Keeping some measure of kindness in our hearts for this Bitcoin bull and staunch advocate for our noble cause, let’s adnotate podcaster/investor Anthony Pompliano’s Sept 21 article “The Next Big Bet – Digital Art“:
Jason Williams and I are making a big bet on digital art.
World-class investors know that the best way to make generational returns is to pursue investment strategies that are unpopular, while ensuring that the new investment strategy is also correct. If you merely do something different than everyone else, but you’re wrong, then that only makes you the idiot in the room. If you do something different than others, and you’re right, then you capture significant profits.
In my opinion, one of the easiest ways to pursue a non-consensus investment strategy is to look for markets that have either (a) been abandoned by the crowd or (b) are so new that most investors don’t realize they exist. Selecting the right market is the most important decision. This second category — the industries that are incredibly early in their lifecycle — is my favorite place to go hunting for opportunity.
Jason Williams and I have been searching for a new market that is too early for most people to have spent the time building an investment thesis. We finally think we have found the perfect opportunity — digital art.
Before we spend time talking about the digital art market, let’s take a quick look at the traditional art market:
- The art market is estimated to have a market cap of approximately $65 billion for the last few years.
- The United States, United Kingdom, and China make up about 85% of the entire market.
- US sales of traditional art was nearly $30 billion in 2018, which made up more than 40% of the market.
- Art dealers are responsible for about $36 billion in global sales.
- Art auctions are responsible for about $29 billion in global sales.
- Online art sales are only responsible for about $6 billion in global sales.
- More than 50% of US art collectors are over the age of 50.
- Asia, particularly Singapore (46%) and Hong Kong (39%), have high percentages of millennials as art collectors.
The traditional art market has done incredibly well over the last 20 years. From 2000 to 2018, the art market outperformed the S&P 500 by over 180% (see today’s sponsor Masterworks for more details and a cool traditional art opportunity). The world’s wealthiest people have been acquiring art for decades,i whether it was for store of value, capital appreciation, or pure creative and intellectual stimulation. Regardless of your personal experience with traditional art, the numbers are absolutely staggering.
There is a shift about to happen though. The world is going to change and it is going to change much quicker than most people realize.
Similar to how Bitcoin is superior to gold in almost every way,ii digital art is superior to traditional art in almost every way also. A traditional piece of art is static and sits on a wall. There is no motion.iii The art does not change unless someone takes the art off the wall and hangs a different piece. Physical art is hard to move around the world,iv it can be easily damaged, and there is difficulty in proving what is authentic and what is not.v
Digital art is the next evolution of art. Each piece can incorporate complex movement and motion into the art. A single screen on a wall can periodically cycle through different pieces of art at the predetermined direction of the homeowner or art collector. The digital art can be sent to anyone in the world with a few clicks of a button, it is immune from damage, and authenticity and provenance is transparently available for anyone to verify.vi Quite literally, digital art has significant advantages over traditional art in the same way that digital news has advantages over physical newspapers.vii
This transition to a digital art world is not a question of if it will happen, but rather when. In fact, I personally believe that the digital art market cap will grow to become larger than the physical art market cap. This may sound ridiculous today, especially since the digital art market cap is less than $10 million and the traditional art market is more than $60 billion, but this is exactly what disruption looks like. Estimating the exact timing of the digital art market eclipsing traditional art is hard, so I’ll refrain from making a fool of myself on that front. My confidence level that we see a future 6,000x increase in the digital art market cap is fairly high though.
Jason Williams and I have spent the last few months thinking through the best way to capitalize on the potential growth of the digital art market. We ultimately settled on the idea to partner with the best digital artists in the world in an attempt to bring attention and awareness to the great work they have been doing. Recently, we have commissioned a number of pieces and collections with the artists we believe to be absolute world-class. The first artist we are revealing is FEWOCIOUS.
In my opinion, FEWOCIOUS is the best digital artist in the world.viii We have commissioned a 6-piece collection that takes radical new ideas and merges it with the FEWOCIOUS style of pop art that has become globally recognized. The first piece in the collection that we are sharing publicly is titled “The Innovator’s Dinner.”
