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Episode 12
All About NFTs - SuperRare's Zack Yanger and Christie's Head of NFTs Noah Davis

  • 2 min read

Episode Description

This week’s episode spends the hour trying to get a better understanding of NFTs and how they are changing the landscape of the art world.

01:26 - A conversation with Zack Yanger, Senior Vice President of Business Development at SuperRare. Zack will provide us a great overview of the NFT space, as well as a first-hand account of the early NFT industry and opinions about what is on the horizon.

36:31 - A discussion with Noah Davis, Head of Digital Sales at Christie’s. In his role at ...

Transcript

Craig: [00:00:10] This is Art Sense, a podcast focused on educating and informing listeners about the past, present and future of art. I'm Craig Gould. This week's episode spends the hour trying to get a better understanding of NFTs and how they're changing the landscape of the art world. First up, I speak with Zach Iyengar, senior vice president of business development at SuperRare. Zach will provide us a great overview of the NFT space, as well as a firsthand account of the early NFT industry and opinions about what's on the horizon in the second segment. I speak with Noah Davis, head of digital sales at Christie's. In his role at Christie's, Noah serves as a conduit between the emerging NFT space and the traditional art world, which has resulted in his organizing some of the biggest NFT auctions on record in the conversation. We discuss the qualities of a good NFT, the complexities of his role and where the NFT market is headed. At the end of the episode are we take a look at some of the week's top art headlines. But first up, a crash course on NfTs with Zack Yanger.

Craig: [00:01:26] So, Zack Yanger, thank you for joining me today on the podcast to talk about NFTs. So can you help define for our listeners what an NFT is?
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Zack: [00:01:39] Yeah, for sure. So an NFT is a non-fungible token. And essentially, what that means is it's a cryptographic token that represents ownership of a unique asset. And so the way you can kind of think about it is if you look at like bitcoin, for instance, bitcoin is a fungible asset because if you have one bitcoin and I have one bitcoin, we can trade them. And there's no difference between your bitcoin and my bitcoin with a non-fungible token. It essentially represents ownership of a unique asset like a digital artwork or an audio file or a plot of virtual land. And essentially, each NFT has its own underlying value that's completely separate of all other NFTs in existence. And so if I have an NFT that represents one artwork and you have an NFT that represents another artwork, we wouldn't necessarily trade them because the underlying values can differ based on who the artists are and a number of other different factors. And so, you know, the technology's been around for five, six years now. But Ethereum, the blockchain was the first to really bring it mainstream and really kind of create an actual market for NFTs.

Craig: [00:03:12] How is it that the blockchain is so tightly connected to this notion of the unique asset? Is it because the blockchain can help demonstrate authenticity?

Zack: [00:03:23] Yeah. So it's a number of things. So the creation of the internet made it basically impossible for digital artists and creators to one, prove that they created something and to monetize it because everything put on the internet could be freely downloaded. We saw with the music industry that the internet played a large part in musicians making far, far less money from being able to sell their audio tracks because audio became freely downloadable on the internet. And so we have this entire segment of creators and artists that are digital creators and what they create lives natively on the internet. And so for this group of creators, there's never been a way to monetize digital artworks or creations outside of putting them on an Instagram or a Facebook. And on one hand, the internet, you know, opened up an entire world to artists and allowed them to gain massive followings around the globe. But it also made it to where anything they put on the internet. They would never be able to monetize again, and so Etherium and the non-fungible token standard, it was actually called ERC seven. Twenty one made very big strides towards solving this problem because for the first time ever, a digital creator now has the ability to register their digital creation as a one of a kind asset that can be bought, sold and traded on the blockchain with the provenance of ownership and previous bids and sales being ever recorded on the blockchain as well. And so essentially, what is mainly being recorded on the blockchain is that provenance of the token and the previous ownership of the token. So every bid that's placed on the artwork, every previous collector, every time the artwork is transferred. All of those different things throughout in artworks, history is all recorded on the blockchain in the token's history, and that goes a long way towards showing kind of that underlying value of the token.

Craig: [00:05:42] That's an issue that the traditional art world has been dealing with for a very long time, which is trying to prove authenticity through provenance. And, you know, sometimes people are able to demonstrate provenance that maybe isn't necessarily even legitimate or they have an asset that looks authentic, but they don't have any provenance. And so. So it seems like there's a natural fit for NFTs to play your role in a traditional art market at some point, right?

Zack: [00:06:13] Yes, I definitely think so. I think we're already seeing lots of the big art auction houses and galleries starting to implement blockchain for provenance of all of these historical paintings. And really, you know, it solves the provenance problem, but it also solves, like you just mentioned, the the fake problem. And so essentially, you know, in the future, there's going to be billions and billions and billions of NFTs in existence. And how do you prove one NFT is authentic or over over another? And the reason that it's easy to be able to prove the authenticity of each token is because you can track back in the history of that token and the provenance to the original minting date and time and wallet address. And so each artist on SuperRare, they each have their own accounts connected to their own wallet. And so when they mint a new artwork, it's being minted directly from their wallet. So in the future, if you own one of these tokens, you'll always be able to look back in the history and see that it originated from the artist's unique wallet address that only they have access to. So it's impossible to create a fake token that has real provenance, if that makes sense. Sure.

Craig: [00:07:46] So can we talk a little bit about how the current NFT market is sort of segmented, like in my mind? There's, I guess, for lack of a better word, the NFT profile pic group, which is kind of a CryptoPunks, Bored Apes, etc. Digital art, whether that's static or video collectibles, whether it's Marvel, DC, sports collectibles. Am I missing somebody there or is that seem to be how things are kind of separated out?

