Written by Adam Szymanski, PhD
On April 22, 2022, NFT company The Holoverse auctioned a hologram NFT of Leonardo Da Vinci’s La Bella Principessa on MakersPlace marketplace. The NFT was sold for a price of 35 ETH ($104,211.45).
The 24-hour online auction period opened on April 21st with a bid just above the reserve price by the well-known NFT collector @ModeratsArt. The opening bid of the night turned out to be the only bid, as no other collectors were willing to entertain the six-figure price tag for the one-of-a-kind NFT.
It’s difficult to tell if The Holoverse considers their opening auction to be a success. On the one hand, they did manage to sell the world’s first holographic NFT for a sum which is not insignificant. This is commendable given that the market for holographic NFTs is in its infancy and without any depth of established buyers. However, the fact that a bidding frenzy never materialized for the piece and @ModeratsArt was alone in showing serious interest demonstrates that the project did not find an audience with either the traditional world of fine art buyers, nor with NFT enthusiasts. Given that the reserve price of the La Bella Principessa NFT was $100,000, it is safe to assume that The Holoverse was hoping for it to sell for much higher than that amount.
The underperformance of the auction does not necessarily mean that the buyer came away with a good deal, either. Only time will tell, but I would not be surprised if 35 ETH is the highest amount this NFT will ever sell for, especially if the price of ETH continues to increase.
Discerning the value of NFTs is admittedly very difficult, as their value depends on a combination of dynamic market factors which are still in their nascency. Here is my hypothesis on why the La Bella Principessa NFT will struggle to see a positive return on investment for its buyer:
1. It is not an original work of art.
This may seem obvious, but it needs to be said: the hologram reproduction of Da Vinci’s painting is not an original work of art. It is precisely that — a reproduction. The Holoverse company has clearly put lots of effort into the design of this product and all indicators suggest that it is a very high-quality reproduction of aesthetic beauty which could serve as a sought-after addition to various interior design schemes. The Holoverse has put an emphasis on the elegance of the glass holographic display case and on the crispness of the digital reproduction.
However, this NFT project is an iconic representation of an original physical painting which was produced during the Renaissance. The NFT is not commissioned by Leonardo Da Vinci, nor does it add anything to the original work of art. It is a derivative product designed to evoke the beauty of an original work of art.
2. It is not a blue-chip work of art
One of the reasons that blue-chip art is an attractive alternative investment class is because it has historically proven its tendency to appreciate in value. Blue-chip art is generally understood to include artworks by high profile artists which sell for over $1 million. Artworks with a market value of less than $1 million — much like microcap companies — are very uncertain investments with a high probability of trending towards zero with time.
Da Vinci’s painting La Bella Principessa, if it were to come to market in the future, would very likely represent a positive return on investment for its anonymous owner. Its value is estimated at over $150 million. If the relevant historical data trends are any indication, The Holoverse’s La Bella Principessa, simply by being worth a fraction of a percent of the original Da Vinci painting, is much less likely to retain its value.
3. It will not be coveted by museums
When gauging the value of an NFT, it is helpful to think about whether or not it could one day be acquired by a prestigious museum’s permanent collection. If museum visitors were offered a holographic reproduction instead of Da Vinci’s original painting, I imagine that they would feel short-changed, since a digital reproduction of a painting does not posses the aura of the original painting.
Due to the fact that illustrious paintings like Da Vinci’s currently sit in free port storage units, hologram NFTs are being floated as a way to experience paintings that would otherwise be inaccessible to the public. While there are certainly educational merits to this mode of digitally representing a painting that is stashed away in storage, it is hard to ever imagine a museum exhibit being made up of anything other than the original paintings.
Were holograms to be included in an exhibit, they would serve a supplementary function, the way that documentary videos about a given painter or historical epoch are often used to contextualize original artworks. If the La Bella Principessa NFT does not figure to star in any museum shows or be a sought-after addition to a museum’s collection, either now or at any point of time in the future, then it is hard to imagine it garnering serious attention from fine art investors.
4. It does not belong to a series
It is commonly understood that works of contemporary art which appear in a series fare better on the art market than artworks which are solitary creations. Jeff Koons has capitalized on this principle throughout his career by creating series of identical sculptures. For instance, in May 2019 the Jeff Koons sculpture Rabbit (1986) sold for a record $91.1 million. It is one of a series of three. A similar principle holds true for the works of Andy Warhol, Damien Hirst, and other darlings of the art market.
La Bella Principessa NFT is a solitary art object which will not benefit from the market’s unconscious penchant for series.
5. It is not crypto-native
Unlike the most successful NFT projects which exist first and foremost as NFTs, and are thus digitally native, this project does not emerge organically from crypto culture. One of the reasons a project such as Cryptopunks has been so successful is precisely because it is an organic expression of a unique historical moment in crypto.
When art historians look back on the NFT Renaissance of the 2020s, will La Bella Principessa stand out as having shaped the artistic landscape of the period?
6. There is no community
The desire for belonging is one of the main drivers behind the commercial explosion of NFTs over the past year. Communities make or break NFT projects. People are willing to pay such exorbitant prices for a Bored Ape Yacht Club NFT because they want to join the club and posses the privileges which come along with membership.
The lure of community has also led to some of the biggest disappointments in the NFT space as it has been marred by dishonest projects which promise social belonging, only for buyers to discover that they bought in to an imagined social group that never really existed. Nevertheless, an active community which is large enough to be recognizable, while also small enough to be exclusive, seems to provide a reliable level of price support for socially oriented NFT projects. La Bella Principessa will not be able to benefit from the price floor that is created by the desire to belong to a socially valuable group.
Conclusion
In due time, we will have clarity as to whether or not the 35 ETH purchase of the La Bella Principessa NFT turns out to be a good investment or not. In the meantime, we can continue to ask tough questions about how digital assets are valued and chart the qualities by which the most successful NFT projects differentiate themselves from the rest. In the short term, I expect there to be broad divergence between artistic value and market value, but over the long run, as the historical and artistic significance of certain collections comes into view, the market will have plenty of opportunity to prove its pricing efficiency.
