Locals cautious about NFTs | Business

While some may value Marchasin’s foot at $3, other NFT art is rising in value and price. The artist known as Beeple sold a massive collage of his art pieces at $69.3 million with the Christie Auction House — the most for which an NFT has sold. Other NFT art with steep prices are NBA Top Shots — think basketball cards with a short video clip. A NBA Top Shot of LeBron James dunking a basket sold for $230,032. Even former First Lady Melania Trump is cashing in on the NFT popularity craze by selling a piece called “Melania’s Eyes.” It’s been criticized by “Matrix” actor Keanu Reeves and musician Brian Eno who described the craze as “a way for artists to get a little piece of the action from global capitalism.”

“If you’re a truly great artist, then chances are and whatever medium you choose to produce your art, someone will see it as a valuable asset class,” Marchasin said.

He said he believes questioning the value of NFTs is comparable to someone questioning the value of an Ed Sandoval painting or the hold Van Gogh’s “Starry Night” might have on him.

“People have been arguing about this for hundreds of years, the inherent value of art as an asset class,” said Marchasin.

However, he said he doesn’t believe there will be much resale value on some NFT art in 50 or 100 years, unless it was one of the first internet GIFS. For instance an NFT of the Nyan Cat GIF, an 8-bit animated cat with a Pop Tart body from 2011, sold for over half a million dollars in February. Marchasin said millions of similar cat GIFs exist and they have no scarcity to create any value. Although, he doesn’t discount the possibility that cat GIFs and other NFT art might become collectible in years to come. 

“I love the idea that a bunch of these stupid NFTs will have a market in 50 years because someone’s into collecting antique NFTs,” Marchasin said.

One of the leading popular NFT art pieces circulating comes from the Bored Ape Yacht Club — cartoon primates which have been on the cover of Rolling Stone Magazine and have been popularized through celebrity ownership. One of the 10,000 in collection, currently sells at around 53 Ethereum or almost $204,000. 

Another Taos County resident, Molly Byrnes with the self-ascribed title of “intergalactic internet witch” sees the potential of NFT art to go beyond cartoon laconic-looking apes. Byrnes got into NFTs in January and started to sell NFTs on OpenSea. She is also engaged in NFT communities through the social media app Clubhouse. She sees many potential opportunities for Taos artists and a way for communities to coalesce.

“I think that NFT’s seem to be right now, kind of … like the entry point into blockchain for many people. And [NFTs] I think they’re going to be used kind of like, tickets, or membership in a club, or ways that people to fundraise creative vision that they want to do and find their community,” Byrnes said. 

On Jan. 11, Byrnes will teach a University of New Mexico-Taos HIVE class, “Intro to NFTs,” which will explore Cryptoart, Web3.0 and the blockchain to all ages and web experience levels. The class will help those better understand NFTs and other metaverse terms and concepts. 

“I think that NFTs seem to be right now, kind of a good like, they’re like the entry point into blockchain for many people,” said Byrnes. 

Byrnes doesn’t find some of the popular NFT art “very compelling” and said it is reflective of who is currently operating the space. 

According to a September Pew Research study, 16 percent of U.S. adults have personally invested, traded or used cryptocurrencies like Bitcoin and Etherium. The study also stated that ages 18 to 29 are particularly likely to say they have used cryptocurrencies. Bynes hopes for more diversity amongst race, gender, class and age with NFT creators.

“That’s why I’m passionate about introducing the concept to you know, diversity of people. because there’s so many, there’s so much cooler things that we could be doing,” said Byrne. 

The lack of diversity amongst NFT creators isn’t the only criticism surrounding NFTs. 

Max Dilendorf of the New York City Dilendorf Law Firm, which specializes in NFTs and cryptocurrencies, told the Taos News to read up on cryptocurrency law, like the Department of Justice’s “Cryptocurrency: An Enforcement Framework” 2020 report. He said sellers and buyers need to do their “due diligence” when navigating crypto and NFT spaces and seek legal representation if needed. 

“People that are getting involved in NFTs don’t realize that they can be very, very dangerous. And so when you … maybe as an artist getting into NFTs there are a number of very, very serious legal considerations that you have to keep in mind,” Dilendorf said. 

Dilendorf added that possible criminal charges can arise by not complying with the Bank Secrecy Act, which detects and prevents money laundering. He said that reselling an NFT can easily morph from art to a medium of exchange or money. 

He said that others can find themselves in legal troubles with the Securities and Exchange Commission by selling and buying unregistered securities.

Recently, the blockchain company behind NBA Top Shot, Dapper Labs, found themselves accused of illegally selling unregistered securities in a lawsuit. 

“Don’t think that you are smarter than the system. Just follow the rules, do your full due diligence on how the legal system works. You know, read the cases,” Dilendorf said. 

Byrnes doesn’t discount that people are laundering money through NFTs but encourages people to be cautious and figure out their tax plans for potential audits. She anticipates that the IRS will be hiring crypto-auditors. 

“I mean the important thing to also know, is that our government, [is] still kind of writing rules about how crypto works,”she  said.

Other criticisms surfaced around NFTs is the amount of energy consumed for an NFT or other crypto transactions. An article in May from the Harvard Business Review stated that, “Bitcoin currently consumes around 110 Terawatt Hours per year — 0.55 percent of global electricity production, or roughly equivalent to the annual energy draw of small countries like Malaysia or Sweden.” 

Byrnes and Marchasin have seen both sides of the carbon footprint from cryptocurrency transactions. However, they both liken that similarly large amounts of energy consumption is used for a credit card transaction. Marchasin said cryptocurrencies may become more “green” in the future.

“It’s cheaper to get energy from solar or from wind than it is to burn coal. So where are people trying to mine Bitcoin? They’re trying to mine Bitcoin at dams and windmills and solar farms and trying to figure out ways to retain most of the energy. I just read a thing about a guy who was using the excess heat from his mining rigs to his pool. So it’s driving innovation,” said Marchasin. 

Marchasin said he’d like to see more energy regulation in the form of tax rebates to incentivize Bitcoin mining to become more energy efficient. 

For now, owner of Wilder Nightingale Fine Art Gallery Rob Nightingale prefers tangible art to digital art. 

“For me it’s hard to grasp that idea. I mean, I’d rather have a piece of art that’s mine and that can hang,” said Nightingale. 

Revolt Gallery owner Steve McFarland sees great potential in NFT art but said he’s doing the “waiting game” with NFT art. He said he’s seeing art galleries venture more into virtual reality, digital art and NFTs but said that scene hasn’t caught on in Taos and doesn’t want to sell it. 

“I don’t want to buy a bunch of screens for people to look at art on and purchase it. It’s more like me helping the local artists, and having people be able to come to community events, doing the music events that we did this past year for six months, every week. It really gave people life and a sense of community,” said McFarland. 

UNM-Taos animation instructor Jesse Thompson, who wants to start creating NFTs, is excited for the potential they can have for gaming and digital art creators.

“It’s like building up patronage for digital creators to allow them to show what they want to, to show off their visions and their worlds and to not rely on bigger companies,” Thompson said. 

For more information about Byrnes’s hybrid Zoom and in-person class visit taos-hive.com or contact program specialist Rose Reza at taoshive@unm.edu to reserve a space.