Real Or Illusory? A Watch Collector’s Foray Into The World Of Digital Collectibles And NFTs
Do you collect things?
And by “things,” I’m not necessarily referring to watches, but to other items including books, toys, sports memorabilia, film props, coins, stamps, and photographs – all of which make up a global market for collectibles that amounted to $370 billion in 2020.
While watch enthusiasm fills many of my waking hours, I have managed to accumulate a few other items that fall into the “collectible” category, based in each case almost exclusively on an emotional tie to the piece or its subject matter.
My favorite is an autographed example of the famous 1965 Neil Leifer image of Muhammad Ali standing over a fallen Sonny Liston. As a side note, one of the best bits of this image is the face of a photographer, visible in the space between Ali’s legs, who realizes that he sat on the wrong side of the ring that night.
Even with the recent boom in sports memorabilia prices, this probably isn’t that valuable an item. To the extent that it has value, however, comes down to four things: the importance of the photo, the rarity of the print, the autograph, and – very importantly – the assurance that it is an authentic item.
Above, you can see the seal and authenticity certificate that accompanied the framed image, and on the lower right corner of the photographic print itself there is another small gold seal. Seems kosher, but wouldn’t it be great to have irrefutable evidence that this photo and its inscription are authentic in every way, down to the serial number?
Fast forward: trends converge
Well, it’s 2021 now and several things have happened in the years since I bought that photo at a charity auction.
- The power and sophistication of software for computer-generated imagery has increased exponentially, opening the door to create large volumes of art, including videos and vector graphics that exist only in digital form.
- With the boom in digital media, including social media, even photographs of real physical objects are stored and displayed predominantly in digital form. Put another way, when was the last time you printed off a photo and put it in an album?
- Blockchain technology now allows almost foolproof authentication both of financial transactions and things like digital video and photo files that are uploaded securely in a way that “mints” them as tradeable tokens (called non-fungible tokens or NFTs) that live on a Blockchain.
In short, we have a flood of potentially collectible digital artworks meeting a secure way of buying and selling that ensures their authenticity.
The watch world was not deaf to these trends. On March 31, 2021, Jean-Claude Biver and Swiss cybersecurity firm WISeKey announced the “world’s first NFT auction of a luxury watch,” specifically a “digital twin” of Biver’s Hublot Bigger Bang All Black Tourbillon Chrono.
Despite the hype, that auction failed to meet its reserve; but on April 7, 2021 Jacob & Co. did sell a video NFT of a virtual watch based on its Epic SF24. This ten-second animated rendering adds a tourbillon to the design of the original watch and displays cryptocurrency abbreviations rather than city names on its split-flap display – and reportedly sold for the equivalent of $100,000.
A little help from my friend
Just as Biver and Jacob were getting into the cyber-asset act, artist Alexa Meade contacted me to ask whether I had any thoughts on the suitability of her work for NFT auctions. I rapidly confessed my ignorance on the topic but did put her in touch with a friend in the art world who could assist, leading to Meade’s first NFT auction, a successful collaboration with model Allison Harvard.
As far-too-generous payback, Meade volunteered to spend time helping me to set up my own NFT auction of some of my watch photographs.
She had faith in me, but I did wonder the following.
- Could photographs of actual watches (as opposed to static or animated digital renderings of timepieces) find an audience in the NFT world?
- Would potential bidders be interested in an NFT created by an independent artist rather than by (as in the case of Biver and Jacob) the creators of the corresponding physical watches?
- Would my personal outreach through networks of friends and my social media accounts be sufficient to draw viewers – and bidders – to the auction?
- Were my thoughts on potential auction pricing justified – or, more fundamentally, would anyone actually bid?
I thought about it a bit and reached four conclusions.
- Nothing ventured, nothing gained! Some folks scoffed when I moved away from the forums to start contributing to Quill & Pad in 2014, and I’m sure that a few chuckled as well when I started my Instagram page a year or so later, but those decisions are looking pretty good now.
