The Intersection of Art and NFTs
NFTs are a strange concept to many. Despite that, Art and NFTs are very clearly linked. How I view the space both for investing and enjoyment.
Over the weekend I announced to the whole world that I bought some TulipPunks. I'm the proud owner of TulipPunk #103 and I'm now using it as my avatar everywhere. Stocktwits. Substack. Flote. I paid for the privilege, dammit. I'm going to exercise that privilege by flexing on all of you. I mean, you could still get your own TulipPunk for about $3 so it isn't much of a flex, but still. To be sure, TulipPunks are very obviously a joke. The creator of that project is making fun of something that most normal people can't really grasp. In a weird way, the creator absolutely understands the avatar NFT movement. He or she likely just thinks it's silly. Which is why they've chosen the "tulip" as the "face" of their NFT project. The insinuation being NFTs are in a bubble and will crash just as tulips did during the tulip mania in the 17th century.
Avatar NFTs still don't do it for me
What's funny about TulipPunks is it actually has the potential to be exactly what it is poking fun at. Like I said over weekend, I have serious doubt that will happen, but for just $3 buying one is a fairly asymmetric bet. What does $3 get you today? A powerball and coke at the gas station? I'd rather have the TulipPunk and I'm not even kidding. But the decision to buy that NFT wasn't because I think it's beautiful artwork. It's not. Let's be real. Avatar NFT projects can't be viewed in the conventional sense that we view artwork. They're something completely different. Think of them more as memberships in a club.
The clubs that are highly sought after and very exclusive (Bored Apes, Crypto Punks) are probably here to stay, to be honest. But for every successful avatar NFT project there are likely hundreds if not thousands that will ultimately wind up worthless. Just like the powerball ticket and the coke. Just like most cryptocurrencies and digital assets. The cream will rise to the top. The rest will fail.
I've made my thoughts pretty clear on avatar NFT artwork and NFTs in general. If you're at the point where you're still reading this and you have no idea what NFTs actually are, read this post I wrote during the summer. It's my best attempt at trying to onboard people who don't really understand what NFTs are. And I'll also take the opportunity to add that I'm not "investing" in avatar NFTs. I'm really not interested and I don't know how to value any of it. I'm far more interested in the IP and domain aspect of NFTs. You can read about some of those ideas here.
Art as an investment
All that said, I do enjoy actual artwork and I have some art that I consider to be an investment. But I am by no means an art expert or connoisseur. I have essentially two things that I look for in art.
Do I like it?
Do I think the artist has potential to be more famous?
For me to spend money on art as an investment, I have to be able to say "yes" to both of those questions. Why? Well, if I view the art as an investment, then I want to protect my purchase if I'm wrong. Which is a way of saying if nobody agrees with me that the art is good, I will still get value out of it by having it my personal collection because I like it and it doesn't matter to me that other people don't like it. I'll give you two examples of this in practice. One, an example of what is widely recognized as investment grade art. And another in art that I just enjoy personally.
The investment example
I have an account with a company called Masterworks. Masterworks is a buyer and fractional seller of classic and modern art. Though, I think it's fair to say most of the company's offerings lean modern. To briefly explain; Masterworks buys art pieces valued at seven figures and then sells "shares" of the art to buyers like myself. Masterworks may pay $2 million for a piece then put a $2.3 million valuation on it and sell shares of the piece to 600 people. Some may have $1,000 exposure to the piece, others may have much more. The company is selective when it comes to what it offers it's user base. For instance, there have been over three thousand pieces of art offered to Masterworks and they've only purchased 67.
When I opened my account, I just wanted a "safe" art investment. Per my rules above, it had to be something I would hang in my own house. While the rep who helped me navigate the platform really wanted me to get into a Basquiat offering that was live at the time, I opted for the much less volatile "Coup de vent" by Claude Monet. With most of my art portfolio exposure allocated to a classic Monet painting, I started branching out into other ideas. I really liked "Staring into Space" by George Condo. I ultimately bought some shares of that work on Masterworks' secondary market. Not as much as I should have because the company just informed investors on Monday that it has sold the work for $2.9 million. Which is a 31.7% return for buyers at offering.
What was it about this piece that made me want exposure? Again, I answered yes to both questions. Condo's sales have done terrific lately and I really liked the art. I can't even tell you why. I just know that when I saw it, it did something for me. That's the best way I can explain the decision.
The enjoyment example
Over the summer my wife and I went to an art fair. We were looking to change up the home décor a little bit and we decided to do something we've never done before; buy art from a local artist. While there were dozens of quality artists represented at the fair, there were a couple who I felt stood out among the crowd. Naturally, the price tags on their pieces were much higher than the more casual artists. But there was one person who I thought was underpricing some of his work. Not all of it. But some. And he had one piece that blew me away. His name is Anthony Brass and the piece that I love is called "Make Like a Tree." Price tag? Eight grand. That's a little more than I wanted to spend on a Saturday afternoon at a local art fair.