Zack: [00:08:16] Those are definitely three of the big categories. There's collectibles. There's I would, you know, technically probably less like the profile pic. Projects as collectibles projects as well. Ok, but then there's crypto art, which essentially to be considered crypto art. One the the actual creator needed needs to be the person that mints the token. The provenance needs to all be recorded on chain, and the artists basically need to be paid instantly as part of the transaction happening on the blockchain outside of crypto art. There's now a lot happening in the music space. You know, there's audio NFTs now there's virtual land is very big one that we're seeing as actually one of the best use cases of crypto art because many of the biggest collectors in the space are collecting specifically for virtual museums and virtual galleries that they've built that in the future, they'll be able to monetize access to these virtual galleries. And so virtual land and the ability to build a gallery on that land, that's a very big use case as well. And then, yeah, there's there's new use cases and projects popping up every day. I think there's a lot of really cool things happening with programable art, which technically it would fit under the the crypto art umbrella. But it's a little different than just a a JPEG or a video file minted with programable art. There could be different layers that maybe the artwork changes based on the weather or based on the price of bitcoin or based on a number of other factors. The artwork can actually change over time based on who owns it and things like that. We're also seeing a big, big amount of interest in generative art, which essentially it's created using code where the code actually determines what the artwork will become once it's minted. And so there's a lot of really cool stuff happening. I think that, you know, over this next year, we're going to continue to see many more use cases pop up. I think there's a lot that's going to be done with audio. But yes, those are the main ones that have really seen success so far.

Craig: [00:11:01] So you work at SuperRare? Well, what does SuperRare see is its role or niche in the NFT market?

Zack: [00:11:07] Yeah, sure. So SuperRare was the first ever digital art marketplace to launch on Ethereum that allowed artists to mint their own tokens directly launched back in early twenty eighteen, and we made the decision very early on to focus on single edition artworks. And so that's one of the main differentiators for SuperRare is that every artwork on SuperRare is a one of one artwork. And so what that means is that only one person in the world at any given time can own that token. On most other platforms, there's the option to do what's called multiple multi editions where similar to like a print in the traditional art world and artists can make, say, one hundred copies of this token and one hundred different people can own that artwork. And so we really made the decision to lean into the the single edition market early on, and it led to super rare, you know, kind of becoming part of like the high end of the art space. That being said, we we recently made a big announcement around decentralizing the curation on SuperRare via our our governance token. And so heading into the future, we're we're really seeing SuperRare as the place where. Galleries and art collectives will be able to set up their own storefronts within our umbrella of collectors and community. But at the end of the day, what I think really stands out about SuperRare is the trust factor that we've built up with collectors in the space.

Zack: [00:13:01] You know, SuperRare is definitely the most trusted platform. I think when it comes to collecting just because we do a lot of work to verify the the that the creators on Super are actually the people they say they are. We've seen it happen a couple of times now where platforms have been actually tricked and you know, a person pretending to be a well-known artist was able to get access and meant something. And so we do a lot of work just to make sure that everything is authentic and that the works that the collectors are buying are actually from the creators that they say they are. And so I think that that plays a big factor in SuperRare. The last thing is just the provenance factor that I've talked a bit about. So the way that SuperRare is set up, every bid, every sale, every transfer, everything that happens in the artworks, history is all recorded on chain in the artworks history in a way that if the SuperRare website was to shut down tomorrow for any reason, all of the tokens are still completely safe. All of the provenance is still completely safe. All the tokens are interoperable and can be traded on any other marketplace like OpenSea.

Zack: [00:14:21] And so we're really trying to help artists create NFTs that will still be in existence one hundred years from now. And so if you look at a lot of the other platforms in the space that they don't take the provenance factor as seriously. I think if any, any platform where you're accepting U.S. dollars, for instance, there's no way that those bids are able to be recorded on chain. And so that's a big part of why we're crypto native and all of the transactions and purchases happen in crypto, because that's how those transactions are able to be recorded in the pieces provenance. So like, let's say you're doing an auction in U.S. dollars on a different platform, you could have 10 of the most influential people in the world bidding each other up on this artwork. But at the end of the day, all that's actually going to show with the token on chain is the winning bid and winning collector and all of that amazing bidding history. Yes, it'll show on the company's website, but if their website goes down, it's not actually attached to the token. And so when buying a super rare artwork, you're really buying much better technology and provenance than is really available elsewhere.

Craig: [00:15:46] Well, I guess this is the billion dollar question, but looking forward, how do you think this market will evolve?

Zack: [00:15:51] Yeah. So I mean, I think that it will evolve in many ways. I think that we're going to see. I strongly believe that we're going to see a lot of the value flow to one of one single edition artworks. I think right now there's definitely a bit of like a bubble craze happening in like the collectibles realm where it's in a way, kind of more gambling. You know, it's it's much easier to buy a collectible based on specific attributes than it is to have an artistic eye and be able to pick out an artwork that's going to go up in value. And so it's just a kind of a different game, if you will. And I think that we're going to see a lot more volume flow into the one of one market as more of the traditional art world comes into the space. And just as more and more money comes into this space, I think that we're also going to see right now it's kind of this big, divided market of, you know, different marketplaces that are all kind of doing different things. They all have different royalty standards.

Zack: [00:17:12] And I think that we're going to see a lot of aggregation to where artists stats, for instance, like right now, artists have an average on super rare and average on maker's place, an average here. But there's no way where you can go and see what's the artist's average sale price. How many artworks have they created everywhere? There's no way that where the stats have been aggregated correctly yet. And so I think that that's coming very soon. And then I also think that. There's going to be a big move towards artists minting from their own smart contracts. So like right now, most artists mint from a marketplace contract like SuperRare or Nifty Gateway or whatever marketplace they mint under. You know, we we're actually over the next week going to be basically giving artists access to create their own contracts on super rare. But I think that in the future, it's going to become much less about the platform that the artwork was minted on and it's going to become more about the artist that minted it. And we'll see a lot more artists using their own custom contracts.

