New York Times Recap: The Untold Story Behind the NFT Craze

The New York Times

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How NFTs Are Sparking a Cultural Shift

Original Source: "The Untold Story of the NFT Boom"

Original Source: Clive Thompson, The New York Times

Original Translation: Echo, Da Shu Wang, Chain Catcher

“It was 40.7 ETH at the time,” Victor Langlois gasped, “It was insane.”

It was not even 4 p.m. yet, and the 18-year-old crypto artist Langlois was sitting in front of his desktop computer, witnessing a frenzied bidding war between two art collectors. Langlois, clad in a white hoodie of his own design, his arms covered in psychedelic art tattoos, including an eyeball and a sunflower floating in a blue sky. Cardboard covered the windows of the room to keep it dark, with a blue LED light beaming down from the ceiling. As the numbers climbed, Langlois nervously pulled at his brimless cap.

The bidding war had started the day before on the SuperRare auction site when an art collector named @thegreatmando1 bid 15 ETH for Langlois's digital painting "The Sailor," then valued at $24,000. But soon another bidder, @yeahyeah, offered $33,000. The two bidders continued to drive up the price, reaching $67,905.92 by noon.

“The Sailor”

When I arrived at his home in Seattle, it was already 3 p.m., and the bid for “The Sailor” stood at $75,000. Langlois was chatting with other digital artists on Twitter, and they were cheering him on excitedly.

Langlois exuded a sincere, almost unsettling vibe. He told me, “Because people in my upbringing were so harsh, I try to be the best person I can be.” As he watched the bidding on the screen, he nervously chuckled, “I can't even believe it,” he said.

A year ago, he was a bankrupt high school student living in his grandparents' house in Las Vegas, feeling very unhappy. There, his grandmother would peek into his bedroom and dismiss his pile of acrylic paintings and colorful marker drawings as "ugly."

Since last summer, he has been selling his art on websites like SuperRare. By New Year's Day 2021, his 18th birthday, Langlois had enough money to move out, so he went to Seattle to become a full-time artist. He rented a house near downtown, filled with art supplies, a Keurig coffee machine, and a set of dumbbells (still unopened).

"My family had no money, everyone had two jobs, living in a terrible place in California." Making so much money in one day was "so bizarre."

Langlois creates surreal digital images, often bizarre cartoonish portraits—tear-streaked faces and exposed skin—conveying his dark emotions. The day I visited, he was selling a piece titled "Sailor," depicting a big-headed figure with its brain exposed like a pile of pink beef; its two eyes looked like they were cut out of a magazine, a common theme in his portraits, happily wearing a paper sailor hat on its head.

In his first days in Seattle, Langlois curled up on the living room couch and drew most of this piece on an iPad. Then, he added motion using animation software: the brain gently pulsating, the eyes blinking incessantly. "Sailor" looks both unsettling and whimsical.

However, Langlois isn't actually selling digital art. He is selling a non-fungible token (NFT), a token that represents a unique relationship to the artist and the art for its owner. NFTs are digital files created using blockchain code, very similar to the code that enabled Bitcoin. Langlois's NFT includes data pointing to an online copy of "Sailor" and data on who currently owns the NFT.

This means that the NFT acts somewhat like a physical artwork. Someone can own it, hold onto it, or resell it to another collector. Langlois's animation is online, visible to anyone, even replicable and downloadable. But there is only one NFT.

Recently, NFTs have become a topic of countless headlines, part of a craze that started in December last year when crypto artist Beeple sold a set of works for over $3.5 million. By spring, a series of dazzling digital files—LeBron James video clips, Jack Dorsey's first tweet—were minted as NFTs and auctioned for hundreds, thousands, even millions of dollars.

The public does not have a consensus on what this gold rush signifies. Ask a Bitcoin maximalist—self-described as a "crypto native"—and they will tell you that NFTs herald the future of digital property. They foresee a time when people will spend income on digital goods that they can trade, resell, or hoard as investments. As governments lose their exclusive power to create money and protect property, individuals will instead trust in blockchain networks.

