Are NFTs Really Art?

Any discussion of non-fungible tokens spawns one question from most advisors: What the heck is an NFT?

The response is inevitably disappointing because what the asker really wants to know is “why are NFTs worth money?”

The snarky, but true, answer is that some NFTs are worth money because people are willing to pay money to own them—think of the images of Bored Apes or pixel-art Punks, iterations of which have touched six-digit price points. Most reference the technology and the widespread belief that the blockchain is the future of financial transactions, so anything associated with it carries a sheen of promised riches. Even so, it’s difficult to look at the prices being realized in an unregulated, chaotic market for a (debatably) tangible asset and not be reminded of Tulip bulbs and Beanie Babies.

But many NFTs simultaneously exist within a similarly nebulous, unregulated and volatile market, one that few doubt is a legitimate asset class—art.

It’s impossible to predict the future of the blockchain or whether an “asset” recorded there will become an integral part of the culture or fall by the wayside as a fad. But NFTs being considered art offers a more solid proposition for attaching value to them beyond wild speculation (although the art world isn’t immune to volatile speculation either).

That brings us to a question even more daunting than “what’s an NFT?,” namely, “what’s art?” To find answers, we turn to the auction houses.

On March 11, 2021, Christie’s held the first ever sale of a purely digital piece of art by a major auction house. The piece, an NFT titled “Everydays—The First 5000 Days” by digital artist Beeple, aka Mike Winkelmann, sold for $69 million, instantly making Beeple, who prior to October of 2020 had never sold a work for more...