On a technical level, NFTs are assets that can be exchanged on a blockchain, a digital ledger of transactions. ‘The NFT market is huge and open to everyone, the audience is wider and there is a potential collector for every media, every style, and all participants are enthusiastic to discover new artists,’ says Aleksandra Jovanić, an artist who mints NFTs on the open-source blockchain Tezos.

It’s worth noting that NFTs can be used for a number of things, from creating a digital provenance to visually representing an asset. The latter is how most of the art world currently understands the term NFT – as synonymous with ‘digital work of art’ – but it’s important to note that ‘NFT’ simply refers to the underlying technology that allows a digital asset to be traded. NFTs are not inherently digital art, but they offer artists an entirely new medium. Put simply: NFTs should not always be thought of as works of art, whereas works of art can be NFTs.

As Jovanić implies, NFTs are relatively accessible for technological reasons: Rather than going through a gallery or auction house, collectors can mint NFTs directly from artists. As creators of NFTs, artists are also entitled to royalties any time the asset is put up for resale, thanks to the way they are coded. This is in stark contrast to what happens in the traditional art market, where artists are most often left out of the resale process entirely. Collectors benefit from blockchain technology too, because NFTs are impossible to fake. There’s no way to copy an NFT, and collectors can be sure of their ownership and the work’s authorship.

Jovanić has first-hand experience of the advantages of NFTs, as her work was exhibited as part of the Tezos exhibition at Art Basel’s Hong Kong show in May. Tezos has quickly become one of the most significant blockchains in the artworld: Marina Abramović recently announced her first NFT collection is to be minted on the platform, while other artists, including Olive Allen and Eko33, have opted to use it to host their NFT projects.

‘Most people know Tezos for being “the green blockchain,”’ explains Eli Tan, a reporter at the crypto news outlet CoinDesk. According to the blockchain, each of its transactions uses one millionth of the power that a transaction completed on Ethereum does. It is a proof-of-stake blockchain – meaning Tezos uses algorithms rather than computer power to verify transactions. It is also known for ‘mainstream-facing products,’ Tan continues. While other blockchains have struggled to break out of a more crypto-centric shell, Tezos has launched partnerships with Cambridge University, the UK Premier League football club Manchester United, and the clothing chain Gap.

Tezos’s clear desire to court mainstream users makes it an easy entry point for those in the artworld who are new to collecting NFTs. At both the recent Hong Kong and Swiss editions of Art Basel, it presented activations where collectors could mint NFTs with just a few clicks. The exhibitions also highlighted generative art, a form of digital art that presents the audience with the opportunity to participate in the creative process. The work is generated by an algorithm made by the artist and new pieces are minted when triggered by the user – meaning each NFT is unique.

Generative art also raises interesting questions for those in the artworld. When a piece of art is partially created by code, who is the true author? And as a collector, how do you determine the value of a generative NFT?

As far as the value question goes, the element of surprise associated with generative art is not unlike that experienced when buying a physical print from an edition. Some people will be drawn to certain colors and visual traits, but ultimately the works generally have the same value. Still, one key difference is that the person minting the NFT will not know exactly how it will turn out because code randomizes the visual traits. Certain features can be ‘rarer’ than others, which can sometimes correlate to value – but most of the time, the secondary market is where the subjective value of the visual comes into play.

‘I would suggest starting with collecting what catches your eye,’ says Diane Drubay, co-founder of alterHEN, an artist-run NFT gallery, and Head of Arts and Culture at TZ Connect, a company that serves as the bridge between different projects on the Tezos blockchain. ‘Collect because you love it, not because of a name or for the potential financial value behind it,’ she continues. In that way, it’s very similar to how collectors evaluate other forms of art.

The main difference between collecting physical art and NFTs is that the value of the latter is inherently tied to the broader crypto market. And there’s no denying that those markets have steeply declined in recent months. In May, the implosion of one major crypto ecosystem pegged to the US dollar led to a USD 60 billion loss that caused widespread instability. The prices of Ethereum and Bitcoin, the two biggest cryptocurrencies, have declined more than 50% since their all-time highs last fall.

Yet the rise of NFTs makes more sense when you look closely at recent online sales trends in the art market. According to The Art Basel and UBS Global Art Market Report 2022, online sales in the art market as a whole have been on the rise since 2019. And it follows that the NFT market has also benefited from the art market’s wider adoption of online business, as art-based NFTs have slowly taken up a larger share of the greater NFT market. In 2019, art-based NFTs made up only 2% of the value of all NFT sales – by 2021, that figure was 14%, according to the report.

At its recent activations at Art Basel, Tezos made a point to tie in the current NFT trend with the broader history of generative art. Works by Herbert W. Franke, one of the pioneers of algorithmic art, were on display, alongside new works by other artists, including Jovanić. This contextualization of early computer art alongside generative art that visitors could contribute to in real time further proved the cultural significance of NFTs and that their popularity is the result of many years of steady work by digital artists.

As NFTs rise in popularity, more traditional art institutions are also now grappling with the idea that they deserve wall space. Some, such as the Belvedere museum in Vienna, have already used them as fundraising tools. A drop consisting of fractionalized, digitized pieces of Gustav Klimt’s The Kiss sold as NFTs brought in more than EUR 4 million in sales for the museum. Others, like the Los Angeles County Museum of Art, have decided to approach NFTs as true works of art: It recently announced a new fund dedicated entirely to digital art.

During ‘The Art Institution’s Playbook for NFTs’, a talk hosted by Tezos at Art Basel, the participants explored these questions, including if institutions should really dive in – and the difference between collectibles sold as NFTs and works of art created and collected through this new medium. Ultimately, NFTs can do both – and the answer is in the eye of the beholder.

Katie Rothstein is a writer based in New York. Her work has been published in New York Magazine, Artnet News, and The Verge. She is the co-host of Crypto Girls, a podcast that makes crypto accessible to a mainstream audience.

Tezos hosted the NFT Speaker Series at Art Basel’s 2022 Swiss edition. Find out more here.

Captions for full-bleed images: 1. Herbert Franke, Mondrian, (1979). Courtesy of Herbert W. Franke and Susanne Päch. 2. Courtesy of Blokhaus – Tezos Exhibit Art Basel 2022. All additional images courtesy of Blokhaus.

Captions for full-bleed images, from top to bottom: 1. Herbert Franke, Mondrian (1979), 2022. 2. Installation view of Tezos exhibition at Art Basel, Hong Kong, 2022.