- If people would be willing to pay actual cash for a book of my photos or a large photographic print to hang on their office walls, why shouldn’t at least some be willing to pay for unique access to an authenticated digital file containing one of my original images in full resolution (rather than the downsized and compressed versions we use here)?
- I’d have the best chance of success on the first go if I used images of an unusual watch rather than yet another set of photos of the latest Patek Philippe Nautilus or Audemars Piguet Royal Oak. And some unusual perspectives would probably help as well.
- There would likely never be a better opportunity to get up to speed quickly and successfully than the one that Alexa Meade had put on the table.
Staging the auction: the abridged version
I won’t drag you through each and every keystroke of executing an NFT auction, but let’s start with point three above: the photos.
I’m fortunate to own several pretty rare watches, but as a combination of striking visual appeal and rarity the Patek Philippe Reference 2526 “Gobbi Milano” is probably at the top of the list. Reference 2526 is a legendary Patek Philippe reference as the first self-winding watch made by the company; my particular example is not only the relatively unusual yellow gold/black enamel dial variant and double-signed on the dial by retailer Gobbi Milano, but is the only such combination certified as original on its Patek Philippe extract from the archives.
And mine is one of three Reference 2526 watches with a custom Voutilainen-Cattin display back, showing Caliber 12-600 AT in all its glory.
I selected a few of my favorite images of the watch and took a few new ones to fill out an assortment of six photos for the auction, in keeping with Meade’s advice on how many to include.
The image above was perhaps most special in that it is a composite of two images shot with the watch turned 180 degrees in between and then combined to “erase” the body of the rotor and reveal the entire movement beneath.
With photos in hand, the next steps were pretty mechanical: we used MetaMask to establish a cryptocurrency wallet and Wyre to transfer in enough money using my bank debit card for the “gas” fees needed to fund the Blockchain transactions involved in the auction.
The NFT art world is Ethereum based, so I bought a small amount of Ether – my first venture into the cryptocurrency world. There’s a decent amount of secret-agent-style language, lots of buttons to click, and arcane passwords and phrases to record (and not lose), but it does create a sense of security.
Onward to OpenSea, a site both acting as a consolidated source for NFT auctions on other sites such as Foundation and hosting auctions as well.
For a new and little-known exhibitor like me, OpenSea has advantages, including a one-time fee for sellers rather than per-listing fees. And for the environment, it mitigates some (but not all) of the concerns about the energy consumption of Blockchain use by bringing the Blockchain into play only when a transaction is completed; so no sale, no greenhouse gas load.
We selected the sequence in which the images should appear in the auction, picked profile photos, and worked on titles and blurbs for each image and for the overall page. Meade’s guidance was tremendously useful here, she policed each caption to ensure consistency of form and converted my page-long bio into the single clear introductory sentence that now appears under my photo on OpenSea.
Other decisions included whether to conduct a standard ascending value auction or a descending “Dutch” auction in which the asking price drops over the auction and the first bid wins.
OpenSea made the second choice fairly easy as a minimum reserve price of 1 ETH (a little over $2,000 at the time of the auction) is required for an ascending value auction and I wasn’t so vain as to think that my photos would do that well! After some discussion, we settled on a five-day Dutch auction with the asking price slowly dropping from 1 ETH to 0.1 ETH.
As a final step, Meade helped me put together promotional images to post on my various social media accounts. One limitation of the current state of NFT auctions is that the sites are poorly organized and not very searchable, so it’s up to the artist to get the word out that their work is actually on sale.
Over the next few days, I regularly posted the promotions, pinged my contacts, and monitored the responses from both friends and online followers.
What happened and what I learned
On the final day of the auction, with prices for each image trending to the closing price of 0.1 ETH, a welcome alert arrived from OpenSea: one of the NFTs had sold!
The winning bid entitles the winner to private rights to view the full-resolution image now residing in their own Ethereum wallet and to sell the NFT in the future just as you would sell a physical watch, with a small percentage of any resale revenues reverting to me.
