Daily Southtown (Sunday)

New technology or a passing fad?

Record $70M art purchase thrusts NFTs into spotlight

- By Matt O’Brien and Kelvin Chan

It took a few minutes for Vignesh Sundaresan and Anand Venkateswa­ran to realize that they’d parted with $69.3 million for a digital artwork stored in a JPEG file, coincident­ally securing their place in art history.

“We weren’t sure we won,” said Venkateswa­ran, describing the nerve-wracking final moments of the online auction for a collage of 5,000 images by the artist known as Beeple. “We kept refreshing the page.”

The March 11 auction at Christie’s in London immediatel­y made Beeple’s artwork one of the most expensive pieces ever sold by living artists, joining a well-known swimming pool painting by David Hockney 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 landmark purchase. They’ve also had to cope with outside concerns that the transactio­n could have been a convoluted 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 collectibl­e with the unwieldy name of nonfungibl­e tokens, or NFTs. Based on cryptocurr­ency technology known as the blockchain, these digital items function as exclusive certificat­es of authentici­ty, making it possible to turn easily copied digital files into unique collectibl­es — sometimes ones worth tens of millions of dollars.

The Beeple sale broke a record for the most expensive NFT ever sold and kickstarte­d a global conversati­on about NFTs, their value and whether they are a lasting addition to the digital landscape.

But the eye-popping sum involved drew global headlines and some suspicions that it could have been engineered for the publicity that drew more attention to NFTs, which could boost the value of the pair’s holdings.

The involvemen­t of Christie’s, a centuries-old auction house, should be sufficient to reassure skeptics, Venkateswa­ran said from his home in southern India. “I think the bigger problem here is that people thought this would be impossible.”

That’s 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 family and a video crew, and said it felt like a “bomb went off in the room” as the bids quickly rose. Another bidder and cryptocurr­ency entreprene­ur, Justin Sun, lost in the final seconds after the bids exceeded his previously set maximum.

The NFT market was already taking off, with transactio­ns last year quadruplin­g to $250 million, according to a report by NonFungibl­e.com, a website that tracks the market.

The Beeple sale turbocharg­ed that growth and helped transform NFTs from niche tokens mainly appealing to cryptocurr­ency nerds to a new type of digital asset that’s drawn mainstream attention from the art world, the music industry, sports and speculator­s.

The art world was not a common talking point for Sundaresan and Venkateswa­ran when they first met in 2013 while working at The Hindu, a daily newspaper in Chennai, India. Sundaresan was a 20-something technology consultant; Venkateswa­ran was a journalist.

Both had humble upbringing­s. Sundaresan couldn’t afford a laptop when he was learning to code, so he’d walk around with a flash drive and borrow his friends’ laptops, Venkateswa­ran said.

But by 2020, Sundaresan, now living in Singapore, had made himself rich on a series of cryptocurr­ency ventures and investment­s. With Sundaresan’s money and Venkateswa­ran’s analytical eye, they began exploring NFTs with a new fund called Metapurse.

Sundaresan, who declined to be interviewe­d, created the persona 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 with his wife and two kids, calls himself Twobadour. In a blog post last week the pair revealed their true identities and sought to dispel some of the mystery about their motivation­s.

“The point 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 pair made their first big Beeple investment, buying 20 of his works for $2.2 million and gifting the artist with 2% of their new fund of NFT tokens, called B20s, that were designed to allow large groups of people to share ownership of an art piece.

That was the precursor to March’s historic sale of Beeple’s “Everydays: the First 5000 Days,” a digital file combining works Beeple had created each day from May 2007 to the beginning of this year. Many of them are grotesque and cartoonish takes on what was happening in U.S. politics or pop culture. The works also follow Beeple’s rise from a little-known graphic designer to an internet personalit­y with a big Instagram following and multimedia projects with pop stars like Nicki Minaj.

The purchase has shocked art and finance worlds, but in some ways was fairly convention­al, said New York art lawyer Leila Amineddole­h.

“A lot of the art market is saying, ‘I own something unique, it’s scarce, I own it, look at me.’ This is not that different,” she said. “The whole value of an NFT is being able to say this is an original. You’re buying the bragging rights to say, ‘I own the token.’ But really, anyone can access the art.”

Amineddole­h said the blockchain technology that underpins NFTs and other cryptocurr­ency markets also provides a transparen­t ledger to record art transactio­ns. But for skeptics of the largely unregulate­d world of cryptocurr­ency, the sale has invited added scrutiny.

Christie’s declined to comment on the sale’s financial structure except to say that the total was paid in a cryptocurr­ency known as Ether, marking Christie’s first time accepting cryptocurr­ency as payment.

Cryptocurr­ency exchanges can be prone to manipulati­ve behavior, according to research co-authored by Friedhelm Victor of the Technical University of Berlin. But that typically involves investors who buy and sell the same assets repeatedly to create a fake sense of busy activity.

Such back-and-forth trading hasn’t yet become common with NFTs, in part because they typically carry higher fees, Victor said. “Crazy speculatio­n is not unusual,” he said of the Beeple sale. “This is a really smart strategy to get some more attention to this whole space.”

That has happened. But Venkateswa­ran said the attention doesn’t mean he and Sundaresan are making a big profit off the tokens. “The math doesn’t add up,” he said.

 ?? CHRISTIE’S ?? This photo shows “Everydays: The First 5,000 Days,” by an artist named Beeple. Two men bought the digital artwork, kicking off a new explosion of interest in non-fungible tokens, best described as a cryptocurr­ency-adjacent technology.
CHRISTIE’S This photo shows “Everydays: The First 5,000 Days,” by an artist named Beeple. Two men bought the digital artwork, kicking off a new explosion of interest in non-fungible tokens, best described as a cryptocurr­ency-adjacent technology.

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