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Appraising NFTs and Digital Assets

NFT market for digital art took the fine art market by surprise. It began with cryptocurrency artists working outside the mainstream art world who made art for their own community using generative art to create collections of PFPs. In 2017, trailblazing collectibles - CryptoPunks, CryptoCats, CryptoKitties – appeared on the Ethereum blockchain, and have since generated millions of dollars in transactions. With the market shifts during the Covid-19 pandemic, the influence by social media, the growing crypto community, and the prestige of the Beeple sale, NFT prices took off. In this period, new platforms and applications such as Decentraland, NBA Top Shots NFTs, Bored Yacht Club, and Art Blocks appeared, bringing incredible momentum to the NFT market for digital art.

NFTs are built on the same technology as cryptocurrency and point to media assets. Their data allows for a decentralized method for recording transactions. An NFT can be thought of as an irrevocable digital certificate of ownership and authenticity for a given asset, whether digital or physical. They point to digital files that are stored off the blockchain such as digital artwork or media files on the IPFS.29 For on-chain generative projects, the NFT is both integral to the artwork itself and the proof of its ownership.

The advent of internet made it possible to share and copy anything online, destroying the scarcity business model for media. NFTs have restored the ability to create markets with digital goods. With the blockchain, digital art can have a unique identifier and while the art could be download or viewed by anyone on the internet, there can only be one owner. NFTs provide a trusted mechanism to enable a market for digital art.

The NFT market and the traditional art world are beginning to move closer together as traditional art galleries bring to market their own Web 3 platforms. Major auction houses like Sotheby's and Christie's are bridging the gap between the traditional art world and the NFT crypto community. By hosting high-profile auctions of NFT artwork, they have brought greater visibility and legitimacy to the NFT market, attracting new investors and collectors to this emerging art form.


Additionally, Art Blocks and Pace Gallery have joined forces to support generative art, collaborating on projects for the new NFT platform, Verso. While there is exciting new infrastructure being build out, the market continues to cool after the boom years with 12% of all art buyers surveyed said they are likely to buy an NFT in the coming 12 months, down from 27% in 2022. 

Regarding the appraisal of NFTs, the various attributes of a given object as well as its unique data should be taken into consideration. Comparing metadata and attributes (rarity) of different NFTs helps to create a narrative to support value.

Watch this space for more information!


Refik Anadol installation image of his show at Jeffrey Deitch Gallery Los Angeles

 © Refik Anadol

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