As the three cameras documented his emotional collapse, Mike Winkelmann struggled to reconcile the conflicting parts of his identity that were clashing amidst his rapidly accelerating fortune. His soul, it seemed, was now up for grabs on the digital auction block where anonymous cryptocurrency billionaires were eagerly bidding. Winkelmann’s life’s work – a staggering collection of five thousand digital art pieces – were being auctioned off as a single non-fungible token (NFT) by Christie’s auction house. The prize for the highest bidder? A digital certification of ownership, a testament to fourteen years spent inside the artist’s mind. Watching the soaring valuation of his art transmogrify into a preeminent example of blockchain technology’s practical value from his couch was an otherworldly experience. As his net worth increased by millions with each passing moment, the newly crowned king of crypto could only watch in dazed awe. The two documentary crews were careful to capture every nuance of his euphoria at this historic occasion.
At the same time, “Token Supremacy: THE ART OF FINANCE, THE FINANCE OF ART, AND THE GREAT CRYPTO CRASH OF 2022,” by Zachary Small, a New York Times reporter who covers the interconnections between the art world, finance, politics, and technology, was being published by Penguin Random House.
In that instant, the artist was catapulted into the ranks of the multimillionaires. Overwhelmed, he found himself escaping to the outdoor patio, away from his celebrating family in the living room. Winkelmann needed a breather.
In previous times, Winkelmann had found a measure of comfort in his ability to separate different parts of his life. His digital graphic and animation business, which turned ordinary visuals into branded content for big-name clients like Louis Vuitton, Apple, and Justin Bieber, was lucrative. The income from these ventures was sufficient to sustain a comfortable lifestyle in Charleston, South Carolina’s suburban McMansion district. In that space, he had achieved a pleasing equilibrium between home, work, and hobby, becoming a beloved figure among his neighbors. This affable Midwestern transplant, known for his broad grin, colorful language, and generous disposition, could often be found engaging in passionate political discussions. But for the most part, he embraced family life, comfortably ensconced in a spacious home offering views of the palmetto trees. Winkelmann’s middle-class upbringing in a small Wisconsin village had taught him the value of compartmentalisation. Thus, he confined his more sensual ruminations to a computer that ran so hot it had to be kept on a wooden platform over the tub in the bathroom, close to a makeshift industrial air conditioning unit that dispelled heat into the attic.
The prevalent digital entity endeavoured to restrain Beeple, the infamous web-based gunk beast accountable for Winkelmann’s rising popularity on the internet. Winkelmann took on this pseudonym back in 2003, inspired by a toy from the 80s that somewhat resembled a bizarre offspring of Sasquatch and Chewbacca. Equipped with light sensors, the toy would trigger a blinking nose and a squeaky voice when its eyes were obstructed. Fresh out of Purdue University, Indiana, with a computer-science degree, Winkelmann found the discipline of programming dreary. His primary interests during his 22nd year were more inclined towards creating narrative short movies via a webcam as opposed to working for a software company. The Beeple toy came to exemplify his engaging fascination for the intermingling of light and sound.
2007 marked the commencement of a project by Beeple which would ultimately catapult him to fame. The “Everydays” series was a daily routine of doodling modest, seemingly rude sketches that contradicted his corporate-esque, Bill Gates impression. These drawings were evidently the vulgar outputs of a mind steeped in the corrosive bitterness of the web and elements of magical realism. In 2008, Beeple adopted Cinema4D, an animation software which enabled him to control three-dimensional space, a concept that intrigued him since his days of playing Super Mario 64 on the Nintendo gaming console at Toys “R” Us. It was not until roughly 2011 that he exploited this software to its full potential to forge bright and hazy figures with peculiar names like Synthetic Bubblegum Tittufux. Concurrently, Beeple also started to disseminate music videos produced using Cinema4D as open-source for creative purposes. He realised the extent of his popularity only upon encountering one of his creations projected on the Hard Rock Cafe during a family vacation in Hong Kong.
In 2017, Beeple finally established his unique style with his exploration of technology-induced dystopias. By incorporating digital assets derived from various online sources, he was able to create intricate scenes in a few hours. His creativity flourished with concepts of skyscrapers erected atop cargo containers, Santa Claus clones in a fierce fight, and devotees worshipping a classic Macintosh computer. His grim tales of the future also featured numerous celebrity sightings: Donald Trump’s head opening up to disclose a burger brain, Mickey Mouse wielding a machine gun, and Buzz Lightyear secreting milk in a park.
