If you ever wondered who would spend millions of dollars on a JPG file, someone just did yesterday and dropped nearly US$70m on a digital artwork - but Justin Sun, founder of cryptocurrency platform TRON and CEO of BitTorrent Inc, was not the buyer.

Christie’s first-ever auction that accepts cryptocurrency, proved to be more than a tremendous success, but a history-making moment when one of the 33 tech-savvy bidders eventually took home the cryptoart titled Everydays: The First 5000 Days. The work is crowned as the most expensive non-fungible token (NFT) art ever sold at auction and Beeple, the creator of the artwork, is now the third most valuable living artist, trailing just behind Jeff Koons and David Hockney.

 

Beeple (b.1981) | Everydays: The First 5000 Days

Dimensions: 21,069 x 21,069 pixels (319,168,313 bytes)

Minted on February 16, 2021

Token ID: 40913

Wallet address: 0xc6b0562605D35eE710138402B878ffe6F2E23807

Smart contract address: 0x2a46f2ffd99e19a89476e2f62270e0a35bbf0756

 

Opening bid: US$100

Hammer price: US$60,250,000

Price realized: US$69,346,250

 

The dedicated two-week online sale opened on February 25, with the opening bid of US$100. Beeple’s Everydays already breached the US$100m-mark on the very first day and elicited a total of 353 bids. The price jumped from US$27.5m to US$60.25m with just a minute left on the clock and realized US$69.3m after premium. 

Justin Sun, founder of cryptocurrency platform TRON and CEO of BitTorrent Inc was initially rumored to be the new owner of the digital artwork, but he soon clarified on Twitter that he was indeed the underbidder. He also went on to explain that the auction got extended last-minute, when he got outbid by an unnamed buyer.

 

Chinese-born tech entrepreneur and founder of TRON, Justin Sun (right) and Chinese business magnate, Jack Ma (left)

Justin Sun said on Twitter that he was outbid last-minute

 

The unprecedented price, in the context of traditional art auction, means that the 40-year-old digital artist would have surpassed blue-chip abstract artist Zao Wou-ki (current record: US$65m). If the artwork was auctioned off last year, it would have been the third most valuable work of the entire year of 2020, with only a triptych by Francis Bacon (price realized: US$84.5m) and Wu Bin’s Ten Views of a Lingbi Rock (price realized: US$78.4m) in front of it.

 

The highest bid skyrocketed to US$60.25m right before the online auction closed

 

If the work were a painting, it would have made it to the top 50 in auction history, surpassing Italian painter Amedeo Modigliani’s famous painting, titled Nude Sitting on a Divan (La Belle Romaine), sold for US$69m after fees at a 2010 Sotheby’s New York sale. 

Nevertheless, whether it was the crypto art itself, or the fact that the auction house accepts cryptocurrency - in this case, Ethereum (ETH) as payment that drove the prices up is open for debate, especially considering the notorious volatility of cryptocurrencies. 

 

Amedeo Modigliani’s Nude Sitting on a Divan (La Belle Romaine), the 27th-most expensive painting ever publicly sold

 

Christie’s started tapping into the realm of blockchain back in 2018, as it hosted a summit to explore both opportunities and challenges presented by the nascent technology. In November 2018, the auction house also debuted an auction, in which all sales were recorded and digitally encrypted by Artory, a blockchain-backed digital registry.

The purchases were certified by Artory, which then recorded such information as transaction date, price, title, and description in a digital certificate for every lot sold. Each buyer was given a registration card with access to the encrypted information on the registry. 

 

"An American Place: The Barney A. Ebsworth Collection" was Christie’s first-ever blockchain-recorded auction 

 

The 42-lot sale fetched a total of US$317.8m, headlined by seminal American artist Edward Hopper’s Chop Suey, which realized US$91.9m after fees. The oil on canvas work marked a new record for the artist, and stands as the most expensive price ever paid for any pre-war American art. 

This time around, Christie’s took the leap as “the first major auction house to offer a purely digital work” and to accept cryptocurrency as payment. Christie’s initially required the buyer’s premium to be settled in US dollars, though prior to the sale, Noah Davis, Christie’s Postwar and Contemporary Art Specialist told Bloomberg, that the auction house decided to accept the premium in Ethereum as well.

 

NFT ensures verifiable authenticity and digital scarcity 

 

So what exactly is blockchain? Blockchain is a ledger of decentralized data that is stored permanently on numerous computers. Transaction records are stored in a sequence of blocks, which form a time-stamped and immutable chain, making it impossible to alter the data and hence considered a more secure and reliable technology. 

It is also the technology behind the cryptocurrency Bitcoin and the rest of the non-fungible token (NFT) network. From a secondary art market perspective, it verifies the authenticity and provenance, as well as the rightful ownership of an artwork. 

 

Mike Winkelmann, American digital artist and graphic designer, best known by the name Beeple

 

Everydays: The First 5000 Days by Mike Winkelmann, better known as Beeple, is a collage of 5000 images created and published online daily by Beeple since 2007, for 5000 days straight. The artwork file is encrypted with a digital signature from the artist, which is embedded in a smart contract on the Ethereum blockchain. The unique NFT is issued by MakersPlace, an online marketplace for digital creators. 

Spanning from abstract, fantastical, grotesque to political issues, his oeuvre has attracted 1.9 million followers on Instagram. He has also collaborated with international labels such as Louis Vuitton, Apple, SpaceX, and Nike.

 

Created on October 7, 2020. The fly that unexpectedly landed on former US Vice President Mike Pence’s head during the 2020 vice-presidential debate, inspired Beeple to one of the images in Everydays

 

Digital art, for decades, does not hold its value remotely as well as traditional fine art. Yet with the ever-growing prevalence of cryptocurrencies, blockchain technology, and various digital marketplaces, digital art is virtually unstoppable.

Last month, Beeple’s 10-second video titled Crossroad featuring a fallen former US president Donald Trump, was sold for US$6.6m on NFT marketplace Nifty Gateway and set the record of the most expensive NFT art - until the shocking online sale yesterday. 

Crossroad first appeared in the market last October, when Miami-based collector Pablo Rodriguez-Fraile bought the work for US$66,666.66, meaning that the video has seen a whopping 100 times increase in value over the course of just five months.

 

Screenshot of Beeple’s Crossroad 

 

Only time will tell whether or not digital art can eventually rival the traditional art market. The auction circle is undoubtedly watching closely before they can decide if accepting cryptocurrency would bring any whirlwind effects in the industry. On top of that, how authorities can ensure cryptocurrency transactions are not exploited as a money laundering tool would be a whole other story of its own.