When you’re trying to figure out the potential long-term value of an artist’s work by considering various data points, you can as easily be led astray with cryptoart as with any other asset. Wash trading is a particular concern whether it’s done to directly manipulate prices or to create the appearance of widespread interest and hype. Does it bother artists? Probably not as much as collectors.

What is Wash Trading?

Wash trading has a long history particularly in the stock market. According to Investopedia:

“Wash trading is a process whereby a trader buys and sells a security for the express purpose of feeding misleading information to the market. In some situations, wash trades are executed by a trader and a broker who are colluding with each other, and other times wash trades are executed by investors acting as both the buyer and the seller of the security.”

Though cryptoart is not a security it is increasingly an asset in which individuals and organizations can invest. As the work of particular artists is identified as strong investments, prices will rise accordingly which can make a huge difference in an artist’s life. So wash trading can affect artists both short and long-term even when such activity seems remote and out of one’s hands.

Wash Trading in Cryptoart Markets

In cryptoart wash trading is often used to create the appearance of high sales volume. Sales volume affects ranking on leaderboards which can be a really strong form of marketing to buyers looking for promising cryptoart investments and speculative opportunities. In addition, the space is getting noisier and it will be increasingly difficult to make a big splash so leaderboard ranking can help with that.

Some people also use the term wash trading to refer to buying one’s art back or through a third party to raise the price. This seems likely to attract more scrutiny if leading to newsworthy sales.

With the launch of Rarible’s cryptocurrency $RARI, which is distributed based on “participating on the platform… [aka] Marketplace Liquidity Mining,” an even more direct incentive for wash trading has emerged.

So cryptoart wash trading can create an appearance of higher interest for an artist’s work than actually exists in the marketplace, create increased visibility for an artist’s work, be used to directly manipulate pricing and lead to larger stashes of $RARI.

Do Artists Care?

CryptoArt Twitter has a wide range of responses and I gathered some of those through a Twitter poll which received numerous responses in the comments. The poll results are posted above.

There was also a lively conversation that emerged based on a tweet from @SatsMoonSoon:

The response focused on artists listed as high volume sellers, artists who are seeking to raise prices and artists seeking $RARI. Some cryptoartists feel these practices don’t affect them. @Reviiser maintains wash trading is not an issue for artists but does affect speculators:

However, as @cechk_art pointed out:

Discussion of all these issues often indicated that the popular platform Rarible is considered to be an epicenter for wash trading. And one of its biggest critics has been NFT data firm NonFungible.

NonFungible’s Stance on Wash Trading

As the leading source of cryptoart and NFT sales data, NonFungible has high stakes in the game. At the beginning of the year, NonFungible included wash trading in a list of “Behaviors in the NFT ecosystem that we hope will decrease in 2020“:

“Most data and analytics platforms propose rankings of the top volume-generating projects. To make a place in these rankings, some projects do not hesitate to set up bots which exchange assets all day long to inflate their volume.”

“Tracking, data and analytical tools such as NonFungible have become, for some projects, a kind of free showcase, offering high visibility to projects generating high volumes. Some smaller projects have understood the importance of these platforms in the ecosystem and have believed that we would not notice these strategies.”

This article is well worth a closer look for those buying cryptoart with plans to sell it later at a higher price. Both investors and speculators should be aware of the tactics described that are not limited to wash trading.

All Eyes On Rarible

Though wash trading is unlikely to be limited to a single platform, Rarible has come under close scrutiny from both cryptoartists and NonFungible. The release of $RARI seems to have only increased such activity and Rarible is clearly aware of the situation:

NonFungible recently called out Rarible and discontinued its visible data listing on the site:

The comments in response to this exchange are well worth a look for more nuanced positions, for example:

In turn, @xCryptochild called out NonFungible for lack of disclosure to which NonFungible responded:

And @Jay_Delay pointed out that NonFungible’s approach does not have to be all-or-nothing:

This issue goes beyond Rarible vs NonFungible but the positions taken related to both companies do highlight the range of concerns.

CryptoArt Grows Up

While current issues might be seen as simply growing pains for a new arts genre and asset class, these issues aren’t going away. Cryptoart’s grounding in non-fungible tokens and its history in relationship to cryptocurrency makes buying and selling an integral part of the art form itself.

Attempts to disconnect aesthetics from commerce are not only a historical fail but a failure to recognize the realities of the conditions under which cryptoart is produced and distributed.

More importantly for collectors with dreams of cashing in, tactics like wash trading are a reminder that the warm, fuzzy cryptoart scene has some sharp edges. Do your homework!

Museum of Crypto Art Purchased Pak’s “Red” for 29.1262 Eth

Recently I presented the perspective that current segmentation of NFT-related businesses tends to overlook the dominant presence of art and design which arguably undervalues the cryptoart market. Regardless of your take on such things, such models are an important element of how cryptoart is valued as an asset class.

Which models will be taken up as more investors and speculators enter the scene may well be dependent on moves by already established forces outside the cryptoart scene. However, for the moment, the most relevant work is being conducted by insider analysts and the artists themselves.

Previously on CryptoArt News

Is the CryptoArt Market Undervalued? Aren’t NFTs Mostly CryptoArt?

Includes references to reports available via The Non-Fungible News as well as to Andrew Steinwold’s article “The first $100m in NFTs.”

A Newbie Collector’s View

As more collectors enter the space, considering their experiences and early impressions will help in developing a more approachable and understandable cryptoart market:

I just paid $100+ for a piece of digital art.

Thread:

— ctramount (@ctramount) July 24, 2020

CV VC Global Report: Blockchain in Art

CoinTelegraph is helping promote a sneak peek of an upcoming report from “Big Four auditor PwC and Swiss blockchain investment firm CV VC” on companies and trends developing uses of blockchain in the artworld.

