It took Vignesh Sundaresan and Anand Venkateswaran a few minutes to realize that they had set aside $ 69.3 million for a digital artwork stored in a JPEG file, which coincidentally secured their place in art history.
“We weren’t sure we had won,” Venkateswaran said, describing the final harrowing moments of the online auction for a 5,000-image collage by the artist known as Beeple. “We keep updating the page.”
The March 11 auction at Christie’s in London immediately turned Beeple’s artwork into one of the most expensive pieces ever sold by living artists, joining a well-known David Hockney pool painting and an iconic stainless steel rabbit sculpture. by Jeff Koons.
Venkateswaran said he and his friend and business partner, Sundaresan, both in their 30s, are still coming to terms with their historic purchase. They have also had to deal with outside concerns that the transaction could have been a complicated scheme to inflate the value of the pair’s investment portfolio.
That’s because Venkateswaran and Sundaresan have invested heavily in a new form of digital collection. with the unwieldy name of non-fungible tokens or NFT. These digital items, based on the cryptocurrency technology known as blockchain, function as unique certificates of authenticity, making it possible to turn easily copied digital files into one-of-a-kind collectibles, sometimes worth tens of millions of dollars.
Beeple’s sale broke a record for the most expensive NFT ever sold and started a global conversation about NFTs, their value, and whether they are a lasting addition to the digital landscape. But the staggering sum involved attracted global headlines and some suspicions that it might have been designed for the hype that brought more attention to NFTs, potentially increasing the value of the pair’s existing holdings.
The involvement of Christie’s, a century-old auction house, should be enough to reassure skeptics, Venkateswaran said in a call from his home in South India. “I think the biggest problem here is that people thought this would be impossible.”
That is certainly the case with Beeple himself., who in real life is a digital artist named Mike Winkelmann. “This whole NFT thing was not something I saw coming, at all,” he said. During the auction, the artist was in his living room near Charleston, South Carolina, surrounded by his family and a video crew, and said it felt like a “bomb went off in the room” as bids rose rapidly. . Another cryptocurrency trader and bidder, Justin Sun, lost in the final seconds after bids exceeded his previously set maximum.
The NFT market was already taking off, and last year transactions quadrupled to $ 250 million, according to a report by NonFungible.com, a website that tracks the market. The sale of Beeple fueled that growth and helped transform NFTs from niche tokens that primarily attract cryptocurrency nerds to a new kind of digital asset that attracts widespread attention from the art world, the music industry, the sports and speculators.
Not to be outdone, rival auction house Sotheby’s is planning its own NFT sale, collaborating with pseudonymous digital artist Pak on a sale next month.
Winkelmann began to see the possibilities of NFTs for digital artists in October, when he tested the waters with an initial “drop” of his work. “People can own my art and collect it and, you know, pay good money,” he said in an interview this week.
It was after another sale late last year that he reached out to one of the losing bidders, Sundaresan, who goes by the pseudonym Metakovan.
The art world was not a common topic of conversation for Sundaresan and Venkateswaran when they first met in 2013 while working at The Hindu, a newspaper in Chennai, India. Sundaresan was a technology consultant in his twenties; Venkateswaran was a journalist.
They both had a humble upbringing. Sundaresan couldn’t afford a laptop when he was learning to code, so he walked around with a flash drive and borrowed his friends’ laptops, Venkateswaran said.
But by 2020, Sundaresan, who now lives in Singapore, had enriched himself with a number of cryptocurrency ventures and investments. With the money from Sundaresan and the analytical eye of Venkateswaran, they began exploring NFT with a new fund called Metapurse.
Sundaresan, who declined to be interviewed this week, created the character Metakovan as a reference to his affection for virtual worlds known as the “metaverse.” The name means “King of Meta” in the Tamil language. Venkateswaran, who lives in Chennai with his wife and two children, calls himself Twobadour. In a blog post last week the pair revealed their true identities and tried to dispel some of the mystery about their motivations.
“The goal was to show Indians and people of color that they too could be patrons, that crypto was an equalizing power between the West and the rest, and that the global South was rising,” they wrote.
It was in December that the Metapurse couple made their first big investment in Beeple, buying 20 of their works for $ 2.2 million and gifting the artist 2% of their new pool of NFT tokens, called B20s, which were designed to allow for large groups. of people. share ownership of a work of art.
That was the precursor to the landmark March sale of Beeple’s “Every Day: The First 5000 Days,” a digital archive combining the works that Beeple had created every day from May 2007 to the beginning of this year. Many of them are grotesque, cartoonish versions of what was happening in America’s politics or pop culture. The works also follow Beeple’s rise from little-known graphic designer to internet personality with a huge following on Instagram and multimedia projects with pop stars like Nicki Minaj and Justin Bieber.
“If you look at each image verbatim, obviously not all of them will stand the test of time,” Venkateswaran said. “Not the 5,000 are masterpieces. That was never the argument. Not everything Beeple comes up with is gold. We do not worship your feet. That is not what we were doing. It’s more about the combined narrative than what it represents. “
The purchase has shocked the art and finance worlds, but it was somehow quite conventional, said New York art attorney Leila Amineddoleh.
“Much of the art market says: ‘I have something unique, it’s rare, I have it, look at me.’ This is not so different, ”he said. “The total value of an NFT is to be able to say that it is an original. You’re buying bragging rights to say, ‘I own the token.’ But really, anyone can access art. “
Amineddoleh said that the blockchain technology that underpins NFTs and other cryptocurrency markets also provides a transparent ledger for recording art transactions. But for skeptics of the largely unregulated world of cryptocurrencies, the sale has invited further scrutiny.
Christie’s declined to comment on the details of the financial structure of the sale, except to say that the full amount was paid in a cryptocurrency known as Ether, marking the first time that Christie’s has accepted cryptocurrency as payment.
“Obviously there is a money trail and Christie’s had a set of exchanges that they were willing to work with, which they vetted and approved,” Venkateswaran said. “And those are the changes that were used to make the payment. So Christie’s has all the information. “
Cryptocurrency exchanges can be prone to manipulative behavior, according to research co-authored by Friedhelm Victor of the Technical University of Berlin. But that usually involves investors buying and selling the same assets repeatedly to create a false sense of busy trading.
Such a back-and-forth exchange has yet to become common with NFTs, in part because they generally carry higher fees, Victor said. “Crazy speculation is not unusual,” he said of the Beeple sale. “This is a really smart strategy to draw more attention to this whole space.”
That has definitely happened. But Venkateswaran said the attention doesn’t mean he and Sundaresan are making big profits on the chips. “The math doesn’t add up,” he said.
O’Brien reported from Providence, Rhode Island and Chan reported from London.