Citigroup private blockchain for sending money. Citigroup, one of the world’s largest financial institutions, will launch Citi Token Services, a digital token service with blockchain technology and Smart Contracts for institutional clients. The product allows the financial corporation’s large clients to send money anywhere globally.

Citigroup uses a private one instead of doing so on a public blockchain, such as Bitcoin. The entity says Citi Token Services will provide cross-border payments, liquidity, and automated 24/7 trade finance solutions. The company touts its new service as a real-time payment revolution.

Citi Tokens Services will transform clients’ fiat money deposits into digital tokens that users can send to any recipient worldwide. The company’s treasury and trading division will oversee the digital asset. Shahmir Khaliq, global head of services at Citigroup, said digital asset technologies can improve the regulated financial system.

Testing logistics with Maersk

With this solution, Citigroup seeks to streamline large transactions by digitizing bank guarantees and letters of credit in the trade finance sector. Proof of this is the pilot plan between the financial institution and the logistics company Maersk. The program demonstrated the programmable transfer of tokenized deposits transformed into instant payments to service providers through Smart Contracts.

The shipping industry is often challenging for banks, as collecting payments and processing transactions in this sector is often cumbersome. According to Citigroup, digital token technology and Smart Contracts can reduce transaction times from days to minutes.

Programmable liquidity

Citi Token Services was also implemented in a global cash management pilot program, allowing clients to transfer liquidity between Citi branches worldwide in real-time and without interruption. The financial institution sees this solution as providing corporate treasurers with a programmable global liquidity management tool.

Citigroup members will not need to set up a digital wallet to use the new functionality. The service will be available through Citibank’s existing system. They’ll also integrate Citi Token Services into a global cash management project.

A report from Citigroup last March indicates that the world of cryptocurrencies is approaching an “inflection point.” In that report, the financial institution predicted that crypto adoption will adapt to the increased use of central bank digital currencies (CBDCs) and real-time asset tokenization.

Partnership with BondbloX Bond Exchange

It’s one of the company’s efforts within the digital asset sector. The announcement comes after Citi partnered with BondbloX Bond Exchange (BBX) to become its official digital custodian. In a statement Friday, the bank said the alliance will encompass custodial services and a pilot program for tokenized deposits.

The Monetary Authority of Singapore regulates BBX, described as the world’s first fractional bond exchange using atomic settlement and blockchain technology. The partnership provides eligible Citi clients access to BBX fractional bond trading, while the investment bank offers settlement and custody services. Launched in 2020, BBX facilitates bond investing by enabling investors to trade $1,000 fractions of traditional wholesale bonds through Blockchain technology. Traditionally, it takes about 48 hours to settle bond trades. However, using Smart Contracts for automated clearing and settlement and digital signatures guarantees automatic settlement.

“This partnership will enable Citi clients and others to enjoy all the benefits of bond trading, along with the support of Citi’s securities services, almost immediately.”

Rahul Banerjee, co-founder and CEO of BondbloX

Banks continue to enter the cryptocurrency ecosystem

With Citi launching this service, critical banking and financial institutions fully join the Bitcoin and cryptocurrency ecosystem and its inherent technology. And since 2021, the company has been sympathetic to the emerging market. Citi, created in 1892 in New York, United States, was developed in June 2021 as its particular unit to offer bitcoin and cryptocurrency services. That was its first step in the incursion into the cryptoassets market.

Since then, this financial company has moved closer to the Bitcoin ecosystem, joining other large banks that decided to become part of the emerging cryptocurrency market. In the United States, apart from Citi, several institutions such as BNY Mellon, JP Morgan, Goldman Sachs, and U.S. Bank, among other banks, entered the Bitcoin ecosystem several months ago. Many of these are through the offering of services, such as custody.

Blockchain asset tokenization: what is it, how it works, potential and use cases. Asset tokenization or blockchain-enabled tokenized assets promises to revolutionize how assets are managed and transferred in finance, real estate, investments, and more sectors, opening the door to an open, transparent, and innovative digital economic ecosystem.

