Around February of this year, in the midst of the still-pending cryptocurrency boom, a sub-category of digital assets started to really take off. NonFungible.com reported that by the first quarter of 2021, over $2 billion worth of transactions had taken place in the NFT market. Musician Grimes sold almost $6 million worth of digital art via digital asset marketplace Nifty Gateway, who are partnered with Sotheby’s. Twitter founder Jack Dorsey auctioned his first ever tweet as an NFT, the final bid closing at $2.9 million. UFC Heavyweight Champion Francis Ngannou sold NFTs following his knockout victory over Stipe Miocic. The proceeds of the sale, $580,000, was actually more than his disclosed purse for the fight itself that earned him the belt. Despite the hype, in many regards serving as a speculator’s dream, NFTs come with inherent issues that threaten to hamper widespread and enduring adoption.
Czeslaw Znamierowski, an artist who died forty years ago, is gaining fame in the 21st century. His artwork recently sold for $120,000 in China, setting a personal record. Znamerovsky’s paintings began to be bought up by oriental auctions, galleries and collectors, according to the Chinese news agencies. In a relatively short time, the cost of Cheslav Znamerovsky’s paintings increased from several hundred to tens of thousands and even hundreds of thousands of dollars.
Transparent art funds that embrace technology, lawful conduct, and the scientific method to do business are what is needed. It must be understood that clients expect to multiply their capital legally, timely and responsibly, which is a much larger responsibility than just selling art to the highest bidder. Without a doubt, art funds are responsible for leading the market instead of just reacting to it. Reasonable, thought through regulations that help all market participants equally generate wealth, create transparency, freedom, and accountability must be promoted. Leaders of art funds must understand this and hold themselves to a higher standard than everyone else.