Winkelmann’s computer held within it a world of chaos, sitting unassumingly on a desk with cords leading to a makeshift server room in the bathroom. His workspace was strikingly ordinary, with an uninspired beige carpet, budget bookshelves, and two colossal 65-inch televisions that constantly aired mute broadcasts of CNN and Fox News. While Winkelmann wasn’t the first artist to engrain popular culture into his work — Marcel Duchamp claimed that title approximately a century ago with his signed urinal exhibit in 1917 — or the first to infuse his work with mass media — Andy Warhol’s testament to that cause can be seen in his renowned silk screens of Marilyn Monroe. What set Beeple apart was his fervent advocacy for digital art, his striking representation of the bizzare and whimsical negativity often found on the internet, and his enthusiastic endeavor to construct an economy around such elements. With nearly two million followers on Instagram and constant urging from fellow artists to start issuing NFTs, Beeple figured it was time for something new.
With no risk and only potential gains, Beeple took the plunge into the world of NFTs in October 2020, mere days before the U.S. presidential election. He debuted three pieces on Nifty Gateway, a marketplace for NFTs. One of his works, titled “Politics Is Bullshit,” portrayed a bull, festooned with an American flag and suffering from diarrhea, a social media icon perched on its neck. For this limited edition of 100, the opening bid was set at a mere $1.00.
His offer, loaded with irony and the haphazard typing well-recognized by netizens, cogently conveyed that for those doubting whether or not to spend a dollar on his artwork deserved nothing short of a punch. Encouraging the hesitant, he urged them to take the plunge and make a purchase. Soon enough, every piece was accounted for. Not to mention, the two other NFTs he listed, including one from a project titled Crossroads, went off the shelves at $66,666.66 each. Despite the eyebrow-raising price tag, this was where Winkelmann saw his opportunity within the digital realm. Until then, the most he’d made off his artworks extended to only $100 for smaller prints. Observing the thriving market for online collectibles — pioneered by Dapper Labs and Larva Labs who introduced CryptoKitty and CryptoPunk NFTs in 2017 — he anticipated a prospective avenue to monetize his digital art.
Those behind the launch of the aforementioned digital products had forecasted the appeal of digital art among internet shoppers. In the brief span of two months from November to January 2018 alone, CryptoKitties raked in an astonishing $52 million. The appeal was simple, as one of CryptoKitties’ founders, Mack Flavelle, explained to Scott Reyburn of The New York Times: “There’s not much one can do with cryptocurrency. We provided a fun and practical way to utilize their Ethereum.”
It seemed Winkelmann’s triumph showcased the potential boon to independent artists that the cryptoeconomy could provide. Yet, behind cryptobusinesses, executives sought a level of validation that no ad campaign could provide. Single collectibles felt insubstantial, merely a bubble. They sought affirmation from established businesses.
Their desires translated into permanence and societal esteem.
In the year 2017, Christie’s showcased a Renaissance painting as the spotlight piece in their November auction of contemporary and postwar art. The discrepancy was devised to portray the immediate appeal of the artwork, although some art historians voiced doubts regarding its authenticity. The auction house, nonetheless, claimed Salvator Mundi as an authentic Leonardo da Vinci piece, eventually selling it for a record $450.3 million to Saudi crown prince Mohammed bin Salman. This price overshadowed the previous record, set by a Picasso work in 2015, by nearly three times. Gasp-filled exclamations from the auction room marked the event as the absolute spectacle, which was further intensified in the subsequent years as the painting remained hidden in the crown prince’s yacht. The prince apparently refused to display the painting publicly, allegedly due to the fear of museums downgrading the painting to a work by one of Leonardo’s assistants, rather than Leonardo himself.
In the ongoing restructuring in 2020, Christie’s declared that they would combine their impressionist and modern as well as contemporary art departments into one division. “Our customers no longer compartmentalize,” announced Guillaume Cerutti, the CEO of the auction house.
The verdict arrived during a period when sales from impressionist and modern pieces were underperforming compared to the postwar and contemporary collection. Unifying these departments was intended to bring collectors into a single market, shifting the market’s dynamic and favoring the more recent works. It was suddenly evident that the most exorbitantly-priced artworks usually featured dripping paint from the canvas. The artwork creators were commonly women, people of color, and individuals in their 30s to 40s. This was an astonishing occurrence, considering that the arts industry had traditionally reserved the majority of its compliments for deceased white males. Sales of artwork sold within a period of three years since creation shot up by 1,000% in the last decade, reaching a sum close to $260 million.