However, the NFT vision carries significant risks and drawbacks, especially environmental costs. Running the Ethereum network requires a vast amount of energy, with annual energy consumption estimated to be roughly equivalent to that of Hungary. NFT skeptics also argue that the rise of crypto frenzy is mainly to keep people talking about cryptocurrency to maintain high prices for Ethereum and Bitcoin. To them, it seems more like speculative behavior driven by hype, the next phase in decades of "financialization of everything."

Since igniting this frenzy six months ago, the ubiquitous beneficiaries of NFTs are increasingly those who have already become winners in today's attention economy. Paris Hilton sold a series of digital image NFTs for over $1 million; the Golden State Warriors auctioned off a series of digital memorabilia NFTs; the person who took the infamous cheese sandwich photo at Fyre Festival is selling an NFT with that image to cover the costs of a kidney transplant.

However, artists in the crypto space like Langlois are the originators of this craze—a strange origin for a trend that seems to be pushing the cultural economy to new heights. Just last year, crypto art was still a vanguard of subculture, perhaps even a genre. It was SuperRare and a few other sites that created this market, gradually convincing crypto millionaires, mostly young and highly online, to open their virtual wallets and splurge on digital tokens.

For those artists, the sudden wealth could be disorienting. In January of this year, when I first met Langlois, his NFT sales had already reached $300,000. While Langlois is a shining star in his world, several dozen other digital artists (who previously struggled or were busy with website design jobs) have also started making a living from their art. Whether NFTs continue or eventually become a new version of 21st-century tulip mania is a question that holds far more significance for these artists than for the art world and other institutions caught up in this speculative frenzy.

Back in his dim room, Langlois is monitoring his auctions. In addition to "The Sailor" on SuperRare, he has also released limited editions of three pieces on the Bitski site, and their prices are rising.

In the final minutes before the 5:00 p.m. deadline, @yeahyeah bid 46 ETH (approximately $800,000) for "The Sailor."

"I'm going crazy," Langlois shouted hoarsely. He sent a message to @yeahyeah thanking him, then clicked the button on SuperRare to transfer "The Sailor" to @yeahyeah's digital wallet.

Langlois leaned back in his chair, taking stock of his day. His sales on Bitski that day totaled nearly $29,000, and with the proceeds from "The Sailor," his earnings were just over $109,000.

"You know what saddens me?" he said to me. He had been celebrating all day, chatting with his online friends, but no one he could call. "I have no siblings, and I no longer speak to my family." Even if he could call them, his new life would be hard to explain.

From left to right: Sarah Zucker's "Treasure Cat," priced at $8,623; Larva Labs' "CryptoPunk #7804," priced at $7,673,568; Matt Kane's "CRYPTOART MONETIZATION GENERATION," priced at $82,764.

For decades, digital artists have been largely dismissed. To the taste masters of the art world, their work seemed more like a commercial craft—can something made in Photoshop really be considered art? Galleries often showed disdain for digital works, asking, "Why should collectors pay for anything that can be right-clicked and downloaded for free?"

Then Bitcoin emerged in 2009, and with blockchain code, you could create digital assets that were nearly impossible to replicate. The first art experiment in this realm was conducted by New York artist Kevin McCoy, who became interested in Bitcoin and its blockchain shortly after Bitcoin's inception. He wanted to see if this could provide a new revenue stream for creators. McCoy was particularly excited about the decentralized possibilities—the blockchain could allow artists to sell directly to fans, bypassing intermediaries like iTunes.

In 2014, McCoy collaborated with entrepreneur Anil Dash to create an experimental cryptocurrency for one of his digital art pieces. The following year, McCoy started a small startup company to allow artists to create and sell tokens for their work. What he mostly encountered was blank stares. "It was a tough process for people," McCoy said.

By the spring of 2017, the concept found new life. Matt Hall and John Watkinson, two programmers in Brooklyn, had created a set of highly collectible characters, called CryptoPunks, featuring punk rock-style pixelated portraits (they liked "weird projects," Hall told me.) They were unaware of McCoy and Dash's earlier experiment.

But they knew about Ethereum, a platform with a simple programming language that allowed coders to create new financial products denominated in ETH. Matt Hall and John Watkinson used this language to mint an NFT for each CryptoPunk, thinking people might enjoy the idea of owning small pixelated portraits, perhaps trading them like baseball cards.