Craig: [00:18:27] Do those custom contracts? Is that attractive to the artists because they can customize more add ons or the buyer like these different bonus features per se for buying a particular NFT? Is that part of the attraction there?

Zack: [00:18:40] Yeah, so that's definitely part of the attraction is just more ability to customize the releases and creative ways. And then also just, you know, I think it also helps with provenance. Additionally, just if artists all start having their own smart contracts, it then becomes even easier to verify authenticity of tokens based on whether or not they came from the artist's contracts. And so, like right now, artists, if they meant a token on super rare, it's a super rare NFT. But once we launched these custom smart contracts for artists, you know, x copy, instead of minting a super rare NFT, could mint an X copy NFT so they can actually like name what the tokens are called. They can decide what the royalty is going to be on the token and different things like that, so it just makes it more customizable for the artists.

Craig: [00:19:36] So is there a specific hurdle out there that needs to be overcome to drive the next wave of growth in this market?

Zack: [00:19:45] Yeah, I mean, I think that it's definitely a lot still needs to be done when it comes to education. You know, the technology just in the last three years has improved significantly. And I think over the next three years, we're going to see the technology improve exponentially and as the technology continues to improve. You know, a year from now, using platforms like Super Rare is going to be no no harder than using Instagram or using Facebook. Right now, the main thing is just the barriers to entry for somebody that's completely new to crypto is, you know, fairly high to to, on one hand, understand, you know, why what is an NFT? Why does an NFT value? But then to also understand, you know, by purchasing that NFT with crypto, getting the crypto setting up wallets? And so I think that a big, you know, a big thing that's starting now and that will continue is more education. We're planning to do a lot of webinars for people that are interested and getting into the space. But, you know, there's definitely a lot that still needs to happen in terms of educating non crypto users. You know, that being said, there's you know, the NFT market is still very small in comparison to all of crypto overall. Metamask alone has like five or six million users, and right now SuperRare has about four four thousand five hundred users to give you an example. And so there's just there's massive room to grow just within the crypto space alone. But I still think that a big part of bringing things mainstream is going to be continuing to educate non crypto people.

Craig: [00:21:49] In my mind, there's still an enormous amount of growth capable because when I look at when you kind of look at the curve of this year and what's going on with the NFT market in how it has grown and pulled back and is slowly growing again, it looks a lot like what Gartner refers to as a hype cycle, which kind of tracks the reception in adoption of a new technology. If you look at that cycle, it looks like we're at that point where you're now getting to that slope, where there's now a slow, steady growth. And, you know, according to their chart, they say that at that point means that you've probably got about five percent adoption of the potential audience, right? And so we started thinking about how big the NFT space is in imagining that that's only five percent of the potential audience that the opportunity still seems enormous. Right.

Zack: [00:22:46] Yeah, for sure, I mean, it's as big as it feels, being in the space every day. You know, we're still a very long way off from where this is all going. I mean, if you go into any grocery store and ask everybody, you know, do you know what an NFT is? I would be. It would be very likely that, you know, maybe two percent of the people in the grocery store, if that could give you an actual answer. And so I think that there's still, you know, it's still a very small niche market in comparison to other markets. But the underlying tech, the community, you know, the ability for artists to now, you know, earn royalties and actually do what they love full time. You know, I think that it's pretty clear to me that this is all not going away and that we're we're still very, very early.

Craig: [00:23:49] What about the traditional art world? Is there participation in the NFT market necessary for long term growth? Or is it assumed that there will eventually be widespread adoption in that traditional art market? What's your feeling there

Zack: [00:24:06] Just this year? You know, we've seen massive interest from the legacy art world in NFTs. You know, all of the major auction houses Christie's, Sotheby's, Barron's, Phillips, they're all doing nonstop NFT auctions now. They're all working hard to get get more artists and collectors from their end in this space. And on our side, we're seeing just massive interest from artists and galleries looking to leverage this new technology. I think that we're we're over this next year. We're going to see, you know, pretty much all of the major art galleries are going to have some sort of NFT solution, whether it's working through a platform like SuperRare or whether it's building their own smart contracts in the future. That being said, I think that. You know, there's there's a lot that still needs to happen on the side of the traditional art galleries and auction houses to do it the right way. You know, right now, for instance, you know, a lot of these auctions that are happening with traditional art houses aren't actually taking place on chain because the auction houses don't want to limit the auctions to just crypto users. And so essentially, they do it in U.S. dollars on their websites. And at the end of the day, it's basically the artist just transfers the token to the winning collector and gets paid by the auction house.

Zack: [00:25:54] And really like in a way, kind of defeats the entire purpose of what the technology is providing. That's one of like I think the most interesting things about super rare is just that we're completely non-custodial, like we never take custody of anyone's art or anyone's money. And any sale that's happening is because the artist minted their artwork and a collector purchased it directly from their wallet, and that funds go instantly directly from the collector's wallet directly to the artist's wallet through a smart contract. And I think that without that provenance and without using the tech to its fullest, you know, I, you know, we've had conversations with a lot of these auction houses, and I know that they're working hard to implement the technology the right way. I think, you know, in these beginning months, for them, I think it's more just about experimenting, getting to know the community of artists and collectors and just kind of dipping their feet in. But we're going to see a lot more coming from the traditional art world very soon.