In essence, tokenization opens the door to a new way of interacting with assets, with new opportunities for investors and democratizing access to physical and digital assets in an unprecedented way thanks to blockchain.

Among its different use cases, asset tokenization is one of the most powerful for blockchain technology. This article will explain everything you need to know about asset tokenization with blockchain: what it is, how it works, its benefits, potential, and more.

Asset tokenization is the process of creating a full or partial digital representation of an asset, both physical and digital, in a digital token stored within a public or private blockchain, which has all the information, characteristics, and attributes related to the underlying asset, through the use of Smart Contracts.

Thus, tokenization can involve tangible assets, such as precious metals, automobiles, commodities, works of art, documents, agricultural products, or real estate; assets with financial value, such as money, stocks, funds, or bonds. Intangible assets include patents, services, carbon credits, or intellectual property rights.

In addition, it is also possible to tokenize assets native to the digital world, such as digital art, assets linked to video games, virtual worlds, and other types of digital assets.

Tokenized assets: How does it work?

Tokenization begins with converting an asset’s rights into a smart contract, where the terms and conditions of the tokenized asset are defined, registered, and secured on a blockchain.

This conversion can be total, i.e., fully representing an asset (1:1), or partial or fractional, where the digital token represents a set fraction of the ownership of the asset.

Example: Imagine that a person owns a real estate property worth $500,000. This person decides to tokenize the property, i.e., creates a digital token representing the property’s total value. In this case, the digital token would equal the property’s entire value, i.e., $500,000. The person can then sell this digital token to someone who wants to acquire the property for that value. Imagine that the person wants to sell only a % of the property, say 20%. In this case, he could create five digital tokens, each valued at $100,000 (20% of $500,000). Each digital token would represent a portion or fraction of the total value of the property.

Once you establish the Smart Contract, digital tokens are issued, representing ownership or rights to the asset. People can buy, sell, or exchange them on digital asset exchange platforms, banks, or any platform enabled for asset tokenization.

In summary and very general terms, the step-by-step would be:

1. You chose the physical or digital, tangible or intangible asset to tokenize.
2. Configuration of tokens and smart contracts
3. Choice of blockchain, public or private
4. Issuance and custody of tokenized assets
5. Distribution of tokens through trading-enabled platforms.
6. Monitor, reporting, and tracking of tokenized assets.

Note that this process may vary depending on the tokenization platform and the tokenized assets. In the case of physical and tangible assets, the process must have an audit to verify the off-chain assets -i.e., the underlying asset – to ensure the backing of the assets on-chain in real-time.

Types of Tokens

Within asset tokenization, there are different types of digital tokens that you should be aware of:

Utility tokens represent delayed (future) access to a product or service provided by a platform or company. Essentially, they do not grant ownership rights but function to allow access to specific tasks on a platform. A classic example of a utility token is Ether (ETH), which people use to interact with its infrastructure Smart Contracts and Dapps and pay its gas rates.

Equity tokens: Equity tokens are a subset of security tokens that imply ownership of an asset, such as shares in a company. In other words, owning an equity token is similar to owning shares in a company. For example, a startup could tokenize its capital by issuing equity tokens.

Security tokens: Security tokens, or security tokens, represent ownership of a real, underlying financial or investment asset, such as stocks, bonds, mutual funds, and real estate, among others. Unlike utility tokens, they provide ownership rights and, depending on the context, rights to dividends or interest. For example, you can tokenize a real estate asset by issuing a security token representing ownership of a portion of that asset.

Real World Assets (RWA) and asset tokenization

Real World Assets (RWA) are tangible, real-world assets you can tokenize via blockchain for benefits such as increased liquidity, security, and operational efficiency.RWAs encompass many physical assets such as real estate, commodities, infrastructure, art, intellectual property, inventories, machinery, invoices, etc.

Tokenizing these assets means issuing digital tokens representing fractional ownership of the assets, enabling them a new world of possibilities in markets based on traditional finance and decentralized finance or DeFi.

Benefits of asset tokenization

Asset tokenization offers different benefits for both investors and issuing institutions. Some of these include:

Capital management efficiency

Both investors and companies can manage their capital immediately and efficiently, thus maximizing the value of assets.