Hall and Watkinson created 10,000 CryptoPunks and put each punk's NFT on a website where anyone could claim a punk for free and have it transferred to an Ethereum wallet. They decided to give away 9,000 punks, keeping the remaining 1,000 for themselves.

Almost no one claimed immediately. Weeks later, an article on Mashable claimed that owning a CryptoPunk "could change the way we think about digital art." A frenzy subculture was born: visitors flocked to the CryptoPunks website, "and within 24 hours, they were all gone," Hall told me. Owners began reselling NFTs to new collectors, initially for a few hundred dollars, then tens of thousands and hundreds of thousands. Later that year, another NFT collectible site called CryptoKitties emerged, where people bought and traded NFTs of digital cats. By the end of 2017, some individual cats and punks were selling for up to $170,000.

By the spring of 2020, the crypto market was heating up, and Coldie sold a piece for $1,000. "I crossed a threshold, and it was like an earthquake; people were going crazy." he said with a laugh.

By mid-2020, cryptocurrency prices were soaring. Another record-setter was Matt Kane, once a painter who had hopes for traditional galleries and had taught himself to code and do web development around 2010. He wrote custom software to assist him in creating intricate digital paintings. In May 2019, he released his first piece on SuperRare, a series imbued with the grief of a friend's suicide. His early NFTs saw minimal sales, with one collector buying a piece for $85 and selling it the next week for a $59 profit.

However, by September 2020, it took him several months to develop a more ambitious artwork, an abstract piece that changed composition based on Bitcoin's price. One of his earliest collectors—a self-described "Token Angels"—had been urging him to set an auction date, offering to pay whatever amount Kane desired.

Kane said: "I told him, I think $100,000 is a good story." To his surprise, the "Token Angels" agreed. This price set a new high and served as a kind of psychological release: If people were willing to pay a five-figure sum for a digital artwork, then where was the ceiling?

Since Bitcoin's inception in 2009, blockchain enthusiasts have long proclaimed its industry-transforming potential. They promised that soon everything from medical records to the stock market to agricultural inventory would run on blockchain. But that has hardly materialized; instead, the first mainstream digital application (outside of cryptocurrency itself) has been for trading funky digital images.

Langlois began creating digital art at age 12, starting with Minecraft. Creative players would create their own "skins" to customize their in-game appearance. A YouTuber he met online taught him how to intricately design skins pixel by pixel. He then started making thumbnails for friends' YouTube channels, charging $5 each. This creative work was an escape from his tumultuous home life, he said, "It was in that year that Child Protective Services placed him with his grandparents."

At his grandparents' house, Langlois's days were safe but dull, and he began spending hours doodling with marker pens for entertainment. At 13, he got an iPhone, opening the door for him to enter the world of online digital art. Langlois took photos of his hand-drawn pictures and posted them on Twitter. Eventually, he transitioned to drawing directly on a tablet with an app. He grew to love this medium because it was more private and shielded from his grandmother's disapproving gaze.

He came across Dostoyevsky's stories from a podcast and quickly read "Notes From a Dead House," getting excited about the writer's tales of unwavering resilience during imprisonment. "When you're in prison, you think you're finally going to die, so why do you keep living?" Langlois said. "I love that. I love why people want to stay alive. That's the meaning of art."

In the summer of 2020, Langlois stumbled almost accidentally into the world of crypto art. He had already started selling occasional prints online. A customer bought one of his paintings for $90 and wrote suggesting he mint an NFT on SuperRare. Langlois was skeptical. He told me, "I thought it was a scam at the time." But after researching SuperRare online, he found it to be legitimate, so he applied to list his work there, submitting a few pieces and a video, and he was accepted the next day.

Langlois didn't know how to price his art, how much was his art worth? SuperRare's Head of Marketing Zack Yanger told him, "You'll get bids at $60 or $600, which might seem like a lot. But I promise you, if you hold onto it, it will pay off." He took the advice and on June 5, he released "I've Been Thinking About You," inspired by a high school heartbreak, a Dalí-esque face with a purple nose, red lips, and the words "Is this what you like?" The initial bid was 0.1 ETH, probably worth $25 at the time. Over the next few days, bids rose to $130, then to over $500. When the price hit 4.5 ETH (around $1,017), it finally sold.