This piece features famous innovators over the last few centuries. From left to right, it includes Benjamin Franklin, Henry Ford, Amelia Earhart, Walt Disney, Steve Jobs, Elon Musk, Beyonce, Jay-Z, Dr. Dre, and Malala Yousafzai. Each is presented at the same table in a tip-of-the-cap to Leonardo da Vinci’s The Last Supper. It is our hope that this iconic digital art will serve as the quintessential example of what is possible in this new world.
“I’m super excited to work with Jason and Pomp on this collection! Digital art is the future. Our goal is to create dope art that shows what’s possible for that future. I can’t wait for everyone to see what we’ve been working on together!” – FEWOCIOUS
In addition to the FEWOCIOUS collection and other private commissions, we have been busy participating in various digital art auctions. We are not ready to showcase everything we have done yet, but here are a few highlights:
The 1 of 1 Hackatao piece that sold for more than $12,000 (link)
The #9 of 25 Trevor Jones Bronze Bitcoin Bull (link)
We lost the bidding war for Trevor Jones’ 1 of 1 Bitcoin Bull, which was ultimately purchased for $55,555. We immediately purchased the original painting that the NFT is based on for $55,000 directly from the artist.ix
Jason and I both have deep conviction in the future of digital art, so we plan to invest heavily in the space over the coming months and years. We are constantly looking for the best digital artists. We’ll continue publicly sharing the various artists we work with and the pieces we add to our collection. This should be a lot of fun — check out the digital art at Nifty Gateway, SuperRare, and OpenSea.
We would love to have you join us.
So that’s Pomp’s hot take, but mine is a bit different. The way I see it, in the same way and for the same reasons that Zoom calls are replacing in-person meetings – and in doing so saving streets from unwanted traffic, saving aquifers from unnecessary showers, and all the rest of this under-appreciated environmental do-goodery – IRL encounters are soon to take on even more of a luxurious, exclusive, rarified, and elite sensibility. As such, the A380 is doomed \and the road is paved for the Concorde’s heir apparent, Virgin Galactic’s Mach 3 delta wing (a Gulfstream G650-sized aircraft), to take tomorrow’s billionaires (and trillionaires) anywhere in the world in a matter of a few hours. This current “K-shaped recovery” will indeed continue to broaden the divide between the Haves and Have-Nots, and since it’s the Haves that determine what is art, the returns to touch and feel are positioned for a very healthy few decades ahead.
All of which is to say that tactilityx is the finest luxury of our age, something digital art fails entirely and unequivocally at.xi As seen in the new modernism that is streetwear with kids in their teens and twenties turning teeny tiny skate shops into multi-billion dollar empires, and with the financialisation of everything not bolted down by anyone pretending to be an adult, there’s a clear trend towards the tactile as a counter-point to the ever-present tsunami of devalued reproductions.
All of which opens the door for sculpture – whether cars or clothes or totem poles – as the preferred medium of irreproducible authenticity in the 21st century. This may be wishful thinking that the physical could out-compete the digital in the art world, but I’m placing my bets accordingly.
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- Makes that centuries but let’s not quibble over details. ↩
- Pomp and I agree 110% here: The Revolution Was Fiat, The Reaction Is Bitcoin. ↩
- There is no motion in hung photographs, I’ll grant, but no motion in painting? No motion in sculpture??! I want what he’s smoking… though I also get the distinct sense that Pomp doesn’t spend quite as much time in art galleries as I do. ↩
- It must be admitted, this is sadly and painfully true. It’s astonishingly expensive to move works of art around the world, whether we’re talking about smaller but more delicate pieces like watches or ceramics, or we’re talking about larger pieces like “Tulips” or “Cetology.” The insurance alone is nightmarish. This is no doubt a considerable contributing factor to the fact that paintings outperform sculptures at the top end of the market. The difference between shipping “No. 9” and “A Matter Of Time” is just slightly more than night and day logistically. ↩
- Authenticity is indeed an issue with fine art, which is why experienced collectors always remind newbs to “buy the seller.” People matter, who knew! ↩
- Unfortunately for “digital art” creators, they fundamentally run up against the masses upon masses of ad-revenue-fueled content producers on YouTube and sponsorship-revenue/glory-fueled TikTok’ers vying for the very same eyeballs. In the optically-determined artistic category of film, which is what “complex movement and motion” as an art form reduces to, the competition is practically infinite. Film is indeed the medium of our time, as Walter Benjamin laid bare in his 1936 magnum opus “‘The Work of Art in the Age of Its Technological Reproducibility” :
For film has given crucial importance to a quality of the artwork which would have been the last to find approval among the Greeks, or which they would have dismissed as marginal. This quality is its capacity for improvement. The finished film is the exact antithesis of a work created at a single stroke. It is assembled from a very large number of images and image sequences that offer an array of choices to the editor; these images, moreover, can be improved in any desired way in the process leading from the initial take to the final cut. To produce A Woman of Paris, which is 3,000 meters long, Chaplin shot 125,000 meters of film. The film is therefore the artwork most capable of improvement. And this capability is linked to its radical renunciation of eternal value. This is corroborated by the fact that for the Greeks, whose art depended on the production of eternal values, the pinnacle of all the arts was the form least capable of improvement-namely sculpture, whose products are literally all of a piece. In the age of the assembled [montierbar] artwork, the decline of sculpture is inevitable.
