In October, star artist Damien Hirst burned a series of his artworks, but they still exist as NFTs.

In October, star artist Damien Hirst burned a series of his artworks, but they still exist as NFTs.

Foto: Bradley Page / SOLO Syndication / Daily Mail / picture alliance / VG Bild-Kunst, Bonn 2022

The Crypto Art Crash What Remains of the NFT Hype

The hype surrounding digital works dominated the international art world for two years. Then the market collapsed, and buyers lost millions. Yet optimism still pervades the scene.

"What a strange day," says Damien Hirst. As the art fair Frieze London gets underway, the artist is wearing silver-colored overalls and gloves made of fireproof material. You could almost mistake him for an astronaut. "It's kind of crazy to burn art," Hirst tells the journalists gathered in his gallery.

Then he takes a picture, roughly the size of a sheet of paper, from a stack with colorful dots on it, opens the glass hood of a fireplace, and then throws the work into the fire. Hundreds more unique pieces signed by Hirst will follow that day. By the end of the month, 4,851 images will have been incinerated.

DER SPIEGEL 44/2022

The article you are reading originally appeared in German in issue 44/2022 (October 29th, 2022) of DER SPIEGEL.

SPIEGEL International

"The Currency," is the star artist's latest project, and it is focused on Non-Fungible Tokens (NFT), digital artworks in file format with certificates of authenticity on a blockchain. Hirst had employees of his studio paint 10,000 pictures with colorful dots, sold them as image files in July 2021 at $2,000 each, and then let buyers decide whether to exchange their file for a physical artwork within a year. He said he would burn the unclaimed paintings by the end of October.

Hirst has always had a flair for marketing, and the project ultimately developed a momentum of its own. Sensing profits, many buyers didn't keep their files for themselves: In August 2021, 2,000 "Currency" works were resold for just under $48 million, a twelvefold increase over the original price. Now, as Hirst ceremoniously burned the first paper versions in October, one buyer on the web sneered: "Good luck to the NFT owners, but I'm glad I can look at my copy on my wall every day."

Hirst asked the right questions at the right time with "The Currency." Do NFTs have a future? Are they merely objects of speculation, or are they also of lasting artistic value? Also: Is the Hirst name perhaps the hardest currency at the end of the day?

NFT Lose on Average 92 Percent of Their Value

There was considerable euphoria when NFTs came into the focus of the general public at the onset of the coronavirus pandemic. Crypto technology, which makes digital goods tradable, had existed for some time, but it became much more important during the global lockdowns as life shifted to the digital realm. NFTs have database entries that can be used to certify files as being authentic. This transformed everything that had been circulating on the Internet for free up to that point into potential objects for purchase: memes, GIFs, avatars, profile pictures. A potentially huge business.

The NFT work "Bored Ape#7827"

The NFT work "Bored Ape#7827"

Foto: The Bored Ape Yacht Club

Most of it had little to do with art. Still, most of it was referred to as such, and buyers of these NFT objects were often primarily concerned with profits. Auction platforms reported record price after record price in 2020 and 2021.

The art market quickly adapted. Museums began buying computer art, and auction houses hired crypto specialists. Gallery owners bolted monitors to their walls and learned technical words like "token."

Meanwhile, celebrities from Madonna to Marina Abramović crafted their own NFTs and threw them into a market where virtually anything sold, especially if there were big names behind it. The impact created by NFT technology in the art world was more important in 2021 than all other painters and sculptors combined, ArtReview magazine found in its annual ranking of the 100 most influential artists.

But in November 2021, the price of the digital currency Bitcoin began to crater, dragging the other major cryptocurrencies down with it. When Russia attacked Ukraine in February, the world changed, stock prices plummeted and the appetite for risky investments waned. In the time since, the cryptocurrency market has lost more than half of its volume. In July, OpenSea, the largest NFT art department store, laid off 20 percent of its staff.

You can still buy the once sought-after profile images of the "Bored Ape Yacht Club," an edition of 10,000 computer-generated cartoon monkey faces. Monkey "#7827," which sports earrings, yellow cap and glasses, was sold 15 months ago for 8,794 Ether, which was valued at 19 million euros at the time. Today, you can buy "#7827" for the equivalent of around 172,000 euros. Objects, some of which were selling for many millions at the beginning of the year, have lost an average of 92 percent of their value. Today, the general mood on the market is rather downcast.

Some Works Bought Before They Are Created

The founders of the Bored Ape Yacht Club are even threatened with the possibility of a class action lawsuit over accusations that they artificially inflated prices. Others profiting from NFTs have been a bit more contrite. Japanese artist Takashi Murakami apologized to buyers of his NFT edition "Murakami Flowers" for the falling prices and tweeted: "I am very sorry." An artist apologizing for the falling value of his works: That is likely a first. Meanwhile, digital artist Beeple, whose collage "Everydays: The First 5,000 Days" sold for about $69 million at Christie's last year, making him one of the three most expensive living artists in the world, bought an old warehouse in South Carolina and now wants to focus his work on an analog exhibition space.

The NFT work "Random Seed 3025" by Ivona Tau

The NFT work "Random Seed 3025" by Ivona Tau

Foto: Ivona Tau
Artificial intelligence artist Tau: Codes

Artificial intelligence artist Tau: Codes

Foto: Courtesy the artist

So, is everything back to square one, back to brush and canvas? Is digital art disappearing again as suddenly as it appeared two years ago?