He posted a video of himself screaming with excitement on Twitter. He said, "I'm ecstatic, I'm so grateful." Over the next few weeks, he sold pieces in the $1,000 to $2,000 range. By September, he was selling pieces for over $8,000. By November, his work sold in a single auction on NFT platform Nifty Gateway for $25,000.

Who exactly is buying NFTs? Typically young people who have been in the cryptocurrency industry for years, holding millions of dollars' worth of crypto. Eric Young, a 40-something full-time crypto investor, is one of Langlois' art collectors, purchasing the $25,000 piece. He said he started investing in Bitcoin in 2018 and made a lot of money, loving the consistency of aesthetic in Langlois' work and the passion for detail. "The level of talent he has at just 18 is truly remarkable," he said.

For some crypto investors, buying crypto art gives them something artistic to talk about in a field dominated by other numb technical conversations. As a collector in Manila, Colin Goltra, told me, "For the longest time, you could only talk to crypto bros, and those telling you about blockchain health records." He enjoys long late-night conversations with artists like Pak, known for adopting a Warholian concept art approach to NFTs (Pak once sold a series of identical images as NFTs, ranging from $100 to $1 million). Engaging with these artists — often eager to talk to wealthy new clients — is a draw.

For the nerdy crypto enthusiasts, the aesthetics of crypto art and its intricate social network on Twitter feel like an art scene they can finally "get" into. Most of the collectors I've spoken to have never bought art before and are somewhat intimidated by the prospect of entering a gallery.

They usually don't have much knowledge of art history. But the visual palette of much crypto art has had a significant impact on them, as it has been heavily influenced by memes, vague and exaggerated metaphors from the internet, or futuristic styles from science fiction movies and illustrations. If crypto art is, in a sense, a visual aesthetic movement, then this will be a consistent theme: the inspiration of a generation of creators does not come from looking out the window, but from looking at the window—they see a digital world of software, movies, and games.

"I think my initial introduction to digital art was a sort of 'Final Fantasy'-esque video game atmosphere," said Los Angeles crypto artist and filmmaker Blake Kathryn, who uses 3D modeling software to create sleek robotic figures and visions of dreamy architecture (she created a digital portrait of Paris Hilton, sold as an NFT for $1.1 million).

Another crypto artist, Olive Allen, often uses pop culture icons in her NFT works, ranging from Furbies to video game character Kirby. "This is indeed an art form that captivates the internet, just like an entire ADHD generation," said Colborn Bell, co-creator of the Cryptoart Museum, which houses hundreds of artworks and showcases them online.

There is a divide in the traditional art world in terms of aesthetics. Last fall, the Vancouver Biennale decided to include NFT artworks, and the Biennale's chair, Barrie Mowatt, visited several NFT websites in search of pieces. He eventually found some works that impressed him, but he said, "I remember thinking at the time that there was a lot of 'dirty word' art here."

Artist Noah Davis is more enthusiastic, believing that crypto artists have a playful spirit that is often lacking in fine art. But he understands why old-school art collectors would scoff at him: "Some pieces do look more like they belong in a store, on a dorm room wall, or on a bulletin board," he said.

Evidently, the NFT market is to some extent driven by speculative activities: many collectors see crypto art as a potentially lucrative investment, much like Bitcoin itself. To a certain extent, this is a display of wealth in the crypto era. Kal Raustiala, a legal scholar at the University of California, Los Angeles, pointed out that paying a high price for art is a long-standing way for the rich to flaunt their wealth.

In the past, people hung Picasso paintings worth $40 million on the walls of their mansions. However, since NFTs are only data, most crypto art collectors stare at screens (when looking at their collections). Collectors have created virtual reality galleries so they can put on goggles, admire their artwork on virtual walls, and invite friends to their gatherings. Other collectors, though, shun this mode of display. They simply pull up their artwork on an iPhone or computer browser, much like using Instagram.