Craig: [00:27:00] Some people have had questions about the blockchain and the efficiency of the particular blockchain that a lot of the transactions are on and related to both like environmental factors and the cost of what's referred to as gas fees. Can you talk a little bit about maybe where the market is headed in terms of combating some of those, those hurdles in terms of the environment and the cost to mint?

Zack: [00:27:29] You know, there there there is a lot of misinformation out there about the the energy consumption that's taking place at the end of the day, you know, to mint an artwork on on a platform like SuperRare and sell it is going to use a fraction of the carbon emissions that you would use to print an artwork, frame the artwork, get a space to sell it and set it up and do it. So you know to to to to say that like NFT artists are actually harming the planet. I think it's a big jump. You know, there was some misinformation spread many months back. You know, it's definitely true that Ethereum is energy intensive. You know, the the I'll try to keep it as simple as I can, but the energy consumption corresponds to the electricity that miners are using to validate these transactions. And essentially, what that means is that miners are competing against each other in a computational race in order to earn the most ETH rewards. And at the end of the day, you know, minting and trading NFTs, it doesn't actually increase Ethereum's carbon emissions. You know, Ethereum has a fixed energy consumption at any given point in time. So while the network is constantly processing transactions, whether it's a financial trade or an NFT mint, these transactions don't actually increase or affect the energy consumption of Ethereum.

Zack: [00:29:07] Basically, the total energy that's spent on mining on Ethereum, it depends on a relationship between the Ethereum price, which is the source of revenue for the miners and the cost of the energy. So like the way I like to think about it, you know, you can think of Ethereum kind of like a train engine that's throttled to the same speed all day, and it's running by the miners that are basically securing these transactions. In this analogy, transactions that are submitted to the network would be seats on this train, basically due to the design of Ethereum. The train is going to keep running at the same speed, whether there are at the same speed with the same energy consumption, whether there are no seats filled or whether the train is packed. And so essentially today, if nobody was to mint an NFT, the same amount of carbon would be used on the Ethereum blockchain. And so. Yes, it's not one hundred percent ideal, but the goal is that everything is moving towards Ethereum 2.0, which will become proof of stake and completely remove the energy consumption. Altogether, you know, that is ideally going to be happening early next year.

Zack: [00:30:31] And, you know, companies like ours and others are donating funds to Ethereum 2.0 development to help move that along as quickly as possible. And in the meantime, you know, our platform and others are using, you know, we partner with a company called Ariel to to offset our carbon emissions, but essentially we make donations each month that offset the amount of theoretical carbon emissions that are being used. But at the end of the day, any fees being minted or not isn't going to affect. The carbon, the carbon usage of the Ethereum blockchain either way, and so we're seeing some other blockchains like Tezos as the first one that's really started doing interesting stuff with NFTs. You know, at the end of the day, though, I think the market is going to stay where the collectors are. Collectors are on Ethereum. That's where they are. You know, there are some collectors that have started collecting on Tezos. And if that continues, I could see there being bridges built between Ethereum and Tezos so that artists could have that option. But at the end of the day, it is just a short term problem that is going to be completely solved with Ethereum 2.0.

Craig: [00:31:52] Well, Zack, I think you've just about answered all my questions. One last question I had was somebody was trying to tell me that you are actually the person that came up with the term crypto art. Is there any truth to the fact that you're that og, that you're actually the person that came up with the phrase

Zack: [00:32:12] SuperRare was the first to start using crypto art and that term in any sort of marketing in this space? You know, I have seen that somebody somebody shared like a website I don't remember, but there was some website you IRL from like twenty fourteen that had crypto art in the URL. And so I can't claim that I'm the first person to ever say the term crypto art, but I can definitely say that's SuperRare. Coined the term crypto art very early in all of this and was the first platform to ever use that word in any sort of marketing. There was actually for a number of years, other platforms and others in the community tried to push for different terms like art and blockchain, art and many others. But we always held strong to crypto art and will continue to. And so that's, you know, it's exciting now to see Christie's having a head of crypto art. But yeah, so a little bit of a long winded answer. I can't confirm that that nobody ever said the term before me, but I can definitely confirm that nobody ever used it in this space before us.

Craig: [00:33:31] So early adopter, you were there at the infancy of it all, right?

Zack: [00:33:35] So yeah, I was the first hire at SuperRare in twenty eighteen joined to basically build the community and the marketing side.

Craig: [00:33:45] Well, imagine walking into a grocery store and asking somebody what an NFT was in twenty eighteen. Right?

Zack: [00:33:50] Yeah, definitely. I mean that that's why this is all really exciting. Just, you know, we for for more than two years, you know, we're we're telling everybody this is going to be a thing. Many people laughed and said, you know, nobody's going to ever buy NFTs, nobody's ever going to buy digital art. And it doesn't make sense. You can already see it or downloaded like there's no reason to buy the NFT. And you know, it's just very validating to see so many amazing artists and art galleries now starting to just take this space seriously. So it's it's all very exciting times.

Craig: [00:34:33] Well, hey, Zach, I really appreciate your time today in your willingness to, you know, kind of open up and help educate us and kind of give us a vision of where we are and where we're headed. And, you know, I really appreciate you joining us for sure.

Zack: [00:34:47] It's great shot and I'm going to try to get.