In an ironic twist of events, Christie’s announced that its highest-valued item for the “20th Century Evening Sale” in October of 2020 would be the remnant of a Tyrannosaurus rex named Stan. This declaration coincided with the birth of an ultra-modern market. The dinosaur remains sold at a jaw-dropping sum of $31.8 million, registering the highest ever recorded payment for a fossil.
A plethora of Christie’s employees articulated their discontent about these internal changes. Common reactions were eye-rolls towards the out-of-date anomalies that were receiving top-billing. This altered strategy was interpreted as a successful attempt by the executives to capture attention during a time of impending economic collapse due to the pandemic. Some employees who joined the auction house for their love of art history were disenchanted with the new direction. However, those with a knack for business found the new atmosphere invigorating and conducive for thriving amidst the orderly pandemonium.
“The absurd theatre has always been my home,” Davis confessed to me. The eccentricities of his profession were something he reveled in. The world of auctions was nothing more than a series of nonsensical record sales, a pretense of rivalry, often just a few affluent men who were acquaintances, battling for the prestige of possession. Artistic discernment was no more. The idea of an object’s past ownership was a delusion. Fossils of extinct beasts were offered for sale alongside works by Rothko and Picasso.
“The only thing I can be certain of is my ignorance,” Davis told me, explaining that this sentiment was both a reinterpretation of a quote from Socrates and a line from “Knowledge” by the Californian punk rock group Operation Ivy.
Hence, given his unusual environment, the idea of auctioning an NFT seemed utterly plausible to the salesman. “It’s going to be bizarre yet amusing,” he anticipated. With less than two months until the auction, everyone involved in supporting the NFT sale had something to demonstrate. Meghan Doyle, a researcher, and Ryoma Ito, the head of marketing, were working tirelessly under the strain of organizing the ideal auction. However, it was still undetermined what Beeple would produce. Initially, he proposed creating one of his “Everydays” pieces to mark 14 years of dedication to his work.
“Interesting, but perhaps it lacks the grandeur it demands,” Doyle responded, rejecting the suggestion.
Winkelmann came back with a revamped concept. “There was this perfect milestone that I’d reached in this huge project,” he recalled. “I’d just coincidentally achieved 5,000 days of producing art.” Instead of providing one piece, he opted to amalgamate everything he’d crafted over the preceding fourteen years into a single synthesis, sold as a NFT.
“He returned to us with an epic masterpiece,” Doyle expressed. “Armed with that image, we managed to drum up the support we needed to create content themed around the artwork and get promotional features in newspapers. We had the whole package: a full picture, a comprehensive story.”
However, Ito felt that the level of commitment from Christie’s marketing division was unsatisfactory. Aware of how crucial this auction was for his internal staff, he set out to attempt his own fortune via extensive networking with private owners, colloquially referred to as “whales” within the digital coin community. Vignesh Sundaresan was among the top contacts on his list.
In January, one could find Sundaresan on the digital dance territory, a champagne flute hovering over his virtual representation’s head. He was jubilantly celebrating in the digital universe, honouring his $2.2-million acquisition of twenty Beeple NFTs and the unveiling of an art exposition that he had tasked internet designers to construct within the digital realm of Origin City. At that time, he was functioning under an enigmatic identity known as MetaKovan, translating from his mother tongue of Tamil into “King of Meta.”
Sundaresan was a seasoned entrepreneur in the crypto space, with a passion for decentralized finance kindled by a childhood spent in Chennai, an Indian city. As a child, he aspired to be the next Steve Jobs. Born in 1988, he grew up with the World Wide Web, which launched the following year. However, his early attempts, such as the creation of “Bitcoin ATMs” and a trading platform named Lendroid, were unsuccessful. The latter exhausted its $48 million in funds in just two years.
In 2019, Sundaresan began to invest heavily in virtual properties. He purchased a digital replica of a diamond-encrusted Formula One car for a virtual racing game, NFT artworks, and hundreds of acres of digital real estate. The following year, he adopted the moniker MetaKovan, describing this as his “exosuit” for “building the metaverse.”
