On Legal Perspectives and Standards for Collecting NFTs, an Experience Spanning Selling at Art Fairs for a Blue Chip Gallery to Vintage Computer Art and Crypto
You previously mentioned your passion for vintage computer art, how did you get started?
My interest for vintage computer art sparked when net art came up in the late ‘90s, at a time when I was wondering why there was no market for digital art. I developed a special interest for generative photography and started reading books by Gottfried Jäger, Herbert W. Franke, and on generative esthetics theories. I realized that there was a very rich history of art that had been completely neglected by museums and the art market. From a contemporary perspective, we might have to reassess the era of postmodernism.
What was your first and last NFT purchase?
My early purchases date back to 2018 and were CryptoPunks, Eve Sussman’s “89 Seconds Atomized” from the artist’s 2004 video “89 seconds at Alcazárat,” and pieces by Robbie Barrat, an artist who works with artificial intelligence. Lately I have been buying artworks by Casey Reas, Travess Smalley, and by the pioneers of digital art such as Herbert W. Franke, Hein Gravenhorst, and Alexander Mordvintsev. I am also buying some historical NFT projects from 2011 to 2019 such as Punycodes, Linagees, CryptoArte, etc.
What did you do at Hauser & Wirth and why did you ultimately embrace digital and NFT-based art exclusively, as opposed to working in both the physical and online scenes?
I started as a research assistant to Iwan Wirth, working mainly on the secondary market. Later, I was heading a small team and represented the gallery at some art fairs. After working many years in the traditional art market I had to accept that it was very much controlled by gatekeepers such as art fairs, galleries, and museums. I became interested in blockchain art and NFTs when I delved into the blockchain community in Zug (known as the Crypto Valley, Switzerland) around 2016-2017. Some entrepreneurs and coders were much more creative than most of the artists I was seeing at art fairs, museums, and galleries. When the ERC-721 token standard was developed and the first NFTs on Ethereum, such as the Cryptopunks and the CryptoKitties, were launched, I understood that we were at the verge of a very interesting new chapter in art history and that this technology would change many things. It was also a time when some startups developed ways to tokenize traditional artworks, for example what the art investment platform Maecenas did with Andy Warhol’s "14 Small Electric Chairs (1980).”
What tips can you share for collecting digital and NFT-based art? And what is the influence of the bear market on NFT-based art and how does it change collecting it?
In order to store your collection properly you need to look into save storage solutions. There are many hardware devices which enable you to display your art collection and you can also buy some virtual land and build your own exhibition space in the metaverse.
A bear market is not necessarily a bad thing. Certainly a large amount of speculative money has left the market and the total market cap dramatically shrunk. However, serious collectors are still buying art. We will see some NFTs become worthless while high quality art will probably become more valuable in the next bull run. Consolidation is a natural process in every market and comes in regular cycles. We are in a buyer’s market now.
As an art advisor, how would you describe the key challenges faced by collectors with digital and NFT-based art? How did these challenges evolve with time?
Many people are insecure and do not know how to handle a wallet or how to buy crypto currencies and NFTs. They need guidance. There are many dangers such as being hacked, sending crypto to a wrong wallet, or losing your wallet’s key. Another hurdle is how to display your NFTs. Nevertheless, I believe that purchasing NFTs will be much easier and more secure over time. It will be like using your Mastercard when buying something online.
What are the most common legal issues around NFTs? What initiatives and organizations are currently helping to resolve these issues?
It is currently a problem that most platforms are not doing KYC/AML onboarding for their clients–a process for ensuring compliance with anti-money laundering (AML) regulations. It remains difficult to launch NFT art funds because you cannot identify the buyers in the selling process, for instance if you are selling on OpenSea. Taxation is another issue, which is not regulated in most countries. It is difficult to classify an NFT from a legal perspective. I am involved in an organization called AIS (Art Identification Standard,) which has a working group for NFTs and is looking at some of these legal aspects and how to resolve them within an international standard.
What mistakes to avoid when collecting digital and NFT-based art?
You have to be aware that most of the NFTs on the market are hyped by some market makers and become worthless over time. It is important to watch who is the team behind a project and how big and engaged the community is. Generally I advise buyers to do some research first, learn about the artists and exchange with advisors and/or other collectors before starting a NFT collection.
Georg Bak is an art advisor and curator specialized in digital art, NFTs, vintage computer art (1960s), and photography. Bak is also a lawyer, he held a senior position at Hauser & Wirth in Zurich and London, and worked as an art advisor for LGT Bank in Switzerland. He is the co-founder of gallery SCHEUBLEIN + BAK in Zurich and he is on the advisory board of several museums, art fairs, and institutions such as the HeK (House of Electronic Arts) Basel, MoCDA (Museum of Contemporary Digital Art), CADAF (Contemporary Art & Digital Art Fair), AIS (Art Identification Standard), Rare Art Festival 2 New York and the Vancouver Biennale’s Art Project 2020. He was also on the curatorial board of Art + Fintech 2.0 in 2021. In 2022, Bak co-founded NFT ART DAY ZRH, an annual NFT conference in Zurich.