There are computer images and virtual worlds that weren't just created for a quick profit. A scene of serious artists has formed in recent years whose main tool will remain the computer. One is the Lithuanian digital artist Ivona Tau. On an October evening in Berlin, Tau is looking expectantly at a monitor measuring about two square meters. It is the opening of her exhibition "Nondescriptives." Nothing can be seen on the monitor yet. Next to Tau is a man who bought one of her works. The image is set to appear on the screen in front of him at any moment. The unique thing about it: Neither the artist nor the buyer have seen it yet. It is first created at the moment of purchase.

Then, Tau exults. The guests standing around, most of them men in jeans and sneakers, turn to the screen. The new artwork has appeared. Branch-like structures appear brightly in front of a gloomy background, reminiscent of a birch forest, with remnants of industrial ruins in between - eerie and poetic at the same time. "The moment it emerges is always exciting, even though I know the code behind it," says Tau.

"The hype is over – now the focus is shifting to the interesting projects."

Digital artist Manuel Rossner

The 32-year-old holds a PhD in artificial intelligence and works as an artist, programmer and photographer. In her series of works, an algorithm melds images of factory buildings with images of trees. Surreal designs emerge in the process, with random generators playing a crucial role.

This trend is known as "live minting" in the digital art scene. And it would be inconceivable without NFTs: Because the works are created as NFTs on a blockchain only at the moment of their purchase. Basically, it creates an intimate, special moment between artist and buyer that is intentional but not entirely controllable. It is more of a happening than an exhibition, and there are now promoters focused specifically on this trend. The crypto art scene travels to these events in the same way classic art collectors go to art fairs.

Even if they didn't fetch the crazy top prices of the profile picture series, serious NFT artists like Tau have also benefited from the attention brought by the crypto boom. Many have earned money from their work for the first time in the past two years. At art fairs like Paris + par Art Basel this fall, digital art will be sold using NFT technology.

A Genre with Its Own History

Once, a drag artist led her to an altar and engaged her in a conversation about love before she was virtually "married" to her digital work, curator Anika Meier recalls of one live minting event. The art historian is an expert on NFTs and conceptualizes exhibitions online, in galleries and in museums. "Digital has had its place in art for decades," Meier says. As a genre, computer art has its own history, even if many aren't familiar with it. When Herbert W. Franke, the forefather of media art, died in July at age 95, Meier curated an online tribute featuring 80 crypto artists.

By comparison, the crypto hype seems like a brief craze in art history. In fact, however, technology is developing so quickly that even experts don't have a whole lot of confidence in their predictions.

Curator Meier advocates accepting NFTs as an artist's technical tool, but not conflating everything associated with the tokens with art. With the crypto crash, the much-needed market shakeout is now taking place in the scene, says the curator. What remains are those who had always been there producing digital work.

Manuel Rossner has long been so well established that he can calmly accept price slumps. "Last year had a crazy dynamic. It was an adventure. But I'm also glad the hype has died down a bit. The focus is now shifting to more interesting projects," he says. Rossner has been building digital spaces and sculptures since 2012 and is one of the most sought-after German artists on the scene.

The analog version of Rossner's digital sculpture "Surprisingly Blue."

The analog version of Rossner's digital sculpture "Surprisingly Blue."

Foto: KÖNIG GALERIE, Berlin, 2021 / Foto: Roman März
Digital artist Rossner in his studio

Digital artist Rossner in his studio

Foto: Studio Manuel Rossner

Some of Rossner's work involves installing virtual sculptures in public spaces. Most recently, he established a virtual reality museum for his collection and placed it, digitally, next to the Neue Nationalgalerie in Berlin. Visitors steer an avatar through the exhibition rooms using an app.

In Rossner's studio in an attic apartment in Berlin's Neukölln neighborhood, there is a high-performance computer, but also paints, brushes and art picture books. A 3-D printer whirs. "I'm experimenting with bringing my designs back into the analog space right now," says Rossner, 33, who wears a baseball cap with a Keith Haring motif over shoulder-length hair. Perhaps his model is one of the future: that artists work across platforms without being typecast as being either in the digital or canvas camp.

Rossner gives buyers of his NFTs the option of having the virtual sculptures physically produced, for which he then mills them from plastic blocks. His "Surprisingly" series consists of three-dimensional, sausage-shaped objects in bursts of color, somewhat reminiscent of balloon animals. He offers these works on his website. Once an NFT is sold, Rossner links to it on the OpenSea art platform.

The buying and selling, after all, continues, and there are no curators. There are some interesting works out there, but also plenty that are devoid of any deeper meaning. It's like allowing an after-work painting class to present their watercolors next to a Damien Hirst. That's why some are happy that cryptocurrencies and NFTs are no longer good targets for speculation: It will separate the wheat from the chaff.

The future of Hirst's "Currency" project is also uncertain at the moment. Big name or not, no one knows how sought-after Hirst's purely virtual edition will be once the project is no longer on view in London. At the moment, the hype is still sustaining it – right now, there are still 1,800 "The Currency" NFTs on sale at OpenSea, with a minimum price of 8,100 euros each.

Lovers of pixel art will find that somewhat reassuring, at least for now. Some NFT owners seem to believe not only in Hirst, but so strongly in the future of digital that they absolutely don't want to give their files back.

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