Transparency

All token and transaction information is immutably recorded on the blockchain, providing greater transparency and making it visible to all stakeholders.

Reduced investment and operational costs

Asset tokenization reduces operational and investment costs by automating manual processes and eliminating intermediaries, hefty commissions, or bureaucracy-laden processes.

Increased liquidity for illiquid assets

Illiquid assets such as art or real estate become more liquid by tokenizing them, breaking down barriers for more limited markets.

Fractionation

A beneficial feature of asset tokenization is that assets that are difficult to split or have a high value, such as real estate or artwork, can be separated. The possibility of dividing an asset through digital representations in tokens opens up the opportunity for investment, access, and participation to more people.

Transactional efficiency and process automation

The use of blockchain technology accelerates and simplifies the transfer of ownership of tokenized assets. In addition, smart contracts enable automating processes such as dividend distribution, interest payments, or fulfilling contractual conditions.

Increased operational capacity

Asset tokenization enables a system that allows for an optimized way of creating, issuing, and managing traditional assets, thus reducing frictions and limitations due to its 24/7/365 availability.

Security

Thanks to blockchain and Smart Contracts, the preservation and registration of tokenized assets are facilitated, ensuring the integrity of information and reducing the risk of fraud, providing confidence to investors, and enabling the auditing of transactions. Tokenized assets cannot be forged or duplicated, and a blockchain protects transactions and data integrity.

Accessibility and fewer geographical restrictions

Asset tokenization can also help democratize access to investment opportunities, allowing people worldwide to participate in previously inaccessible markets.

What assets can you tokenize? Use cases and examples.

The potential and benefits are vast, but which assets can you tokenize? In essence, asset tokenization stands out for its versatility, which allows it to stand out as one of its major attractions. Several use cases and examples of asset tokenization with blockchain demonstrate its potential to revolutionize different sectors and industries and its integration and real utility within them.

They use different forms of tokenization with the various digital tokens, such as non-fungible tokens or NFT. We present you some examples of tokenized assets:

• Money (stablecoins and CBDC)
• Bank deposits
• Digital tokens
• Buildings, apartments, and houses
• Airline tickets
• Physical and digital art
• Licenses
• Services
• Invoices
• Hedge funds
• Equity issuance
• Agricultural products
• Energy Assets
• Commodities (grains, soybeans, wheat, and corn)
• Genomic profiling
• Songs and music albums
• Memberships and subscriptions
• Loyalty programs
• Sports teams (Fan Tokens)
• Gold
• Automobiles
• Social media profiles
• Real estate properties
• Renewable energy projects
• Diplomas, trophies and medals

Future of asset tokenization with blockchain

What does a future with asset tokenization at the epicenter look like? The destiny of asset tokenization is promising, as it can potentially transform how businesses and individuals manage their assets. For example, the CEO of business giant BlackRock, Larry Fink, envisions a tokenized future with optimism.

For the asset management industry, the operational potential of some of the underlying technologies in the digital asset space could have exciting applications. In particular, tokenizing asset classes promises to improve efficiency opportunities in capital markets, shortening value chains and improving costs and access for investors. At BlackRock, we continue to explore the digital asset ecosystem, especially in areas relevant to our clients, such as permissioned blockchain and equity and bond tokenization.

Letter to investors sent by Larry Fink, CEO of BlackRock.

The tokenization application can mean a before and after for many industries, which, hand in hand with digitization, allows access and interoperability to traditional and new markets that emerge in the future. In this sense, estimates and projections leave big numbers as an opportunity for tokenized assets. For example, according to Bernstein, with the momentum of stablecoins, CBDCs, private market funds, securities, and real estate, asset tokenization has a $5 trillion opportunity by 2030.

Analysts at Citigroup believe that $4 trillion to $5 trillion in tokenized digital securities could be issued by 2030. As blockchain technology becomes more widely adopted, mature, and regulated, we will likely see an increase in tokenized assets and greater investor participation in these markets. For this, the blockchain industry and technology will have to overcome different technical, regulatory, and trust challenges to establish itself as the ideal infrastructure for asset tokenization in the future.

