In July 2021, a portrait of a woman with frumpy 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 centuries-old oil on canvas. It did not once hang on a wall. The artwork was a nonfungible token, or NFT — one of 10,000 unique, algorithm-generated 24-by-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 racked up about $800 million worth of sales on the Ethereum blockchain exchange, according to its 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 are also acquiring NFTs. Others, like the Uffizi Galleries in Florence, Italy, and the British Museum, are minting and selling them from works in their collections. And artists are being encouraged in their efforts to produce digital art.
But even as museums dabble in NFTs, the market for them, and for the cryptocurrencies that they are traded in, has plummeted. Trading volumes are down 97 percent from peaks reached in January. In the latest sign of the market’s distress, the FTX cryptocurrency exchange filed for bankruptcy on Nov. 11, inflicting billions of dollars in losses on its clients and investors.
So why is ICA Miami collecting NFTs?
“Our collection, as well as our exhibitions and programs, seek to take on some of the most pressing and topical art and ideas that are happening today,” said Alex Gartenfeld, ICA Miami’s artistic director. “Over the last 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, while it found itself now “at the center of the marketplace” and public attention, it was not that way for the preceding three decades. In any event, he added, museums are not concerned with the value of their art collections so “the groupthink is fairly irrelevant to the work that we’re doing.”
So irrelevant, in fact, that ICA Miami has accepted the gift of “CryptoPunk 305,” a second cartoonish head of a woman, this one with blond hair wearing virtual-reality goggles. And last summer, “Super Cool World #660” by the artist Nina Chanel Abney — a cartoonish, Jesus-like figure with a white beard and a red robe — was donated to ICA Miami.
“CryptoPunk 305” goes on display on a monitor Friday, Mr. Gartenfeld said.
The rush toward NFTs may be somewhat like the tulip mania that gripped the Netherlands in the 1630s, when demand sent bulb prices skyrocketing. In this case, the rise in prices followed the $69.3 million purchase (in cryptocurrencies) at a Christie’s auction in March 2021 of a JPG file by the digital artist Mike Winkelmann, known as Beeple.
Much of the subsequent market has evaporated. Still, proponents argue there are irrefutable benefits to NFTs, also called encrypted digital art.
What to Know About NFTs
What is an NFT? A nonfungible token, or NFT, is a digital asset that establishes authenticity and ownership and can be verified on a blockchain network. It is a way to claim ownership of a digital file and is comparable to a certificate of authenticity you might get if you buy a sculpture.
Encryption on the blockchain is said to make a digital work impossible to fake. Each unique work, or edition, has information about its provenance and past 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 led Stockholm’s Moderna Museet and was the artistic director of the Venice Art Biennale in 2009.
Mr. Birnbaum is artistic director of Acute Art, which helps some of the world’s best-known artists — including Ms. Abney, Olafur Eliasson and Kaws — produce NFTs and virtual- and augmented-reality artworks.
“Once or twice every century, something new arrives, like photography or cinema or television or the internet,” Mr. Birnbaum said. “I think we’re in a moment of transformation, and it has to do with these new digital mediums.”
He added: “How do you actually collect those things? Using blockchain technology.”
He acknowledged the “hype” around NFTs and the “speculative kind of logic behind all of this,” but said it was important not to overlook their great advantage: NFTs allow artists to produce editions of their works in the digital world.
While museums such as ICA Miami are acquiring NFTs for their collections, others are selling 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 on sale last year and is now offering an NFT series based on Turner paintings, in collaboration with the 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 France — has also teamed up with LaCollection.io to mint its own NFTs. These are unique digital copies of 24 pastels that are seldom exhibited (because of their fragility), and the work of such masters as Monet, Degas and Jean-François Millet.
In the first drop 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 site visitors from about 200 countries, mostly men 35 to 45, a demographic that “skews younger and more male” than the museum’s own, said Eric Woods, chief operating officer 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” crowd investing in series such as the Bored Ape Yacht Club images stored on the Ethereum blockchain; and a growing category of collectors interested in fine art.
Mr. Woods said his aim with NFTs was to answer this question: “How can the M.F.A. deepen the conversation with its audience in a world where Instagram and Siri are prevalent?”
“If we can reach them and speak to them in the language that they’re speaking at the moment,” he added, “we can be better at sharing 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 feeling of the page and the leather-bound book,” he recalled.
The NFT market “is still new, and the proverbial water has yet to find its level,” he said. “I don’t think it’s going away, and I think it will only continue to grow.”
Mr. Birnbaum was similarly confident about the interaction between museums and NFTs. He said there were other forms of art in the past that museums initially didn’t know what to do with, such as instruction manuals for works of conceptual art that were not actual physical objects.
“Museums tend to collect what has turned out to be important and influential,” he said. “I’m pretty sure that they will collect digital art in the future. It’s already happening.”