The buyer also has bragging rights of having bought the very first timepiece-related NFT from a private artist ever sold, and (in the unlikely event that I’m onto something significant here) the only NFT to sell from my so-called genesis sale.
In addition to learning that there’s at least one person within my current range of communications willing to part with the equivalent of 200 bucks for one of my full-resolution watch images, I now know enough about the mechanics of conducting these auctions to repeat the task in the future and to consider adding features for winning bidders such as including the source images for a focus stack along with the final stacked image within an NFT.
I also learned a fair amount about how members of the watch community, including close friends, view the world of digital collectibles, and you likely won’t be surprised to learn that the comments have ranged from strong support to bafflement to ridicule.
I’ll give a special tip of the hat to a pal who suggested that it wouldn’t be too surprising if some dimwit started identifying himself as “Non-Fungible Time,” inspiring me to launch the only appropriate response: @nonfungibletime.
Are NFT-based digital collectibles the future of art? I don’t know.
Can Blockchain or similar technologies overcome the immense energy use and greenhouse gas emissions associated with peer network authentication today? I’m told yes, but I can’t verify it based on my own knowledge.
Will digital photographs of “real” objects, including luxury goods, emerge as a robust NFT category? I don’t know.
In an increasingly digital world, does it make sense that authenticated digital collectibles will have inherent value? Of that I am sure – and I’m keen to participate in that journey, if only on a small scale.
For current and upcoming NFT auctions from GaryG, please visit opensea.io/accounts/
Quick Facts NFT, Unobstructed movement view of Patek Philippe Ref. 2526
Description: composite digital image created from two source image stacks, offset 180 degrees and combined to create the illusion of the removal of the automatic winding rotor
Image dimensions: 3871 x 3871 pixels
File size: 5.19 MB
Date original images photographed: April 9, 2020
Shot with: Hasselblad X1D II with XCD 120 macro lens; f/16, 1/350, ISO 100
NFT Market value: 0.11568 ETH on April 13, 2021
You may also enjoy:
How The Watch Industry Is Testing Blockchain And Cryptocurrency, Plus Five Brands That Have Already Waded In
Mixing Money And Watches: A Collector’s Lament On The Current State Of Our Hobby
Becoming Horological Art: My Transformational Experience With Alexa Meade And The Audemars Piguet Equation Of Time
Watches And Art: At Baselworld 2017 With Artist Alexa Meade And Maurice Lacroix
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Feel free to contribute!
I can see understand the advantage of using Blockchain to track/manage the NFT, but why is the NFT art world Ethereum based? Why can’t sellers and buyers just use traditional currencies like traditional auctions as well as accepting crypto currencies (perhaps for those wishing to pay with undeclared funds?).
And when the world’s major tax offices start to crack down on money laundering at auction houses (as they are belatedly starting to do https://www.ft.com/content/c7883919-26e5-49f5-816b-de1747232506), how easy will it be for crypto-based sites like OpenSea to validate their buyer’s source of funds?
Further reading https://www2.deloitte.com/content/dam/Deloitte/lu/Documents/risk/lu-forensic-aml-art-market.pdf
NFTs are based in Ethereum because Ethereum is Turing complete. It is, in other words, a distributed programming language capable of executing code such as ERC-721, ERC-20 and other future standards that create mathematically, cryptographically unique certificates. Ethereum is not the only blockchain that permits this, but it is the most open and it is the front runner. When trading NFTs on OpenSea, the token in question is native on the Ethereum blockchain. Thus, the transaction must ultimately be executed on the Ethereum blockchain in order to perform the ownership transfer. If you buy a car, you must ultimately transfer ownership at the Department of Motor Vehicles. With NFTs, the DMV is the blockchain. Buyers and sellers can indeed transact in any currency they choose but in order to use the cryptographic properties of NFTs, there *must* be a transaction on a blockchain and by having the value conducted in Ethereum, other aspects of the sale are protected by the inviolability of the Ethereum blockchain.