Mastercard will test asset tokenization with blockchain technology through its Multi-Token Network. At the moment, companies, institutions, banks, governments, and global entities are exploring the world of blockchain tokenization as a tool based on technology and digitization, with the ability to facilitate the way assets are managed and transferred in a more efficient and accessible way.

Blockchain-built Metaverse is not dead. Nearly 99% of what we buy in the real world is virtual value. These virtual items now live in the metaverse as well. Consider virtual value as culture or symbolic value, brands to differentiate ourselves. Virtual value on which we build our identity. Because, at present, identity is virtual. A virtual identity that entirely belongs to the one who acquires it through NFTs. The knot of identity is in tokenization because it is the link to ownership.

Yat Siu exposed these ideas in an excellent TED talk about the metaverse. One of the best experiences of this summer vacation. Enjoyable, simple, and emphatic. The Enjoyable, simple, and emphatic Hong Kong-based investor and co-founder of Animoca Brands gives us many clues about the meaning of the metaverse.

Rhetorically, the talk attempts to argue against the statement: “The metaverse is dead.” The number of times people declared dead Bitcoin, cryptocurrencies, or metaverse is infinite—even the barely born Web3 ecosystem. But, perhaps as zombies in a zombie society and economy, they are still there. The media is always alarmist, burying left and right to flag novelties. It is debatable to what extent the metaverse is new. Let’s face it: there are always precedents. But what is the innovation that surpasses the metaverse and makes it obsolete?

In responding to such a condemnation of the metaverse, Siu begins by describing this concept’s enormous concrete growth in size and impact capacity. He highlights that millions find employment and economic opportunities in the metaverse. The metaverse built on blockchain creates value. To understand this, Siu asks us to stop thinking of the metaverse only as a 3D virtual reality, as that “place” you go to with expensive VR glasses.

Metaverse blockchain

So, what is the metaverse for this technologist? It is the most advanced experience of capitalist societies. It is the reality of communities that spend more than nine hours a day online. The online realization of capitalism has finally arrived! What there was until now was a transfer of pre-online capitalism to a centralized internet. An online space that, in the words of the speaker, treats us like serfs in the Middle Ages. We work on the internet for free for the Data Lords.

For Siu, the metaverse is the treasure trove of decentralized autonomous organizations (DAOs). It is a space powered by blockchain and Web3, where, with no central authority, multiple communities can converge and collaborate. He is talking about the open metaverse. The metaverse behind these are decentralized finance and DeFi. But, above all, the metaverse in which the product of online work, the data, is for the one who works it because it allows digital ownership. Ownership is a responsibility, but it is what gives us economic freedom.

Beyond economic freedom is the shaping of our identity. For this, it is not only necessary to control the alienation of our work as data producers. What people acquire online must also belong to the person who buys it. Proof of property guarantees the open metaverse, as opposed to what is currently purchased in, for example, video games. Virtual in-game items do not belong to whoever pays for them. Examples of not-owned virtual goods are skins or decorative elements earned in the game. However, a purchased NFT is a part of the metaverse that becomes the purchaser’s property.

In tokenization, the opportunity for the open metaverse and Web3 lies. Tokenization makes us owners in the metaverse and of the metaverse. And in the strength of property rights lies the power of freedom.

Blockchain technology, the foundation of cryptocurrencies, will transform how we invest, pay, or consume.

Why will blockchain change our lives? Blockchain’s practical application is more challenging for ordinary citizens to visualize than the metaverse or Artificial Intelligence. And yet, it promises a major economic revolution. However, before discussing its potential, it is worth defining what we are talking about when discussing blockchain. Its beginnings link to cryptocurrencies, especially Bitcoin. Still, its scope is much broader and will produce significant changes in payment systems – most central banks are already working on their digital currencies – logistics, the video game industry, and the world of investment thanks to tokenization (making a digital replica of a tangible asset).

