Sotheby's director foresees a flourishing future for NFTs

By Raffaele Redi

Hong Kong will represent a very significant hub for the NFT market

Dmitri Cherniak Self Portrait #1, 2020 NFT                                 
Dmitri Cherniak Self Portrait #1, 2020 NFT – Photo: metaverse.sothebys.com
                                

An estimated $3.5bn of non-fungible-tokens (NFTs) as art and collectables were sold between January and September 2021.

Public sales of NFTs only accounted for 2% of global fine art auction turnover, a niche market, divided between New York, 90%, and Hong Kong, 9%, and represented less than 100 lots in total during the first six months of 2021.

However, those figures are going to change according to Max Moore, Director, Head of Contemporary Art Auctions at Sotheby’s.

“We are at the very beginning of what’s possible. There has been so much growth in the market I think there will be a correction soon with some dips. The next five/ten years will be really important. But I am confident that NFTs has the potential to lead the framework for generations to come,” he told Currency.com.

Before moving to Hong Kong, Moore was working in New York as vice president, co-head of Contemporary Art Day Sale, at Sotheby’s: “In the last three months, I recorded even more sales than in New York. Hong Kong will represent a very significant hub for the NFT market,” he said.

The New York-based auction house recently launched the Metaverse. The term was coined in Neal Stephenson's 1992 science fiction novel Snow Crash, where avatars interact in a three-dimensional virtual space.

Sotheby's has auctioned NFTs from well-renowned collectors of the digital art space, and is now reshaping Art NFTs working on the hybrid NFTs or digital paintings.

The art NFT market

According to the Hiscox Online art trade report 2021, after several years of declining growth, online art sales rocketed during the pandemic, as the traditional art market struggled to adapt to lockdowns and restrictions on social gatherings.

Sales in the first half of 2021 are up by 72% to $6.8bn, not too far off the total figure for all of 2020, $7.9bn, which saw a 64% increase on the prior year.

With the same growth rate for the second half of the year, they are projected to reach $13.5bn at the end of 2021. The online art market in 2020, accounted only for 15.8% of all art sales, up from 7.5% in 2019, as explained in the report.

In this environment, NFT sales of crypto art and collectables have already hit an estimated $3.5bn in 2021.

“The digital world was only created 20 years ago. Its understanding will come with time and will come with some of the new technologies. Time will help this market to continue to grow,” says Moore.

“The Blockchain technology is what has allowed [NFTs] to flourish, because it allows anyone to create ownership of a digital asset which is available just to everyone having access to a digital platform.

“Ownership is now recorded and people are trusting this ownership as the truth, and I want to spend money and time and energy into researching and exploring this, because of that fundamental truth.”

Hong Kong: A leading NFT hub

As the NFT market is developing, “[this] area of the world could take the lead,” says Moore.

So far, Hong Kong has established itself as the world’s second city for Contemporary Art after New York. In the aftermath of the China ban, the south-east Asian metropolis is likely to become one of the largest crypto hubs in the world. Interestingly, the winner of the famous Beeple auction is an Asian collector.

“Hong Kong will represent a very significant hub for the NFT market. In the last three months, it was astonishing to see that it performed better than New York. The engagement in Asia is high, for digital assets hanger and curiosity are high and a global level as well,” says Moore.

The Metaverse

Sotheby’s recently launched Metaverse (the auction is still ongoing at the time of writing) or ‘Natively Digital1.2: The Collectors’, features some of the most important and historic collectors of the digital art space.

“Sotheby’s Metaverse has been a project that we started 3-4 months ago when we quickly realised the potential of NFTs and digital assets. At Sotheby’s, we created a trusted brand to bring the most valuable collectable objects to the market for a worldwide audience and we didn’t want to share this important role with any other, but keep this in house.”

“Metaverse goal is to recreate a trusted ecosystem mirroring our traditional system and model to offer highly valuable high calibre assets that we create to a broader audience not just Natively digital and crypto collectors but all traditional collectors as well,” says Moore.

There are significant steps to be made in this. Sotheby’s focuses on attracting the traditional collectors and begin to open their eyes to understand that art is art and the medium that we are exploring here, with the digital medium can create the same value, the same relationship between collectors and traditional physical artworks.”

Hybrid NFT: the future of art NFTs

In the first four months of 2021, NFTs generated $127.6m  in auction turnover, twice the total generated by the photography sector. Just 100 NFT lots were sold, in comparison to 6,500 photographs.

NFT Art is considered the new Renaissance, as NFTs allow the artist to increase their profits even from secondary sales.

“The lack of physicality is the reason why the digital art has never picked up in mainstream remaining a very niche market. A large part of the population will always appreciate the physicality of artworks the interaction with paintings for example,” says Moore.

“I keep receiving the same question from crypto collectors: what can I do with my NFT now?

"That’s the reason why I would promote and appreciate a more physical manifestation, let’s say a digital painting,” he adds, suggesting that ultimately, a hybrid ownership and experience model, where NFTs exist both as digital collectables and as physical objects, might be the one that lasts longest."

Further reading

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