Craig: [00:34:54] It seems like I often find myself in a conversation about why anything has a particular value. And my answer is that it comes down to three things. Scarcity, authenticity and appeal. Much of the excitement around NFTs comes from the fact that the technology can prove the scarcity and the authenticity. Well, that just leaves appeal. Do you like it? Do others like it that can be hard to predict? But those NFTs that are scarce, authentic and appealing have real value. They bring a sense of pride and intrinsic joy just to look at. But a question a lot of collectors have been dealing with is how do I display my collection of NFTs? If looking at your NFTs makes you happy and brings you a sense of pride, then you need to get your NFTs onto your walls. And there is no easier or safer way to do that than with your Canvia. Canvia is the first commercially available digital art frame to provide a fully integrated solution for securely displaying NFTs directly from a user's crypto wallet. Regardless of whether your NFT is portrait or landscape static or video, you can sync your MetaMask or other crypto wallet and immediately start displaying your NFTs on your Canvia. If you want to learn more about Canvia and its NFT display solutions, head over to Canvia Dot Art and check it out. And now even more. Talk about NFTs with Christie's Noah Davis.

Craig: [00:36:31] Noah Davis, thank you for joining me today on the Art Sense podcast. You know, I was thinking maybe the best place to start with you is maybe your opinion. What makes a good NFT?

Noah: [00:36:45] A good NFT can only be an NFT. That's that's really my my thesis there. There are very many people who seem to think that an NFT can just be a one to one correspondence to something that already exists. But to my mind that that alchemy is really impossible to pull off in an authentic and meaningful way. Nft is successful. Nft projects have created community for people in a really unique way and a really organic way. So I think that there is there is a different kind of successful NFT for four different kinds of projects. There are fine art NFTs. There are profile, picture style NFTs. There are one of ones from crypto native artists. There are NFT NFTs like the the World Wide Web that Sotheby's sold that are really ingenious and basically solve for a problem that nobody even knew existed with with some of these collectibles that are really intangible like ideas. So I'm more I'm really interested in NFTs that that are vital in that sense that they cannot exist in any other way, shape or form. If you want to. If you want to sell something and you can do it without involving NFT, then you should. Right.

Craig: [00:37:59] So Christie's has really focused on primary sales to this point. I think we can both agree that your name as market legitimacy in many cases. So how do you know your choosing wisely?

Noah: [00:38:13] Wow, that's a really good question. I think it comes with with immersing myself in the space. I am very much a neophyte here and was previously pretty much a Luddite. So I'm still still getting up on my feet with all of the technology and this new landscape. But I think that I find myself being drawn to people with a magnetic kind of pull. And when they have that community around them, when I can see this real engagement from their audience, that is a great signal to me. So I kind of trust that, that feeling. And of course, I haven't always made the best decisions. I mean, this has been a very steep learning curve and figuring out what works and what doesn't. And also in crypto and in fine art, too. There's a lot of people who present as something that they may or may not be, in fact. So figuring out what is the signal and what is the noise is really important, and the only way to do that is to just be completely in it. So that's what I'm doing. I'm just trying to be in the Discord communities on Twitter. I find that to be extremely helpful. Absolutely. Pretty much crucial, actually. I think pretty much crucial.

Craig: [00:39:39] Sure. So an NFT is an asset in Christie's has been auctioning assets of all types for three hundred years. But where has the organization needed to be the most flexible in accommodating the sell of NFTs?

Noah: [00:39:56] I think I mean, the answer to that is it's manifold. It's very, yeah, that's a lot. We I think probably the strangest aspect of it all is the the the lack of an object, right? Usually we are selling something that very much exists, that we keep track of, that we shepherd through the process. We keep it in our inventory. We photograph it. We catalog it. We present it in an exhibition and then we ship it out to the new owner. None of that happens with with with NFTs. So managing the movement of these tokens? That's that's a very interesting new problem to solve for. And of course, also the cryptocurrency payments is brand new for us. There are all sorts of new questions around KYC from a lot of crypto native bidders. So sorting all of this out, figuring out what is a DAO, right? All of these things have been have been hurdles for us, and it's definitely been a challenge, I think, for the support departments to keep up. And I'm so grateful to them for supporting me throughout this because I really am basically a one man army on the front lines of the NFT business. But I'm super well supported by people behind the scenes and in credit and in finance and legal and compliance and post-sale, you name it.

Craig: [00:41:31] So do you feel like this whole process of dealing with this new type of asset is actually kind of changing the way Christie's does business? I mean, do you think there will be long term changes organization wide based on the needs of selling an asset like this?

Noah: [00:41:46] One hundred percent. Yeah, 100 percent. I do, because because I believe that this that this marketplace is going to be around for, for the foreseeable future, for forever. When when the kids get it instinctively, you know, when when you see kids buying skins on Fortnite, for example, and I've bought skins on Fortnite, you know, I get this stuff. I'm thirty two years old, so I'm like, thirty two going on 15, I guess. But when the kids get it instinctively, you can bet that this is this is the way this is going to be the future. So I really do think that that the next generation Gen Z, when when they come of art collecting age will gravitate more naturally towards an intangible asset because tangible assets are really cumbersome, I think. I think of this, there's this one Barbara Kruger picture that I think about a lot recently, where it says it's gigantic printed image and I can't remember what the image is. But the statement, you know, the Barbara Kruger big billboard statement is you can't take it to the grave with you or you can't carry it with you when you die. Something along those lines, right? And that that makes me think about about the absurdity of the inherent absurdity of of things. And I get that. I mean, a lot of a lot of my clients, just they don't have any interest in stuff. Metakovan, the guy who bought Beeple, does not have a permanent address. He doesn't own a car. He just owns crypto and and and and land real estate in the metaverse. So I see that as the future for. It's no, it's not going to be the sort of curiosity or, you know, outer limits of of ownership like that's going to be the bedrock.

Craig: [00:43:37] So can you talk a little bit more about the types of bidders that you are seeing participating in these particular digital art sells?