Blockchain technology is not just a database; it is a group of technologies allowing value or asset transfers without the intervention of third parties. It offers a new model in which a central entity does not verify authenticity but uses a network of nodes -computers connected to the web- involved in blockchain. Hence, no transfer of value – be it money or any other asset possessing some value – is made through an intermediary but through consensus, allowing information to be stored transparently. A blockchain is a chain of blocks with encrypted transaction information on the network. Being interlinked (hence the word chain), they allow data transfer (or value) with secure encryption through cryptography.

“Information transfer is decentralized, validated by multiple nodes without knowing each other. Once added, data cannot be deleted or modified due to cryptographic encryption connecting blocks.”

BBVA.

The big banks are already making accounts of what lies ahead. Citi, for example, has published an extensive report on the economic impact of blockchain. Digital currencies (CBDCs) issued by the world’s biggest economies alone would have a valuation of $5 trillion by the end of this decade and occupy the cell phones of 2 billion people. Ninety percent of central banks run pilot programs using virtual currencies. However, the ECB thinks the new euro will only be available for up to three or more years. There remain unknowns to be cleared up, for example, its effect on privacy.

Blockchain and Payments

Manisha Patel, an IMF finance expert, has some answers. First, the social sense: “Many developing economies are exploring these new digital formats because of their potential to increase financial inclusion. They will achieve this if they are an affordable and widely accepted payment instrument.” But they need extensive internet infrastructure and access to cell phones. That’s the way to overcome the barriers. That remains time and its logic. “Customized proposals in each country may take several years.”

And what will happen to crypto assets if official digital currencies become popular? “Cryptocurrencies will survive as a form of payment within the shadow economy, illegal activities, and tax evasion. They compete with $100 bills,” predicts Kenneth Rogoff, former IMF chief economist. “They will use them for speculation and crime,” corroborates Emilio Capela, partner at McKinsey & Company. But some believe in redemption. Enrique Dans, a professor at IE Business School, values the freedom that comes from not depending on a central bank. And he is enthusiastic when talking about its eight-year-old little brother, ethereum, “an open-source community that, unlike bitcoin, consumes much less energy when mining [manufacturing] them,” he says. “With this technology, the 2008 crash would not have happened″.

Blockchain and Videogames

Another business that sees mountains of money with the blockchain is video games. Last year some 3.2 billion gamers used the blockchain. These guys don’t usually wonder what technology is behind their video games. Still, together with the Web3 ecosystem (investor Packy McCormick defines it as “an internet owned by devs and users, coordinated with tokens”), they will improve the experience when sitting in front of the computer. The consulting firm specializing in this intangible space, Newzoo, estimates that they generate $184 billion. Everything was more or less on track until Bitcoin began to be surrounded by controversy. Fraud, theft, and the bankruptcy of the FTX platform are memories that damage the memory of the crypto world.

Although the consumer sector also has a hand in this game (the world of distribution will gain efficiency with the massive use of blockchain systems), the two technologies (blockchain and tokenization) want to share the future. Tokenization changes everything because almost everything is tokenizable. A line of credit, the minimum investment in venture capital, the purchase of a house, the rights to songs, image rights, shares, currencies, gold, a painting by Picasso… Digital assets democratize – argue their advocates – investments created for the elites or that did not even exist in the financial markets.

“Tokenization can transform financial and non-financial infrastructure and public and private markets over the next 5 to 15 years,” estimates Alkesh Shah, head of digital asset strategy at Bank of America Global Research. The tokenized digital equity market is estimated to reach $4T to $5T by 2030. “It already makes it possible to reduce credit risk, increase the liquidity of previously illiquid assets, or allocate capital more efficiently,” says the analyst. There is even a painting circulating these days, valued at more than $50 million, and its owner is studying the possibility of tokenizing it through NFTs (non-fungible tokens). In other words, unique and unrepeatable.