Keeping in mind that Benjamin was a raving Marxist, his notion of the pending “decline of sculpture” must be given its proper context, to whit:
The technological reproducibility of the artwork changes the relation of the masses to art. The extremely backward attitude toward a Picasso painting changes into a highly progressive reaction to a Chaplin film. The progressive attitude is characterized by an immediate, intimate fusion of pleasure-pleasure in seeing and experiencing-with an attitude of expert appraisal. Such a fusion is an important social index. As is clearly seen in the case of painting, the more reduced the social impact of an art form, the more widely criticism and enjoyment of it diverge in the public. The conventional is uncritically enjoyed, while the truly new is criticized with aversion. Not so in the cinema. The decisive reason for this is that nowhere more than in the cinema are the reactions of individuals, which together make up the massive reaction of the audience, determined by the imminent concentration of reactions into a mass. No sooner are these reactions manifest than they regulate one another
While fine art today is indeed political, it’s politically exclusive, not inclusive, notwithstanding all empty verbiage to the contrary. This is why art fairs are a thing amongst the jet set. It’s also why YouTube TikTok, and Netflix are a thing with “the people.”
- While news media may seem like a compelling categorical analogy here, the better analogy is that of digital cameras with that of film cameras. From an artistic perspective, it’s a much of a muchness between the two and the primary differences lie in costs and accessibility moreso than the fundamental nature of the craft, to say nothing of the collectibility or investibility of the products. ↩
- With all due respect to “FEWOCiOUS”, 17-years-old kid, let’s keep in mind, how can he possibly be a better
artistwhore than Andy Warhol? Andy, of course, created digital diarrhoea in the 1980’s on his Amiga 1000 with an exploration that went exactly as far as it deserved to. ↩
- Don’t let these one-off sale prices delude you into thinking that there’s anymore of a market for “digital art” then there is for CryptoKitties and Pokemon Go. Works for sale on SuperRare that wow you with sticker prices in the tens and hundreds of thousands of dollars were purchased for perhaps $1,000 – 2,000 as recently as a month ago. The consistency of this pattern speaks to the inherently fraudulent behaviour on display. The kinds of kids who buy these are exactly the kinds of kids who paint Warhammer 40,000 figurines. They might have a few thousand bucks to their name but they don’t have the millions much less billions needed to foster and shape nascent markets like this. ↩
- To quote good sir Benjamin again:
Buildings are received in a two-fold manner: by use and by perception. Or, better: tactilely and optically. Such reception cannot be understood in terms of the concentrated attention of a traveler before a famous building. On the tactile side, there is no counterpart to what contemplation is on the optical side. Tactile reception comes about not so much by way of attention as by way of habit. The latter largely determines even the optical reception of architecture, which spontaneously takes the form of casual noticing, rather than attentive observation. Under certain circumstances, this form of reception shaped by architecture acquires canonical value. For the tasks which face the human apparatus of perception at historical turning points cannot be performed solely by optical means – that is, by way of contemplation. They are mastered gradually – taking their cue from tactile reception through habit.
- This isn’t to say that photography doesn’t have its place in the fine art world, or that film doesn’t, but neither film nor photography are as collectible for wealthy private individuals, even if they can certainly be invested in. As such, I would expect that a best case scenario of digital art is something like the market for photography. This is non-zero! But also not 6,000x upside. ↩