NFTs, on the decline elsewhere, are embraced by some museums

In July 2021, a portrait of a woman with disheveled hair, purple lipstick and a mole on her right cheek entered the collections of Miami’s Institute of Contemporary Art. The work was not a hundred-year-old oil on canvas. It didn’t even hang on the wall. The artwork was a non-functional token, or NFT – one of 10,000 unique, algorithm-generated 24 x 24 pixel digital images – created in 2017 by the Larva Labs collective.

“CryptoPunk 5293” (the work’s title) is part of the CryptoPunks series, which in just five years has amassed around $800 million in sales on the Ethereum blockchain exchange, according to the website. By acquiring the work last year (as a gift from a trustee), ICA Miami became one of the first museums to collect NFTs. And it has added two more NFTs this year.

Other museums also buy NFTs. Others, such as the Uffizi Galleries in Florence, Italy and the British Museum, mint and sell them from works in their collections. And artists are encouraged in their efforts to produce digital art.

But even as the museums deal with NFTs, the market for them, and for the cryptocurrencies in which they are traded, has plummeted. Trading volumes are down 97 percent from the peaks reached in January. In the latest sign of the market’s distress, cryptocurrency exchange FTX filed for bankruptcy on November 11, inflicting billions of dollars in losses on its customers and investors.

So why does ICA Miami collect NFTs?

“Our collection, as well as our exhibitions and programs, seek to take on some of the most pressing and relevant art and ideas happening today,” said Alex Gartenfeld, ICA Miami’s artistic director. “Over the past two or three years, one of the most ubiquitous and transformative conversations has been around how artists explore and develop their creativity through NFTs.”

He said that digital art had a long history and that although it was now “at the center of the market” and public attention, it was not so in the previous three decades. Anyway, he added, museums aren’t concerned with the value of their art collections, so “the groupthink is pretty irrelevant to the work we do.”

So irrelevant, in fact, that ICA Miami has accepted the gift of “CryptoPunk 305,” another cartoonish head of a woman, this one with blonde hair wearing virtual reality goggles. And last summer, “Super Cool World #660” by artist Nina Chanel Abney — a cartoonish, Jesus-like figure with a white beard and red cape — was donated to ICA Miami.

“CryptoPunk 305” will appear on a screen Friday, Gartenfeld said.

The rush towards NFTs may be a bit like the tulip mania that gripped the Netherlands in the 1630s, when demand sent onion prices soaring. In this case, the price increase followed the purchase for $69.3 million (in cryptocurrencies) at a March 2021 Christie’s auction of a JPG file by digital artist Mike Winkelmann, known as Beeple.

Much of the ensuing market has evaporated. Still, proponents argue that there are irrefutable benefits to NFTs, also called encrypted digital art.

Encryption on the blockchain is said to make a digital work impossible to forge. Each unique work, or edition, has information about origin and previous ownership that is permanently recorded on the blockchain. As a result, artists can produce digital editions of their artworks and offer them to collectors with the assurance that copies cannot be made and sold.

The digital art world is now attracting prominent international curators, such as Daniel Birnbaum, who previously directed Stockholm’s Moderna Museet and was artistic director of the Venice Art Biennale in 2009.

Mr. Birnbaum is the Artistic Director of Acute Art, which helps some of the world’s most famous artists – including Abney, Olafur Eliasson and Kaws – produce NFTs and virtual and augmented reality artwork.

“Once or twice every century, something new comes along, like photography or cinema or television or the Internet,” Birnbaum said. “I think we’re in a moment of transformation, and it has to do with these new digital media.”

He added: “How do you actually collect these things? Using blockchain technology.”

He acknowledged the “hype” surrounding NFTs and the “speculative kind of logic behind it all”, but said it was important not to overlook their big advantage: NFTs allow artists to produce editions of their works in the digital world.

While museums such as ICA Miami acquire NFTs for their collections, others sell NFTs derived from their collections. Digital copies of masterpieces by Leonardo da Vinci and Michelangelo were sold by Italian cultural institutions – including the Uffizi galleries – until the government put an end to the practice earlier this year. The British Museum put NFTs of 200 works by Hokusai up for sale last year and is now offering an NFT series based on Turner paintings, in collaboration with French NFT platform LaCollection.io.

The Museum of Fine Arts, Boston – which describes itself as having the world’s largest collection of Impressionist paintings outside of France – has also teamed up with LaCollection.io to create its own NFTs. These are unique digital copies of 24 pastels rarely shown (due to their fragility), and the work of such masters as Monet, Degas and Jean-François Millet.

In the first release earlier this year, NFTs of 12 pastels were offered in editions of 30 to 50, at prices starting at around 240 euros (about $250), and 249 were sold. There were about 6,000 visitors from about 200 countries, mostly men between 35 and 45, a demographic that “skews younger and more male” than the museum’s own, said Eric Woods, director of the Museum of Fine Arts, Boston.

Mr. Woods said there were three types of NFT buyers: fans of collectibles issued by sports leagues and teams; a “crypto-focused” audience that invests in series like the Bored Ape Yacht Club photos stored on the Ethereum blockchain; and a growing category of collectors interested in art.

Mr. Woods said his goal with the NFTs was to answer this question: “How can the MFA deepen the conversation with its audience in a world where Instagram and Siri are prevalent?”

“If we can reach them and talk to them in the language they currently speak,” he added, “we can better share our collections with the world more broadly.”

Mr. Woods said NFT skeptics reminded him of those who resisted the Amazon Kindle when it first appeared. “People were up in arms about how you could bastardize the written word, and do it on this screen, and not have the tactile feel of the page and the leather-bound book,” he recalled.

The NFT market “is still new and the proverbial waters have yet to find their level,” he said. “I don’t think it’s going away, and I think it’s only going to continue to grow.”

Mr. Birnbaum was similarly confident about the interaction between museums and NFTs. He said that in the past there were other forms of art that museums initially did not know what to do with, such as instruction manuals for conceptual art that were not actual physical objects.

“Museums tend to collect what has proven to be important and influential,” he said. “I’m pretty sure they’ll collect digital art in the future. It is already happening.”