Finance and Tokenization

And then, suddenly, someone wants to reinvent finance. “The next generation of markets, the next generation of stocks will be their tokenization,” advanced Larry Fink, chairman and founder of BlackRock, the world’s largest asset manager, in November 2022 in The New York Times. If Picasso reinvented painting by dispensing with the vanishing point, technological disruption is poised to reimagine finance. Helping, too, are two inseparable sciences: sociology and cryptography. Sixty-seven percent of the millennial generation (born after 1981) worldwide prefer to be guided by recommendations from a computer (robo advisor) when investing. In the coming decades – the Schroders management firm’s experts say – the former baby boomers (between the late 1950s and 1970s) in the United Kingdom will endow 5.5 trillion pounds to the millennials and Generation Z. A figure that in the United States ($68 trillion) resembles a new Independence Day. “Currently, tokens are not defined or regulated consistently across regions, but administrations will address this gap,” Schroders predicts.

Well, tokenization (blessed by the giants of Wall Street) has already reached the economy. Venture capital firms such as KKR, Hamilton Lane, and Apollo are digitizing some of their funds through blockchain platforms that many followers of this new algebra know: ADDX, Avalanche, or Polygon. On the same street, other giants – Goldman Sachs, HSBC, JP Morgan, Citi, and Société Générale – are designing their structures where to trade digital assets. “It’s an opportunity to develop the use of these services on a large scale,” notes John Gladwyn, manager of Pictet Digital. Indeed, Hamilton Lane has lowered the minimum investment for some of its funds from $125,000 to $10,000. And late last year, KKR tokenized its healthcare fund in Avalanche. Even the market value of tokenized gold topped $1 billion in March.

Constant innovation

Financials know they must constantly innovate or, like a repeated dream, will be worthless. Until now, crypto had a big problem of volatility. The way around this barbed wire is stablecoins. The currency is pegged to a currency like the dollar to bring stability. It was a market for $7.8 trillion (about seven trillion euros) in transactions last year. But hackers appear, who have never left, or speculators, who are remoras of any ecosystem where seas of money flow. Doubts emerge. “Stable versions are of little use as stores of value because it is never clear whether they have enough collateral [assets] to stabilize the currency in case of attacks,” warns Mr. Montalvo, professor of economics at Pompeu Fabra University (UPF).

Within the uncertainties of any technology, one of the areas where there is more consensus lies in Smart Contracts. They allow to execute a pre-established when a series of requirements occur. If “this” takes place, then “that” happens, guaranteeing a high level of accuracy and compliance,” says Mr.Casado, head of digital assets at KPMG. It works through the blockchain, so the agreement terms lie inside a distributed and decentralized database. You can view but not modify them. “A clear beneficiary will be international trade, which uses a huge amount of documentation and conditions and could be automated with standardized rules and simpler options for negotiation,” Montalvo.

Smart Contracts and the Supply Chain

With this type of contract and the tokenization of the supply chain, those who make a fortune by counterfeiting, for example, Louis Vuitton handbags, would have a hard time, “Dolce & Gabbana or Gucci have already launched experiments selling digital garments protected within that blockchain,” says Javier Molina, an analyst at eToro. He adds, “If, as a customer, I buy the NFT or, say, a digital scarf, I have the guarantee that only I am the owner.” Porsche and Mercedes are also getting in on this technology.

It’s not just money. In developing countries, adulterated drugs (between 10% and 30%) cost a million lives a year. Hence the value of tracing, of following the trail. “Walmart and IBM have managed to know the journey of orange juice from a farm in South Africa to the US consumer in just three seconds,” recalls Daria Krivonos, Copenhagen Institute for Future Studies CEO. Around 20% of the top 10 global food companies will use blockchain by 2025. There they coexist with entrepreneurs. BlockBar is a blockchain-driven platform allowing luxury beverage brands to issue NFTs on rare wines or spirits. The goal is to own and sell these exclusive bottles on the secondary market. “The company stores them in a state-of-the-art facility, and they can be shipped worldwide or picked up at more than 250 duty-free outlets,” clarifies its CEO, Sam Falic.

The brands’ commitment

An ecosystem is gradually taking root whose fertile soil is that of blockchain and where brands are building community. Adidas has created an NFT collection called In the Metaverse, Balenciaga has designed different outfits for the avatars of the Fortnite game, Gucci sold for $4,000 virtual handbags on the Roblox video game platform, and Nike acquired the digital sneaker manufacturer RTFKT Studios.