Noah: [00:43:46] Mm hmm. Yeah. So the audience definitely skews younger. No surprise there. And these are people who are mostly tech savvy or they have kids who are really tech savvy. It's a very global audience. There are certain enclaves of of places that are very crypto friendly on the globe, where it's not surprising to see bidders there. But I am impressed by how global this marketplace is and generally speaking, a lot younger than our traditional audience. One of the bidders on Beeple above a million dollars is twenty years old. So, I mean, that's pretty remarkable at Beeple. Generally speaking, is a very, very shocking illustration of of the bidding pool here. There were more than 40 people who placed bids on Beeple, 20 of them bid above a million dollars, and only three of the total bidders were previously known to Christie's, so for the most part, completely brand new audience. And that's pretty astonishing.

Craig: [00:44:56] In the business world, there's a term called market capitalization market capitalizations, a loss in sales caused by a company introducing a new product that takes away from the revenue of their older products. Do you think that the fear of market cannibalization will dissuade organizations like yours from promoting NFTs from the typical roster of traditional art world artists? In other words, do you feel inclined to only offer new digital artists in order to bring in new money from new bidders?

Noah: [00:45:26] No, no, no, no. I think I think the the NFT is what I'm looking at. I really am focused on on the art and the collectible, the asset, whatever it is that the NFT represents. That's what I'm thinking about. First and foremost, there are plenty of of artists, you know, fine artists with capital F and A, I guess that that have released successful projects so far. Damien Hirst and Tom Sachs jumped to mind, and I certainly would love to handle those objects in the right context and at the right time. It's not something that I worry about the the the the fear that I see that I sense from from other parts of the art world, I think comes from this. This sort of anticipation that blockchain technology, which is the underlying technology that that facilitates NFT, is that that is going to disrupt their business model tremendously. And that's true that I had this this epiphany moment light bulb moment when I was researching the crypto punks we were. We saw the grouping of nine CryptoPunks from from Larva Labs in our evening sale. And I was I spent hours just trolling there. Their website, the Larva Labs website, they their sites is such an amazing illustration of what blockchain can do, how you can see not only where every punk currently resides. You know, the wallet where where that that punk is.

Noah: [00:46:55] You can see how it got there. You can see what bids are being placed in real time. You can see what bids are being accepted or rejected. It's really fascinating if a if a marketplace like that existed or a tool like that existed for Pablo Picasso or Andy Warhol, it would solve for so many problems. It was all for authenticity testing. It's all for for record keeping. You could you could include literature references and exhibition history and and even restoration history title claims. All of that can be recorded on the blockchain, but also the financial stuff. And when when that's all publicly available in a anonymized, decentralized way, I mean, that completely changes the business model for everybody. And God knows that this this business, the art business is is driven largely by this. This kind of I don't know, the person who knows where the bodies are buried is the one who's going to make out like a bandit. And if everyone knows where the bodies are buried, I mean, who's who is going to win it? I love that. I just I think the potential there is so incredible. But some of the animus from the the the old guard, I think it's coming from a place of a fear of change.

Craig: [00:48:12] It seems like it's a fear, a fear of transparency and efficiency. You know, I think some people's brands in the traditional art world are kind of built on. I'm the insider with the inside knowledge and I can, you know, I can I can identify the value and I can put you in touch. But if all of that is very transparent, then some people are, would you know, be prone to losing that value that they've kind of, you know, manifested over however many decades, right?

Noah: [00:48:47] Yeah. Yeah, it's it's very, very, very serious. So I think about this, this this this headline I saw recently, I think over the summer, at some point I saw that there was this hit man who got arrested in China, this this businessman had hired a hitman to take out a rival businessman. And it's so funny that the hitman contracted it out, farmed it out to another hitman like a subcontractor, and then that hitman subcontracted another guy. There were there was something like eight or nine different hitmen who were wrapped up in this thing. They all got caught in the dragnet, but I've seen private sales for four million dollar art go down like that where you think that you're talking to the buyer, but you're actually talking to somebody who's talking to somebody who's talking to somebody. And that's an incredibly inefficient and and just frankly gnarly way to do business. So I think

Craig: [00:49:49] Well in each one of those people want their pound of flesh,

Noah: [00:49:52] Right? And then you have it, it's the big fish all the way down to little fish kind of thing, and it's just a completely inefficient and kind of slimy way to do business. So I'm looking forward to the day where where we have a blockchain for for the art world, generally speaking and for artists and for artists. I'm excited for them to have smart contracts too, where you have this durable, indelible agreement in place that hopefully enforces itself because I don't know how much you've looked into what smart contracts can do and artists resale royalties and these kind of things that the blockchain can solve for it. It's really fascinating stuff.

Craig: [00:50:33] So let me ask you this there are some people in the space that complain that the bidding on these NFT sales at Christie's should be taking place on the blockchain.

Noah: [00:50:43] Yeah, I'm one of those people.

Craig: [00:50:44] So. Right. And so I guess that's my question. Are you considering, you know, because there's, you know, I think it's a reflection of everything we've just talked about in I think some of the people will say, you know, we're losing really valuable data in terms of maybe there's a bidding war between well-known collectors. We're we're we're losing a record of that by not having this take place on the blockchain. You know, I assume you're you're fighting internally to try to, you know, make that. Maybe you can talk to about, you know, obviously it sounds like you want that change. What hurdles are standing in your way?

Noah: [00:51:22] Man, I think I think we're we're we're we're trying to move deliberately and methodically towards a fully. On chain experience for four auctions at Christie's. But of course, we're talking about two hundred and fifty going on three hundred year old company and that that old adage about the old dogs and new tricks. Definitely true. But I am. I am really impressed by how quickly the business has moved to to accommodate these changes and how there's a willingness to explore this new space. I think we'll get there, but there's there's all sorts of hurdles in the way. I mean, notwithstanding the fact that I'm the only NFT guy and this is the tail end of a crazy pandemic and we're all trying to get our bearings and come back to reality and to ask everybody to help me build a completely new reality is I understand that that's that's a big ask. So I'm again, I think we're going to get there to an on chain kind of experience. We just want to make sure that we do it right and that what we build is, is, you know, immaculate basically.