In fact, several people have told me that they appreciate digital art for its space-saving benefits. Before discovering Cryptoart, Token Angels had purchased many physical paintings to the point where their family had to intervene to stop them from buying more. Now, he owns a virtual 3D gallery on an online platform called Cryptovoxels, where he showcases his crypto art, including a $100,000 artwork by Matt Kane. He told me: "I would describe Matt Kane's art as pure climax because the images are so beautiful that you want to zoom in."

Outsiders to NFT culture are almost clueless; they believe that those who buy NFT art own the NFT. But in reality, an NFT contains data corresponding to information about the artwork, such as the creator, title, and a link to an online viewable copy. The visible image is just a part of it; whether a JPEG or a GIF animation, it is merely a digital file hosted in an online location. However, the NFT typically refers to that file (if the site hosting the artwork goes down, the NFT could become a blank link). Anyone can copy that digital file from platforms like SuperRare and post it on Instagram or Facebook, or even set it as a phone background.

Given this, we are curious about what collectors most want to get when buying an NFT. Some collectors view buying an NFT as proof of their connection to the artwork and the creator, allowing them to brag as they used to, almost indifferent to whether anyone else will see the artwork. Collectors I have interviewed, however, believe that if the art piece they own is widely replicated on the internet, they would be delighted. For the artwork owner, having thousands of people pay attention to their digital art brings joy.

For cryptocurrency believers, this attention signifies that the cryptocurrency industry is in the early stages of a major economic shift, where creators can sell any digitally reproducible product: music, videos, in-game items, articles, and photographs. Nifty Gateway co-founder Duncan Cock Foster said: "It's a bit like 1996 internet relay chat now, before Facebook was invented."

"I spend a lot of time giving away art for free to attract potential customers." André Oshea, one of the few successful Black NFT artists, said he is optimistic about NFTs, as this technology is helping online artists combat the abuse of their work.

However, the emerging NFT market still has many downsides. Economist Alex de Vries, who tracks cryptocurrency energy consumption, sees energy usage as a significant drawback. Currently, all Ethereum mining devices consume a total of about 42.78 terawatt-hours annually, a concern for some crypto artists who also identify as climate activists.

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The peak of the NFT market began with Beeple. A 39-year-old crypto artist from South Carolina named Mike Winkelmann. For the past fourteen years, he has been creating a series of works called "Everydays," where he shares daily creations online to hone his craft. "I will continue to do this until I die."

Mike Winkelmann started with simple sketches on paper and later transitioned to using 3D modeling software. He is known to favor surrealism, sometimes creating bizarre images or satirical pieces on pop culture or current events, such as a buff Tom Hanks battling the coronavirus. His online presence grew significantly, with DJs using his visuals in shows and brands like Louis Vuitton as well as celebrities like Nicki Minaj and Justin Bieber collaborating with him. He currently has over 2 million followers on Instagram.

In October 2020, Mike Winkelmann discovered cryptocurrency and was surprised to realize the disparity between an artist's fame and income. Since then, he has been creating his own pieces. His first crypto artwork depicted a chubby naked man straddling a bull, wearing a Guy Fawkes mask, and flipping the middle finger. He made around $130,000 in that transaction. In December of last year, he conducted a limited edition sale of some "Everydays" images as NFTs, including a collection of 20 "Everydays" images, generating over $3.5 million in a single week.

Ecstatic about his success, Mike Winkelmann believes this validates crypto art, suggesting that crypto art may have more influence than traditional painting or sculpture. "Crypto artists are essentially shapers of the visual language of society, and I hope that crypto art will gain mainstream respect." He expressed his wish for his own mom to engage in purchasing crypto art.

In January, Christie's reached out to Winkelmann, inviting him to participate in an auction. Noah Davis told me, "People go crazy when they see such works." Therefore, they decided to transform the entire "Everydays" collection (consisting of 5000 pieces) into NFTs, allowing buyers to acquire his fourteen-year compilation of works.

The auction took place on March 11th this year. During the event, Winkelmann engaged in an NFT art-themed audio conversation on the Clubhouse social media platform, until the bidding price for the collection reached $50 million, leaving everyone breathless. Winkelmann exited Clubhouse, witnessing his NFT eventually sell for $69 million.