But this technology not only lives in that thin digital air, it also touches the ground. “The application of digital technologies and blockchain – if you adapt them to local needs and we ensure that small producers can also access them – could generate great benefits to the economy as a whole and achieve greater efficiency, productivity, resilience, and sustainability,” lists Máximo Torero, chief economist at the FAO (Food and Agriculture Organization of the United Nations). And he warns: “There is a risk of aggravating inequalities if this progress remains inaccessible to women, young people, or small producers.”

Tokenization and Music

All this is happening without forgetting that tokenization is a technology that also affects music. The sale of the music catalogs of successful artists to companies such as Hipgnosis – run by the Canadian Merck Mercuriadis – is generating billions. The singers earn a lot of money, frees them from any pressure for the rest of their lives, and the companies make money through reproduction rights. Universal Music Publishing has paid some $600 million to Bob Dylan to take over the catalog and recording masters, Bruce Springsteen has sold 300 songs, 20 studio albums, and 23 live albums for approximately $500 million, and Sting sold his entire output to Universal after receiving more than $300 million. Some 130 creators (Paul Simon, The Killers, Phil Collins, and Neil Young) have sold their works.

However, investing in intellectual property was only possible for some people. In this situation, blockchain technology, tokenization, and its ability to asset fragmentation hits in. The co-producer of Rihanna’s track Bitch Better Have My Money has raised $63,000 (€58,000) after tokenizing the rights to his song with NFT. He split them into 300 parts for $210 via the AnotherBlock platform, and 205 people purchased them.

Selling painting leftovers as art

Converting masterpieces into digital assets opens up a big business and raises ethical questions. Transforming work into a digital asset to exploit its value divides the art world. In the final months of 2021, NFT-based crypto art was going through its winter. After artist Beeple (Mike Winkelmann) bid an NFT (“Everyday: The First 5000 Days”) for $69.3 million at Christie’s, almost the entire industry thought the most absurd art orgy in history was over. “They are a scam just like cryptocurrencies,” qualifies independent curator Bartomeu Marí. “Right-wing anarchism was looking for a means to escape the financial control of the States and not pay taxes. I haven’t seen any fabulous works of art in that format.” But the pursuit of money by human beings is exhausting. Jackson Pollock’s studio has turned leftover paint staining the studio floor into NFTs. In partnership with the Web3 Iconic platform, it produced four in a run 100. He marketed them online on July 19. They sold out (in dollars and ethereum) in just three hours for about 400,000 euros. Pollock worked by letting the paint drip through the wooden handle of the brushes.

Art and NFTs

Some of the most prestigious galleries in the world, such as Pace, show Rafael Lozano-Hemmer’s works. One of his pieces fetches up to one million euros. The end of the conversation explains his principles. “I have ensured that my name is not associated with NFTs because of their intricate relationship with cryptocurrencies.“. He advocates that it can be a way of life for artists from underrepresented communities in the marketplace. “However, I’m less impressed with creators who have a privileged position – think myself – and still produce them,” he criticizes. In nine days in April, British artist Damien Hirst pocketed €19 million from selling 5,508 paintings from his artificial intelligence-generated spiral series. Three hundred ninety-nine were NFTs. Nevertheless, institutions such as Lacma, Castello di Rivoli, Buffalo AKG, and the Pompidou have included them in their collections. In the new, there is always the doubt between what will perish and what history will disdain.

But none could commit such a failure with old masters. In July last year, The Italian government stopped selling NFTs of masterpieces from the country’s museums. To get about 70,000 euros for the Tondo Doni (Uffizi, Florence), by Michelangelo, is a business failure. With the pandemic, many sought funds to survive. Italy will not sign any more contracts: it wants to protect its cultural heritage. The head of one of the great Spanish art galleries – who requests anonymity – claims physical possession. “The collection belongs to the whole country. It would devalue the works if we enter into these digital sales to specific individuals,” he reflects. However, the Thyssen Museum decided to use this tool with the canvas Les Vessenots en Auvers (1890) by Van Gogh. The institution sells 100 versions for 30,000 euros, which you can purchase on Telefónica’s NFT Marketplace.