Hong Kong artists say NFTs are both empowering and challenging as cryptocurrency volatility affects income

Many Hong Kong artists experimenting with non-fungible tokens (NFTs) are finding the technology gives them more control over their artwork, but some say it is challenging working within the complex and volatile world of cryptocurrencies, according to interviews with the South China Morning Post.

NFTs, which refer to data stored on a blockchain that guarantees a digital asset is unique and immutable, took the world by storm last year, as people snapped up cartoon avatars, virtual property and digital artworks that cost millions of dollars.

In Hong Kong, profile-picture NFT projects took over the city's prime advertising spots, as major auction houses Christie's and Sotheby's sold NFT artworks for millions. The tokens also proved to be a boon for many individual artists, who found a new market for their art.

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NFTs created by Felix Ip, almost all sold out!! Only one available, DM us 👌 pic.twitter.com/UIMvr4u9U4

- Start Art Gallery (@startarthk) September 24, 2021

"Digital artworks previously had no value, nobody was willing to pay for it," said Felix Ip, a local comic artist and illustrator. "Now they have a value just like physical artworks."

Ip, whose work combines elements of old Hong Kong and steampunk, first learned about NFTs in March last year, when he was commissioned by the industry group Bitcoin Association of Hong Kong. The resulting work was an illustration of a bitcoin-themed tram hovering in the sky over the city. Start Art Gallery, a physical gallery for crypto art, invited Ip to exhibit the piece and sell it as an NFT.

With the gallery taking care of minting, the process of creating an NFT by adding data to a blockchain, Ip had five limited NFTs of the illustration ready for sale. But Ip and his manager Eva Yang did not know what to expect because they were "so unfamiliar with the territory", Yang said.

"On the gallery's opening night we sold three of them. We were totally in shock," Yang said. Prices for the three sold pieces varied from 1.8 ether to 2 ether, and a fourth one was later sold for 2.8 ether, she added. Ether, the cryptocurrency traded on the Ethereum blockchain, was worth about US$3,000 when the gallery opened in late September. It has since lost nearly a fifth of that value amid a cryptocurrency sell-off this year.

"It's a totally different world," Yang said. "We kept thinking how much one ether is in Hong Kong dollars, and they just decided [to buy] in the snap of a finger."

Hong Kong artist Claudia Chanhoi said NFTs give artists more power because the market is not as exclusive as traditional art. Credit: Claudia Chanhoi alt=Hong Kong artist Claudia Chanhoi said NFTs give artists more power because the market is not as exclusive as traditional art. Credit: Claudia Chanhoi>

With major commercial galleries and curators dominating the city's art scene, many independent and digital artists have had a tough time getting their work displayed or sold. But NFTs allow artists to engage with their audiences directly, and to make decisions on their own terms.

"The NFT space isn't as exclusive as the traditional art market," said artist Claudia Chanhoi, whose cartoon artworks focus on exploring female sexuality. "If you want to be represented by a gallery or to have a show, you might need to know someone or convince the curators that your works can be sold or can fit the art buyers' taste."

"When it comes to NFTs, I feel like you have a little bit more power," she added.

Local photographer and graphic designer Tommy Fung, who started selling his work as NFTs last year on the marketplace Refinable, also appreciates the direct relationship the technology gives him with buyers.

"Digital artists can reach their fans directly, without the need of a third party like a gallery," said Fung, whose Instagram account SurrealHK featuring imaginative works about Hong Kong has more than 159,000 followers.

Photographer Tommy Fung Photoshopped himself on a Star Ferry, his favourite type of public transport in Hong Kong, against the city's iconic skyline. Photo: Tommy Fung alt=Photographer Tommy Fung Photoshopped himself on a Star Ferry, his favourite type of public transport in Hong Kong, against the city's iconic skyline. Photo: Tommy Fung>

With NFTs, artists get to control the price, royalty fees and number of editions of their artwork, Fung noted. The technology also allows for secondary royalties to be baked into the token's smart contract, guaranteeing artists a cut of future revenue every time a piece is resold. On OpenSea, the world's largest NFT marketplace, creators can set these fees up to 10 per cent.

But artists say that it is still not easy to wrap their heads around the emerging NFT market. Ip said it is difficult to decide what to charge when designing avatars for a new NFT project, since it involves thousands of design elements and the project does not know which images will wind up becoming popular. He also finds the aesthetics in the NFT space hard to grasp.

"I don't really get the aesthetics standard at the moment," Ip said. "Something that could be thought of as unappealing in the physical world can be sold at a very high price, whereas beautiful art pieces could be selling at really low prices."

"When you look at the NFT space, what really works is the culture, the trend and the story. It's something extremely current," said Chanhoi. "If you just put the greatest masterpiece in the NFT space, you probably wouldn't be able to make any sales."

The volatility and complexity of cryptocurrencies also present a headache for artists. The drastic ups and downs of cryptocurrency prices mean that the value of their earnings from selling NFTs are constantly changing. A massive sell-off in cryptocurrencies last week wiped out more than US$1 trillion in the global cryptocurrency market.

"I was surprised to know that the price of ether, the cryptocurrency I use for minting, is extremely volatile," Fung said. "It is difficult to have a precise budget when thinking of minting an artwork, because it all depends on the market, the time of day, et cetera."

Yang also pointed out the importance of timing and compared selling NFTs to selling stock.

"You do have to watch when it is a good time to sell, and when price goes down you worry that it's not worth as much as before," Yang said. "Artists who want to enter the NFT world do need someone to manage that part. It is not well polished yet."

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.