"What just happened?" he almost swore.

As it turns out, the primary collector of Beeple's work is Vignesh Sundaresan and Anand Venkateswaran, who are the founders of the NFT fund Metapurse. To purchase Beeple's $69 million NFT, they created multiple pseudonymous accounts.

Sundaresan and Venkateswaran had a plan for Beeple's art. They bought land in three online 3D worlds and hired a design team to build a virtual museum showcasing Beeple's art.

But the museum was just part of their plan. The other part was turning Beeple's work into a new cryptocurrency. In January, they took 20 Beeple "Everydays" NFTs purchased for $2.2 million and created a new set of 10 million NFT tokens called B20.

These tokens represent partial ownership of Beeple's work. They paid 10% of the tokens to the designers building the virtual museum, 2% to Beeple, and kept 50% for themselves. The rest will be sold. Sundaresan said, "The idea is to make art a multi-person ownership, as our avatars float above the museum."

Anyway, the B20 tokens may have already generated a hefty return. In late January, Sundaresan and Venkateswaran held a virtual party in their online museum to introduce their new token, and in a short time, they sold 2.6 million tokens, raising nearly $1 million.

On March 10, B20 token prices peaked at just over $27, and by May 7, the price had fallen to around $2. Assuming they still have 5 million tokens, that's equivalent to $10 million.

Does the sky-high price of NFTs indicate an inevitable bubble burst? It certainly seems so, and many collectors themselves think it's quite probable. They say it doesn't scare them. Bitcoin and Ethereum prices have dropped several times, but they have always recovered and soared to record highs. Many collectors tell me that the NFT market may go through a similar shake-up.

"I'm sure there will be a version that, in a few years, I will look very stupid." Goltra told me when we first spoke in December last year. He said the art craze could fade for a long time, making his collection worth very little in a few years or even decades. But he hopes NFTs can settle in almost every corner of culture. He said, "Various artists are figuring out how to engage audiences and enthusiasts through tokenization." "This aligns with the initial crypto vision of eliminating intermediaries."

At a deeper level, some observers see the rise of NFTs as a symptom of long-standing issues in the Western economy—a concept known as "financialization of everything," as described by Scott Galloway, a marketing professor at New York University. He points out that amid all the bubbles of the past few decades—from the tech stock boom to the subprime mortgage boom, and more recently the bull market—the result is that "over the past 30 years, a great tech age has resulted in tens of trillions of dollars of economic growth. We see wages flat, one in five families with a child food insecure." He warned that while some artists may get rich quick, any transformation of economic activity into pure speculation will only heighten inequality.

NFT pioneer Anil Dash also questions that among the venture capitalists and entrepreneurs eager to create the NFT market, few outside of creating new lucrative derivatives seem to care about anything else. Galloway suspects that NFTs could accelerate the mass adoption of cryptocurrencies in everyday life, a dream of Bitcoin enthusiasts, but also a concern for Galloway: he worries that if national currencies truly contracted, the U.S. as the primary global currency holder would suffer most, to the delight of rivals like China and Russia, as well as money launderers and criminals.

When it comes to the massive energy consumption of NFTs, there are potential technical solutions such as the PoS mechanism, which is expected to transition fully later this year or early next year and would only use 0.01% of the energy currently consumed by the Ethereum mining network. Prior to that transition, artists like Joanie Lemercier have urged crypto artists to stop using sites like SuperRare and instead use transaction markets that already employ the PoS mechanism, such as Hic et Nunc or Kalamint. However, so far, most artists seem to stick to energy-intensive markets.

In my recent Zoom conversations with Langlois, he was surprised to see this strange impasse quickly become a national conversation. Now, celebrities and brands seem to be driving this trend more than artists. "NFT is just something people can joke about or casually discuss, even if they don't understand its meaning, they can talk about it, right?" he said.

That doesn't bother him; he believes that NFTs will endure long-term, both for artists and for the frenzy of MEME collectibles. Having just flown back from San Francisco, where he visited SFMOMA for NFT collection ideas, his mind is full of concepts. "Art is taking off," he said, "somehow, I find myself at the top of this crazy group."