Britain’s crackdown on auctioneers is ultimately useless because the lion’s share of large art transactions happens within and around freeports. Most high value art never leaves one, in fact, because tax implications of purchases can be avoided entirely. Applying taxation to the blockchain will be legally fraught regardless of the jurisdiction in which it is sought in no small part because the public nature of blockchains renders them stateless.
For further reading on the vagaries of the contemporary art market, I wholeheartedly recommend Don Thompson’s “The 12 Million Dollar Stuffed Shark: The Curious Economics of Contemporary Art.” It’s a gripping and engaging read about a subject that you think is boring but is actually wild. For further reading on the fundamentals of Turing-complete blockchains, I recommend Chris Dannen’s “Introducing Ethereum and Solidity”, a 101-level look at the programming language that makes Ethereum versatile.
Thanks for the very useful tutorial, Seth! By the way, if you ever have the opportunity to tour one of the big freeport art warehouses and can arrange a plus-one slot, I’m your man…
Ian, you incorrectly assume that all potential NFT buyers are US-based and are therefore subject to its taxation regime. Many first-world jurisdictions have no cap gains tax for crypto, including S. Korea and Singapore. You also incorrectly assume that large auction houses actually care where a bidder’s money comes from in anything more than a superficial and platitudinous manner.
Anyways, Ethereum isn’t the only NFT platform but it’s definitely the most “crypto-native” one. Other more fiat-friendly blockchain options include FLOW and WAX, which underpin NBA Top Shot and Topps MLB, respectively. These “friendlier” options accept credit card payments but you still need a blockchain on the backend or else it’s not an NFT and there’s no actual provenance.
no, I’m not assuming NFT buyers are based in the US; the UK was investigating money laundering with auction houses before digital currency entered the picture and I’ve no doubt other countries are doing the same.
I’d be more than pleased to have the security of Blockchain coupled with the robustness of denomination in a fiat currency such as dollars. For now, that isn’t viable in the NFT art world as the Ethereum boat has to some extent sailed, but my (marginally competent) understanding is that there is no reason why dollar-based Blockchains wouldn’t be entirely suitable.
Thank you very much for this, Gary. I’m routinely called a criminal for owning cryptocurrency, and have been told by money managers that they’ll deal with drug dealers but they won’t touch crypto. It was extremely refreshing to read an open-minded how-to on the one thing that posturing intellectuals hate more than Furries.
It’s worth noting that the watch industry has been an early adopter of NFTs due to their features of authentication. Arianee, a French blockchain startup, already provides Ethereum-based authentication for Richemont, Breitling, Audemars, MB&F and Roger Dubuis.
Very pleased you enjoyed it, Seth! I’m still very much a noob in this arena so I’m sure there are some errors in my descriptions, but I wanted to share my experience and try to describe this world from a new adopter’s perspective.
Good point on the use of Ethereum authentication in the watch world — Kurono is also launching this for their own watches, which I find interesting given their relatively low price points and Blockchain gas costs.
And I had to chuckle at your mention of Furries — we have a couple of friends who are in that community, and they will be pleased to hear that there is something less mainstream!
Gary, wonderful article! Love that you’re staying so curious about this very exciting new space.
Can’t say it was surprising that Biver’s approach missed and that yours hit. Purely digital offerings are definitely more “on-brand” in this space. And it doesn’t hurt that the Voutilainen-Cattin display back is utterly stunning…
Wishing you and Alexa continued success in your respective journeys!
Thanks, Pete! Old dog, new trick, I guess 🙂
I think that much of Alexa’s art is well-matched to the NFT world, and she is working with Alli Harvard and others to create more video and stop-video content that will also suit. And, the warehouse of painted artifacts (clothes, furniture, props, etc.) that she has accumulated should benefit from Blockchain authentication as well, when and if she chooses to sell some of them.
And the tip of the hat to Voutilainen-Cattin is more than deserved!
All the best, Gary