us get here. So, the market is still relatively young, and will continue to grow and stabilise as NFTs find wider adoption and more artists become accustomed to digital art.
What concerns do you have about the NFT marketplace and what challenges does this present for Sotheby’s?
With so much activity over the past year, this period of rapid change will undoubtedly present some growing pains. For one, the market has an incredible amount of digital art available at any time. But, for Sotheby’s, our approach is always from a curatorial mindset, and we want to present our clients with the best possible works of art and sale opportunities that are unique and different from others.
'The environmental impact of NFTs is one that we have been aware of from the outset and have actively sought to remedy as best we can'
The British Museum's NFT project, in collaboration with LaCollection, has been accused of being environmentally unfriendly in terms of carbon emissions. What is your view about the environmental impact of NFTs and cryptocurrency?
The environmental impact of NFTs is one that we have been aware of from the outset and have actively sought to remedy as best we can. For our first iteration of Natively Digital, we engaged in a carbon offset study with Regen Network, a blockchain-based carbon offset platform, to accurately offset the minting and transaction costs of the sale. And most recently with LFC Heroes Club, all NFTs in the sale were minted using Polygon, an energy-efficient network. In using Polygon, we could optimise every Ethereum transaction for energy and cost, since Polygon can batch hundreds of thousands of blockchain transactions into a single Ethereum transaction. Because of this, an enormous amount of activity can take place on Polygon and be verified on Ethereum, with exponentially less energy usage, making it undeniably more energy efficient.
Natively Digital: A Curated NFT Sale
Which cryptocurrencies can collectors buy NFTs with at Sotheby’s and why?
We currently accept Ether (ETH), Bitcoin (BTC) and USD Coin (USDC) as our cryptocurrency payment options. The decision to accept these three currencies is that they are among the most popular and widely accepted, so we wanted to ensure that our offerings could meet a wide swath of the crypto community.
Do you think that Ethereum will continue to be the preferred cryptocurrency?
For NFTs, I think Ethereum will remain the preferred cryptocurrency since early adoption for NFTs took place on the Ethereum blockchain, so there is a natural connection between the two. Ethereum is the most used and most decentralised blockchain in the world, and this is why the NFT ecosystem has flourished on Ethereum.