Craig: [00:52:34] So is participation by the traditional art world necessary for the long term growth of the NFT market?

Noah: [00:52:41] Not necessarily. Not necessarily. But I do think that there's going to be an entrance soon from various players. I know a lot of people are are ready for for season two, basically on the sidelines, traditional collectors who have now set up wallets or they bought a bunch of ether or they've hired somebody to manage their collection that they're going to create. So that is all really compelling to me. But that being said, it's not necessary. It's not it's not the necessary thing for this market to thrive and to grow. Ultimately, I think the reason why we are selling NFTs at Christie's is because it's a very sophisticated and mature marketplace, even though it's unpredictable and volatile. Don't get me wrong, it's a total fiasco, really. But but it's it's a crowd of people who who really know what they're doing and and know what they want to do. So I feel like it can only be additive to have people from the fine art space enter crypto and crypto art and NFT collecting. But it's not going to be the make or break thing to keep this. Keep this party going.

Craig: [00:54:01] Right? So looking forward, how do you think this NFT market's going to evolve?

Noah: [00:54:06] I have no idea. My friend, I I've been. I get this question obviously constantly, and I just like to say, I don't I don't have a crystal ball. If anything, I have a snow globe and all I do is pick it up and shake it around. So that's what what I can promise you is that it will always be chaotic and it will always be unpredictable. So if anybody tries to tell you what the marketplace is going to look like in six months or even a couple of weeks, I would be deeply skeptical of that person. But what I what I can say is the reason why this is all super unpredictable is is for a few reasons. I think it's this equation. I think about this all the time for the people who are driving this marketplace and the collectors and the artists, you know, people who have been really immersed in this stuff for a while. For them, the future does not exist. The future is an abstract concept that is completely irrelevant for them because the future is now essentially right. It's grandiose, but it's true. People in the space. Think about the future as something that they're bringing into reality in media res. So when the future is now and the art doesn't exist and the money doesn't exist, quote unquote exist, and that's the equation, there's no way to predict what the outcome is. It's just it's just impossible. So. But that's also what I find so rewarding and fascinating. Stimulating about the space is that is that unpredictability and that chaos. So I guess it takes a certain type to really enjoy it, you know?

Craig: [00:55:47] Last question. So is, is there anything specific in your mind that might drive the next wave of growth? Or better yet, are there any hurdles, specific hurdles in your mind that need to be overcome before the next great wave of growth?

Noah: [00:56:04] Yeah, what I'm what I'm hoping to see is mass adoption of crypto and decentralization, and that will probably happen when when bitcoin and Ethereum spike again and reach a kind of plateau, or they stabilize and it should bring a lot more people into the marketplace, as well as expand the buying power of the people who are already in it. I mean, I'm hearing a lot of people saying crazy numbers for for what Bitcoin and ether will look like towards the end of the year. But you also see crazy growth happening with other chains and other crypto like Solana and Cardano. So I think it's going to be a really exciting fall. And if we do see an explosion in the value of crypto and the adoption of crypto, that will that will be the catalyst for for the next wave, whatever the next wave is. And I think that this will all coincide nicely with with a movement away from proof of work as the as the dominant mode for these these blockchains to function. Because the proof of work is the reason why, for the most part, there is this environmental damage being caused by blockchain technology, and that's definitely something we need to work on. The space is actively trying to optimize itself and and also solve for this problem. So I think with the advent of Eth2 and with these other proof of stake blockchains coming along, all of this is is is good, is good. It's a very good sign. It means that we're nearly there. I know people have been saying Ethereum too is coming for since 2017, but I am. I am very encouraged by the London one five five nine fork and and all the efforts being burned now. It just it seems like something is is nearly there. Something is going to happen soon. And yeah, I'm excited to see it. I hope it does not completely implode, but it could very well do that too.

Craig: [00:58:14] So, so what's on the horizon? What do you guys have, you know, a particular sell on on the on the near horizon? I know that, you know, when I try to reach out to you yesterday, you're in the middle of a studio. Visit what? You know, what's coming up for for Christie's specifically in terms of of offering, Oh

Noah: [00:58:35] Man, I'm excited. Ok, so we've got at the end of the month, actually since the end of the month is a week away. Basically in a week, we're going to open up the bidding on a single owner collection sale online sale in Hong Kong based out of Hong Kong, called no time like present. It's the collection of the on you and among the awesome stuff that the watches and the George condo painting and the fine art, right? There is also some extremely exceptional NFTs. There is going to be a crypto punk zombie and a couple of other punks that are really amazing, as well as some suited bored apes and me bits. So those will be our first NFTs on offer in Hong Kong. The bidding opens in one week from today and then in New York on October 1st, we are going to sell a full set of curio cards, including the Misprint 17B, so full set of 30 plus 17B and a full set of sets one, two and three of art blocks curated which were collected by the consignor minted directly from the smart contracts. And those two lots will be offered as the first loss in the sale on October 1st and the post quarter present sale. And we are going to conduct the bidding in a live format with an auctioneer in Ethereum. So that's a first, and I cannot wait for that because I've been I've been placing bids on behalf of clients for almost 10 years and always in USD or fiat.