The full CV VC Global Report: Blockchain in Art “will be published in the upcoming weeks” and will be discussed in a livestreamed event on August 12th.

Here’s the Sneak Peek.

NFT Fractions: New Ways to Collect and Speculate

The concept of NFT Fractions is a great fit for collectors, speculators and artists wishing to maximize gain. Check out NIFTEX.com for more.

DeFi Rate
Fractional NFT Ownership Heats Up – Niftex Shards Skyrocket
Cooper Turley

Can Performance Art Be Collected As NFTs?

Performance art is typically collected in the form of documentation and physical objects created during performances. Some artists and collectors, as well as museums, are exploring the collection of the reproduction rights of performances and that has led to experiments with licensing and contracts.

Perhaps the creative approach taken in the distribution of HOW ARE WE can serve as a starting point for addressing the collection of performance art with NFTs.

The Value of a Pixel

The recent purchase of Pak‘s “Red Pixel” work called “Red” by the Museum of Crypto Art set off a discussion about valuation.

Hazmus shared thoughts and gathered responses:

On Art and Value: Part 1 ~ Part 2

$WHALE: Experiments in Valuation

$WHALE is a social currency launched earlier this year by WhaleShark.Pro that is backed by non-fungible tokens gathered in a basket called The Vault.

The Vault’s valuation is audited by NonFungible which produced the $WHALE Vault Audit in May and July of this year.

CryptoArt Valuation Tools

Blockchaingamer’s Analytics database is a new tool for comparing NFT assets.

NonFungibles’ NFT Market Overview is a key resource.

Media Coverage of the CryptoArt and NFT Markets

Decrypt:
NFT token sales hit $100 million as virtual economy booms
Greg Thomson

PublishOx:
Are non-fungible tokens (NFTs) art and investment product of the future? A look on Upland
Niqestates

NEDEROB / Play to Earn:
Five Major Trends in the NFT Market in 2020 So Far
Nederob

Future Tech Rumors:
‘Digital Art’ Framed And Collected On Blockchain

CoinDesk
Yield Farming Expands From Finance to Digital Collectibles
Brady Dale

African Market by Sharonang via Pixabay

In evaluating the cryptoart market, one typically separates cryptoart from other collectibles and related sectors of the NFT industry as a whole. The resulting analysis, based on data provided by NonFungible gives one a sense of the cryptoart market as relatively small, lagging behind other sectors, but promising in its recent growth. However, what if the manner in which such sectors are segmented undervalues the actual cryptoart market?

NonFungible is an excellent source of NFT (non-fungible token) data and they periodically issue short “NFT Ecosystem Performance” reports on their blog. Recent examples include a report on “NFT Ecosystem Segmented Performance” as well as “Art, Trading Card Games, Domain Names” for the first half of 2020.

Alternate Approaches to Categorizing NFTs

In that last post the Art category focuses on the big three marketplaces, SuperRare, Known Origin and MakersPlace, while art-heavy categories such as Trading Card Games and Collectibles are reported separately. When we put all the categories together, NonFungible’s Market Overview shows us that, by their reckoning, we are now over $100 million in lifetime NFT sales volume.

Andrew Steinwold breaks up the market a bit differently in his recent response to NonFungibles work. While he also discusses cryptoart in terms of marketplaces, he separates art-heavy categories into Collectibles and Game Assets and also introduces the design-focused Culture Tokens category. But what would happen if we organized things a bit differently?

Are These Approaches Actually Categorizing Forms of Cryptoart?

I’m not criticizing the work of either NonFungible or Andrew Steinwold. They both base their takes on clear analysis and they tell you what they’re doing and how they break it down. That’s what you want from such reports. Even if you view things differently, they’ve named their terms and have valid reasons for so doing.

I’m not going to rework the numbers though I wish I had time for such a project. But I do want to point out some reasons why I think the above approaches underestimate the value of the cryptoart market by essentially moving a bunch of art into other categories!

Collectibles Such as CryptoKitties are CryptoArt

Though Steinwold separates collectibles such as CryptoKitties from game assets, projects like CryptoKitties are often referred to as games. But, however you look at it, CryptoKitties, Avastars and CryptoPunks are all essentially systems for creating and trading art.

If you look at them as collectibles, how are they not art? If you saw them on one of the cryptoart platforms they’d fit right in.

If you look at them as games, consider two scenarios:

When you take the game elements out of CryptoKitties, you still have art.
When you take the art out of CryptoKitties, there is no game.

I should insert a Keanu Reeves “Whoa” meme here, right?

Game Assets are CryptoArt

What is an Axie but a piece of art that battles other pieces of art?

What are trading cards if not pieces of art?

See the two CryptoKitties scenarios above and apply here as well.

What Happens When We Don’t Separate Art and Design?

The separation of art and design is a convention with which not all of us agree. It is easy to maintain that design and architecture are just ways of making art. Basing that separation on notions of what is practical and what is not impoverishes all forms of art and of what it means to be human.

That said, Steinwold’s “Culture Tokens” are essentially graphic art and product design. Virtual worlds such as Decentraland and Cryptovoxels are essentially massive design projects full of art, graphic art, architectural design and designed products.

All the Interesting Forms of NFTs are CryptoArt

The most boring NFTs are things like tickets, real world stuff and anything else that isn’t cryptoart. The closer one gets to accounting and record-keeping the further one gets from art making. These practices are essential to an art market, but NFTs like tickets are about accounting and record-keeping without art and they are boring as fuck.

So, if you’re crunching NFT numbers, please consider what happens when you include all the art in the cryptoart market.

And please keep in mind when you see headlines about the NFT market that they are primarily headlines about cryptoart.