Rare NFTs and rare paintings are not the same thing. Here’s why

Rarity is an invaluable resource for curators and collectors. From one-of-a-kind oil paintings to vintage baseball cards, or even giant Cheetos popping out of regular-sized consumer bags, people like things that break from the norm.

However, the vast art world is generally governed by supply and demand, making rarity (often interchangeable with the term scarcity) an elusive and ambiguous term to define concretely. While 1/1 works are widely accepted as the highest form of a single craft, rarity itself is actually an official measurement of rating, but one of many factors that help determine the value of a piece.

As an age of digital art and non-fungible tokens (NFTs) unfolds, the concept of rarity takes on new meaning. Especially in the case of crypto-art, the term “rare” has been detached from its perceived definition in the traditional art ecosystem.

While creators and collectors in the NFT space may be speculating about the rarity of CryptoPunks and the importance of scarcity in terms of the future of Web3, it’s hard to say whether there is any comparison between the endurance of a 1/10,000 generative avatar and, say, a 1/9,000 original Andy Warhol painting.

What exactly is rarity?

Rarity can mean different things to different people in different industries. Nevertheless, we can give a rolling definition of rarity as the quality of something having unusual, special qualities. For the sake of both art and collectibles, rarity comes down to the question “how many others are there?”

In traditional art, rarity is defined by supply and demand. That is, the quantity (total supply) of a work of art or the number of works made by an artist affects the buyer’s desire to buy it. So to discern rarity, one must look at a number of factors surrounding the scarcity of a piece and an artist.

Say an appraiser is trying to determine the rarity of an oil painting. They might ask: How many pieces did this particular artist produce during his career? How many of these pieces were oil paintings? How many are 1/1 or editions? How many are currently accounted for and/or still in circulation?

The Sotheby’s video below illustrates the quest for rarity and provides a more intimate insight into how the world’s best art connoisseurs perceive the concept.

By understanding the extent and condition of an artist’s catalog, appraisers can determine the appeal or specialty that a given piece embodies—be it an oil painting, a bottle of wine, garment, etc. Given the vast number of appraisers and art historians who remain active in the traditional art world, there never seems to be a lack of knowledge or expertise when it comes to discerning the rarity of art.

However, things are different in the NFT space. While the concept of NFT rarity is undoubtedly derived from the traditional art world, it has since transformed through the subjective lens of crypto artists, developers and collectors. For example, the term “rarely” is associated with meanings beyond its conventional connotation. Rather than non-ironically denoting an observation of rarity, the phrase communicates the potential profitability of an NFT/collection, as well as mocking those who obviously lack it.

The fact is that NFT rarity is based on different metrics than traditional art. Uncommons and characteristics help determine the value or worth of the rarest NFTs in a PFP collection. In other words, while an NFT collection may number 10,000, if only 10 of those thousand have significantly unique characteristics, they are considered rare among that collection, and thus rare in the scope of the larger NFT market.

Anecdotally, as the value of an overall collection increases, so does the prestige and rarity of its most prominent/desirable NFTs. This happened to Bored Apes, Doodles, Moonbirds and others. It is simply an accepted but generally unspoken rule for NFT assessment.

Nevertheless, if the 10 unique NFTs were minted separately from a larger collection, say by a mid-level independent crypto artist, the likelihood of them achieving the same notoriety would be significantly lower. While they may be seen as even rarer by some (depending on the artist who created them and the lack of quantity), their lack of association with earning potential or relevance can easily exclude them from the rarity conversation.

Can NFTs match the rarity of traditional art?

The elephant in the room during any crypto vs. “real” art conversation is that, unlike traditional physical art, NFTs are valued in cryptocurrency. While there is much to be said for the viability (or lack thereof) of fiat currency, crypto has and retains a longstanding reputation for being volatile and unpredictable. Consequently, this characteristic unpredictability has been transferred to NFTs.

The big question regarding NFT rarity is: what happens if crypto prices go to zero?

If an NFT sold for 100 ETH at a time when the price of ETH was worth more than $4000, does it retain the same value and importance when ETH has fallen to $1500? While it could well retain or even exceed its value in terms of ETH, its fiat (dollar) value is unlikely to increase significantly.

There may be too many moving parts around crypto art to dictate whether NFTs will retain their rarity down the road. Concerns about environmental impact, widespread fraudulent behavior and lack of regulation often define the NFT space. But while some older institutions have embraced the technology, the majority of art collectors and general consumers still seem reluctant to even give crypto art the time of day.

Many of the most influential NFTs will undoubtedly retain cultural and historical significance for years to come. But it won’t be a stretch to say that even the rarest CryptoPunks could be cast aside if ETH falls and stays at $0. Because of this, many NFT collectors informally advise others to collect not only rare and potentially valuable tokens, but those that have personal and cultural significance.

Beyond speculation, many arguments surrounding rarity in the crypto space seem to stem from the youthful nature of NFTs and Web3. Remember: NFTs are less than a decade old, so they can’t hold a candle to the many millennia of experience the traditional art world has. While monumental sales, including those by crypto-artists like Beeple and Pak, undoubtedly rival even the most high-profile traditional art auctions, the value of crypto-art and NFTs is not universally accepted in the larger art market.

On-chain provenance served as a main argument for the longevity of crypto art for years. For example, some believe that the troubled and murky past of Leonardo da Vinci’s Mona Lisa, as well as countless other pieces that have disappeared or been the subject of duplication, could become non-issues with the use of blockchain technology.

While it is true that we can quickly establish the immutable history of an NFT through the open ledger blockchain network, the excitement of this functionality seems to have diminished over the years. Yes, immutable digital ownership is groundbreaking, but can its new nature really compete with the historical significance of traditional physical art?

This is precisely the line of questioning that artists such as Damien Hirst pursue in order to look beyond the status quo of rarity. Hirst’s collection The Currency spotlights the importance of supply and demand, the two calculations determining the rarity of his NFTs and their corresponding physical parts, respectively. By encouraging collectors to decide whether to keep tokens or destroy them to redeem a physical work, Hirst highlighted the malleable and ever-changing concept of scarcity. Given the opportunity, which one would you bet would retain its rarity for the long term?