Noah: [01:00:19] And this is going to be the historic thing. I think, you know, placing bids and ISAs is is just that. That's indicative of how quickly we've we've made it to this point from March to now, March is our first time ever accepting crypto, and now we're conducting the bidding for a lot for two of the top lots in a contemporary art sale in Ethereum. So that's really exciting. And then on October 6th, we're going to be selling Justin Obasanjo's Twin Flames one NFT, plus the 100 physical prints of the whole project, which he created for his show at Super Chief Gallery. I think in twenty eighteen, but that's going to be an amazing event. I mean, Justin is one of the best people that I've met in the space, and I just adore him as a friend, but also think that he's a brilliant artist. That's going to be the first photographic NFT that we offer. And it should be. It also a top lot in that sale. It's going to be the first lot in the afternoon session of the photography auction, the only NFT in that sale on October 6th. So we're moving a little bit beyond this sort of NFTs in their own. Kind of playground in their own little sandbox and peppering them into our regularly scheduled programing and our other sales, that's really important to me to sort of bring it into our ecosystem. And yeah, it's it's going to be amazing.

Craig: [01:01:48] Yeah, you're moving to prime time instead of the after school special, right?

Noah: [01:01:52] Yeah, a little bit. But it's not like the sideshow. I want it to be part of the main event and then we're going to in the fall. We haven't announced what we're doing in November or December, but there will be more sales, so we're going to have a hell of a second season.

Craig: [01:02:08] Awesome. So if folks wanted to keep track of of those offerings and they wanted to keep track of of you, where would be the best place for for folks to keep an eye on what's going on, you know, maybe on your feet? Or, you know, Christie's in general, where where are the best places online to look for you guys?

Noah: [01:02:29] Definitely my Twitter. I am at nonfungible Noah on Twitter, and that's for all intents and purposes, the official Christie's NFT announcements channel. So anything that that we're doing with with NFTs, I announce it there first, pretty much. And then it usually follows up with an official quote unquote post or tweets from the Christie's channels. But yeah, I'm I'm on Twitter, I'm tweeting about stuff, and I'm also on Discord, too. I'm Noah, the poser on Discord POS u r and I pop up in various different channels, depending on what it is that I'm announcing or who I'm trying to hang out with.

Craig: [01:03:13] Well, hey Noah, I really appreciate your time. I know how slammed you are and I appreciate you taking time out to to answer some questions and help kind of define the space for folks that are lovers of art. And so I really appreciate your time this morning, man.

Noah: [01:03:31] Totally my pleasure. Thank you so much.

Craig: [01:03:46] And now the news.

Craig: [01:03:51] So speaking of NFTs, the Hermitage has gotten into the NFT game as the State Museum of Russia. Armitage was founded by Catherine the Great in Seventeen Sixty Four and is housed in what was the czar's Winter Palace in St Petersburg. The museum boasts one of the world's great art collections, including works by all the heavyweights of art history. So NFTs. The museum recently conducted an experiment by selling digital versions of five masterpieces in the collection as NFTs on the Binance NFT Marketplace. The works included in the project, which was titled Your Token is kept in the Hermitage, including Leonardo da Vinci's Madonna, Lita Judith by Georgian Vincent van Gogh's Lilac Bush, Vasily Kandinsky Composition six in corner of the Garden Museum by Claude Monet. The concept of the experiment is actually a concept I've been debating recently with Art Friends, which is the concept of what one would call digital deaccessioning if it's unacceptable to the public and museum organizations to do a session. Specific works that have been left to an institution to be steward over. Might it be more acceptable to sell digital versions of the works in the collection to raise funds for ongoing expenses and preservation? Some might immediately say yes. Others say we need to slow down and think a little bit more about this. There are certain legal questions in play, but the biggest question mark for those that are truly forward thinking is whether a museum would be sabotaging its future by doing so.

Craig: [01:05:35] Many see a vast opportunity in the metaverse and believe that museums should be planning now for what their virtual versions will consist of. In their eyes, by selling NFTs from the collection, a museum is robbing itself of the digital assets it should have in its virtual museum someday. Regardless of which side you're on, the sale was completed last week, bringing in a little over four hundred and forty thousand. It was announced recently that MoMA plans to have an exhibit in the near future, around one of its most popular pieces in its collection on Ray Matisse's The Red Studio, because the painting is of Matisse's Studio. There are various Matisse paintings in a variety of states of completion sprinkled throughout their work. The event will bring together all of those paintings to be exhibited together. It's all very meta and should prove to be a very popular exhibit. And now a story about fake bacon. Actually, it's a story about fake Bacon's Francis Bacon. Italian authorities seized nearly 500 paintings suspected of being forged works by Francis Bacon, along with other cash and valuables at the scene that totaled nearly three million euros.

Craig: [01:06:51] The suspect at the center of the investigation is a collector from Bologna, who has been the subject of two other investigations in the last three years as a result of the most recent investigation. Five people have been charged with criminal conspiracy to authenticate and circulate fake works of art and fraud and money laundering, which brings to mind another excellent art documentary I recently consumed on Netflix called Made You Look. A True Story about Fake Art, which chronicles the downfall of the Bluechip Gallery Knoedler Co., and whether director and Freedman was a willing participant or an embarrassed victim. I suggest watching the documentary and making your own determination. That's all the time we have for this week. You've been listening to art since you can find the show on Apple Podcasts, iTunes, Google Play, Stitcher Radio, Spotify or your favorite podcast app. If you've enjoyed this podcast, be sure to subscribe. And while you're there, please rates show and leave a quick review. Your feedback is the key to other folks finding us. If you'd like to see images related to the conversation, read a transcript and find other bonus features. You can go to Canvia Art. And click on the podcast tab if you'd like to reach out to me. You can email me at Krag at Canvia Art. Thanks for listening.

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