So I bought a different piece from him. I love what I bought as well and it hangs in our living room right now. The cost was three figures, not four. But it's a good example of sticking to my rules. I'm very much betting on Anthony with that purchase but I'm not expecting an investment return. Maybe Anthony Brass will hit it big and his art sale prices will skyrocket. For him, I hope that's what happens. But art is tough. And being upper echelon in anything is very difficult to accomplish. The most likely scenario is Anthony will continue making small pieces and selling art at local and regional art fairs and making a fine living with a small following. And I'll still have his art that still provides me with a level of enjoyment. Ant that's totally fine.
But back to NFTs
I'm sharing all of this because art as an industry is now having a moment. Whether it's pure opportunism or not, Sotheby's is involved in the digital art space. They've sold CryptoPunks and Bored Apes. Christie's helped digital artist Beeple shatter records at auction for artwork that doesn't exist in the physical world. Just as is my take on physical and fractional artwork, I don't know what the hell any of this is or if any of it makes sense. I just know what I like. And I think I found a digital NFT artist that I like. The artist goes by Webzee and this is an example of a Webzee piece:
This piece is not available yet. Webzee was supposed to launch the mint for the collection yesterday but it was postponed shortly after launch due to the AWS outage last night. The mint for the rest of the "Webzee's World" NFT collection is now scheduled to relaunch tomorrow night. Some quick details on the collection:
Mint Price: 0.1 ETH
3,450 Total Mint
Obviously making 3,450 pieces of art would be an undertaking. Here's a description of how the collection takes form:
Each Webzee NFT Artwork is generated from over 165 unique attributes hand drawn by Webzee. Using some spaghetti code some rando intern wrote on a scrap of toilet paper this one time, we generate the artworks using math and stuff. Then Webzee hand selects each artwork by deleting the ones that are kinda maybe too sh*t.
So basically the artist, or artists, that identify as "Webzee" have hand drawn all of the elements for the collection. They've then uploaded digital representations of those elements, and then used code that will spit out 3,450 concoctions of art that feature some mix of the elements. This is essentially human art that is thrown into a generative art system. It's really interesting. The pieces that I've seen are, admittedly, weird but really cool at the same time. The answer to the question "do I like this" is "yes."
Now who the hell is Webzee?
I don't know. And I can't figure it out. The ETH address associated with the contract doesn't have anything in it that would help an amateur detective like myself figure out an identity. There are no previous sales on CryptoArt.io. But the people behind Webzee grew demand for this project somehow. The Webzee discord has over 22,000 members. Even at a 0.1 ETH price, I think there's a pretty good chance these things are going to sell out tomorrow. I didn't plan to buy one last night when the mint originally started. But what's interesting is the issue with the minting due to AWS has presented an opportunity. We can look at the wallet addresses of the early minters and see what else they have to try to gauge their wallet values and sense of investment.
There are 134 unique holders of Webzee NFTs from last night. Even though I'm unemployed (cough, self-employed, cough), even I don't have time to go through all of those addresses. I picked ten at random. These are not cherry-picked. They were selected totally at random.
Random address 1: bought 8 Webzee NFTs last night, has over $6k in ETH, 14 total NFTs
Random address 2: bought 1 Webzee NFT last night, has $200 in ETH, 8 total NFTs
Random address 3: bought 1 Webzee NFT last night, has $1,300 in ETH, 71 total NFTs
Random address 4: bought 2 Webzee NFTs last night, has no ETH currently, 38 total NFTs
Random address 5: bought 2 Webzee NFTs last night, has $400 in ETH, 3 total NFTs
Random address 6: bought 1 Webzee NFT last night, has $1,200 in ETH, 63 total NFTs
Random address 7: bought 1 Webzee NFT last night, has $150 in ETH, 1 total NFT
Random address 8: bought 4 Webzee NFTs last night, has $2,600 in ETH, 10 total NFTs (holds MekaVerse NFTs)
Random address 9: bought 12 Webzee NFTs last night, has $1,100 in ETH, 82 total NFTs (holds 4 Meebits)
Random address 10: bought 3 Webzee NFT last night, has $1,000 in ETH, 10 total NFTs
Judging from these ten randomly selected wallets, I notice a couple things. First, those who have the ETH to buy more than one generally seem to be doing so. Also, there appears to be one example of a person who went out of their way to buy Webzee for their first NFT. To me, the biggest reason to think about going long Webzee here is random address number 9. That person has 4 Meebits, which at the current Meebit floor price are valued at roughly $50k combined. This is also the person who went biggest on Webzee. Maybe because they have the ETH to do so. Or maybe because they have a handle on this space that I lack.
What would you do?
Am I buying a Webzee tomorrow? I haven't decided yet. It would be easy to do so because I have 0.1 ETH that I bought a long time ago just sitting in a wallet. It would be easy to deploy it. The question is what do I think will outperform? ETH or Webzee NFTs? I already know I like the art itself. Am I willing to part with roughly $500 to $600 between the NFT and the gas to potentially get stuck with an NFT from an artist that could flop? Because that's the other variable. We don't even know who this person is. Frankly, that doesn't scare me as much as it might for others. Banksy would be a good example of a pseudonymous artist hitting it big and making millions in secondary sales.
I leave you with "I don't know."
But, maybe you do. I guess that's the ultimate point of the post today. There's this weird art project that I've stumbled upon and I figured I share it with you.
Standard disclaimer: none of this is investment advice. I'm not qualified to make recommendations on art or anything for that matter.