In January, the 33-year-old Sundaresan revealed a fund known as Metapurse for investing in NFTs. The 20 Beeple artworks he’d acquired were combined into a single asset named B.20, which was then divided into ten million tokens. Token buyers were informed that this would represent ownership of the first large-scale public art project in the metaverse.
In a company newsletter, it was stated, “We were inspired by the idea of not just being able to possess historic artwork, like the Mona Lisa, but also being able to possess the museum where it’s exhibited, and then share that ownership and experience with the public. Earning money from art is straightforward and lacks imagination. Our goal is to decentralize and democratize art.”
Ito had kept a close watch on Sundaresan, understanding that this crypto millionaire had a fondness for the compelling sci-fi fantasies offered by Beeple. More importantly, MetaKovan, as Sundaresan is known, was interested in leveraging NFTs as a financial asset. Ito realized Sundaresan might be that individual who is ready to make a bold statement about the significance of digital art by investing millions in a single image.
Convincing Sundaresan to join wasn’t all plain sailing. He was initially cautious about participating in the “know your customer” process set forth by Christie’s, a preventive measure against money laundering that demands companies retain essential information about their customers. Sundaresan feared his track of digital engagements might expose him as MetaKovan. However, he eventually came to terms with such business risks inherent to dealing with prestigious auction houses, even if most of the bidders choose to remain unidentified to the public. Alongside Sundaresan was his Metapurse co-founder, Anand Venkateswaran, another Indian crypto investor. Venkateswaran, however, remained in an advisory capacity throughout the acquisition process.
Christie’s marketing machinery, which was initially lethargic, finally sprang into action. Winkelmann’s NFT concept transitioned into an event bearing its own title – “Everydays: The First 5000 Days,” reminiscent of an Avengers movie. Doyle began to receive an influx of emails from crypto enthusiasts expressing interest in bidding. Instead of being advertised with a price range, the art piece was marked “estimate unknown.” A playful gesture replacing the customary phrase “inquire for estimate,” indirectly indicating that if you have to ask, you probably can’t afford it.
The tag “estimate unknown” held more truth than anyone could anticipate. Winkelmann had mentally prepared for the NFT to fetch near $1 million. Ito shared the same sentiment. Just a few days before the sale, when reporters began speculating about the piece selling for tens of millions, the team realized they were on the verge of something monumental.
“Noah looked at me and said, ‘We are about to throw a grenade on the art world,’ ” Winkelmann recalled.
Compliance officers and executives at Christie’s were still debating the financial terms of the deal. The original plan was for the house to accept cryptocurrency for the hammer price but require that its own premium fee be paid in dollars; however, sale organizers worried that such an arrangement would discourage crypto whales from participating in the auction.
Success needed to be measured with the company’s long term goals for growth. Accepting cryptocurrency would invite scrutiny from the press, traditional collectors and government regulators; it could also be a financial risk, depending on the volatile prices of bitcoin (BTC) and ether (ETH). What ultimately became clear to decision makers was that nothing about this sale could be half-assed. Big money often requires big leaps of faith.
“A decision was made at the highest levels to take the whole thing in cryptocurrency,” Doyle said. “The amount of cogs in the wheel for that to happen was truly mind-blowing.”
The decision proved successful, resulting in a never-ending flood of questions about the Beeple sale. Sundaresan had already committed to the auction, yet the entry of a surprise competitor, ready to partake in one of the fiercest online bidding wars ever experienced by the auction house, left everyone stunned.
The auction opened with a humble $100 bid on February 25, 2021. Shockingly, within a span of eight minutes, the bid sky-rocketed to $1 million.
“The traffic was overwhelming. I was astonished our site didn’t crash,” expressed Doyle, “It was an unprecedented event.”
The auction then reached the phase where the potential buyers had to prove their financial credibility, often through reference letters from the crypto exchanges that backed their transactions. Around two dozen buyers, 18 of them completely new to Christie’s, were in the running at this point. The majority of them belonged to the millennial cohort.
“It was a psychotic amount of bidding,” Davis thought as his phone started blowing up with messages. His boss, Alex Rotter, head of 20th-and-21st-century art, even took to social media to brag about the sale. He posted a Beeple artwork to his Instagram featuring a superpowered Homer Simpson lobotomizing his son, Bart Simpson, with laser vision.
“Beeple leads the way,” Rotter captioned the image. “It’s all happening.”
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