More than one year ago I wrote this post of Damien Hirst's NFT experiment, The Currency. Since then, we've had a crypto crash, the bonfire of more than £60 million in paintings, and (much to the chagrin of some participants in this project) not much else. I thought it was about time to write a follow-up article with my renewed thoughts on this.
As a quick background, in July 2021, Hirst sold 10,000 non-fungible tokens (NFTs), each associated with one of 10,000 unique enamel on paper dot paintings. Within one year, the holder of the NFT could elect to either keep the NFT or trade it in for the corresponding physical work. Where the NFT was traded in for the physical work, the NFT itself was 'burned' (the word in the NFT world for transferring an NFT to a part of the internet that is inaccessible, effectively removing it from circulation). Alternatively, where the holder elected to keep the NFT, the physical work was physically burned. This was quite the spectacle at Frieze week in October 2022 – incinerators were added to Hirst's Newport Street Gallery and, over a number of weeks, over £60 million in the unclaimed paintings were set on fire (see a video of it here - and the menacing photo of Hirst below).
The Currency project was actually started by Hirst before the rise of NFTs. It initially began as his commentary on the inextricable association between works of art (especially his works of art) and money. If you have seen one of the works from the series in person – nicknamed 'tenders' to further link them to the kind of legal tender that we would otherwise call cash – you will see that they contain a number of the security features that are found on modern banknotes. Things like holograms, embossing and microdots were added, not for security per se (Hirst's more valuable paintings don't even contain this level of protection), but to create the illusion that they are financial instruments – cash, deeds, bonds etc.
The back of one of the physical works in The Currency showing the hologram of Hirst's head (top middle), embossing (top right), watermark (top left), and signature (bottom right)
Hirst, forever an opportunist, pivoted the project in early 2021 when he saw the success of NFTs. It was a perfect evolution of his idea. What better way to question the value of this new form of digital asset than by forcing holders to decide between the NFT or the painting? And, in the year where these tenders were trading hands and the redemption window opened, Hirst teased its holders by offering perks to those who kept the NFT – things like exclusive merchandise (who wouldn't want an umbrella branded with his iconic spots), studio visits (where attendees even got to make their own spin painting, signed by Hirst), and an additional NFT related to Hirst's Drake album cover. Hirst was trying to level the playing field – after all, a piece of digital code seems pretty unsatisfying in comparison to a piece of paper that you can hold, frame and display.
The results
The window for redemption closed in July 2022. After this point, the participants were locked into their decision – either the NFT exists forever, or the artwork. The results were, as I predicted in my earlier post, split 50:50 – 4,851 NFTs were kept and 5,149 artworks survived (although Hirst himself said that he kept all 1,000 of his NFTs, meaning that the public generally favoured the physical work). The corollary of this meant that 4,851 paintings were burned into ash at the bonfire, or about £60 million worth of art at their current value.
So how have things fared since then?
If you elected for the physical work, then the answer would be pretty good.
Artsy reports 12 auction results of The Currency physical tenders so far in 2023, with an average auction price of £12,000 and a standard deviation of £6,000. The pre-sale estimates depend on the particular auction house, but have settled in the region of £8,000-12,000, placing the auction results at the upper end of these estimates. Not bad, considering the initial cost of the NFT was US$2,000 – although many would have bought their NFT on the secondary market for a higher price.
There is a notable deviation in auction results, the lowest result being US$8,890 and the highest result being £27,720 in this time frame. Yes, each tender in the series, despite being one of now 5,149, has a prescribed rarity based on its specific features like title and the number of drips on the work (which can be accessed on the Heni website), but the auction results haven't tended to favour the 'rarer' characteristics over less rare ones (although there might be some personal preference for the titles of the works). Like all auctions, you either get lucky or you don’t.
The story is quite different for the NFT holders.
The floor price on OpenSea at the time of writing is 2Ξ (2 eth), which is about £3,000 using today's value, and the volume of sales has all but collapsed from around 50 per day to less than 10 per day on average. Why? Well Hirst hasn't really engaged with this NFT community since the bonfire last year. In October 2022, he did release 1,000 prints that were magnified versions of specific tenders (called the Unique Prints), but these were available to everyone – NFT holders could mention this fact in their application form, but it wasn't clear what advantage, if any, this gave them in the print allocation process. There's an ongoing rumour that holders of the Drake-related NFT collection (called The Great Expectations) will be able to claim a physical dibond print of their NFT in the future, but this is a benefit associated with that collection and not The Currency.
It also doesn't help that the wider NFT market has crashed for the moment. There are still some very successful projects, with the occasional NFT smashing auction records (for example, works by Tyler Hobbs are in great demand – see, for example, this work that sold for $1 million in May 2023), but as a whole the hype and buzz has dissipated. I've also recently done a podcast on the future uses of NFTs in the consumer sector, and my general feeling is that there are legitimate and valuable use cases of NFTs in the future.
Ultimately, I think Hirst's The Currency experiment has shown that the market isn't quite ready for mass NFT adoption, especially where fine art is concerned. One turning point might be when the technology to display NFTs improves beyond garishly backlit LCD displays. Where the work is perfectly capable of existing in the physical world, please just keep it there for the moment.
George
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