Jean-Michel PAILHON: The market of digital art on blockchain to grow to 10Bn$ by the end of 2024
"After a buoyant 2021 and two very difficult years (2022 and 2023 until the end of June) we have seen more good news coming up in the sector of digital art"
by Aida Dzhanhirova
The market of digital art on blockchain to grow to 10Bn$ by the end of 2024
At the beginning of the year, various analytical reports on the results of the past year emerge. At the NFT Factory, a specialized space in Paris for meetings and ideas exchange in the realm of innovations and NFTs, a discussion on digital art utilizing blockchain technology was held.
The report "Digital Art on Blockchains: The Next US$1 Trillion Asset Class", was presented by the Grail Capital investment and advisory firm on 08.02.2024.
Cultural Singularity conducted a quick interview on the digital processes with one of the speakers, Jean-Michel Pailhon, co-founder and Chief Investment Officer at Grail Capital.
The photo was provided by Grain Capital
CS: How long has your organization been researching the digital market?
JMP: Grail Capital has been set up in February 2023 so that’s only for a year that we’re doing it professionally and full-time. But Tim (Salikhov, my co-founder) and I (Jean-Michel Pailhon) have been collecting digital art on blockchains (most of the time coined as “NFT art”) since 2021 and 2020, respectively. As we both come with an investor background, we’ve always approached our digital art collection from a cultural and investment standpoint. Therefore, our collection and investment approach as well as our database of artworks and artists are 3 years old.
CS: On which blockchains is the situation most active in digital art?
JMP: As of the end of December 2023, Ethereum-based digital art is still the largest by a significant margin: representing 85-90% of total NFT art market capitalization and 75% of all-time volumes. The situation has nevertheless evolved in the last 2-3 months of 2023 where Bitcoin / Ordinals and Solana-based digital art and collectibles markets saw a massive increase in activity. In December 2023, Grail Capital estimated that 40% of the volume took place on Bitcoin / Ordinals, 35% on Ethereum and 20% on Solana.
CS: In your presentation, you highlighted two main directions in digital art today – generative art and AI-driven art. Could you please characterize the dynamics of both directions and their prospects and peculiarities?
JMP: Those two segments of the digital art market on blockchains (Generative art and AI art) have two different past trajectories but they are somehow related. Both are art currents that existed before the NFT era, but they’ve found their perfect medium of creation, storage, and distribution (transfer) of their digitally native artistic creation thanks to the non-fungible technology. Before NFT, both would exist but their display, rarity check, provenance guarantee, and distribution capacity were experiencing lots of friction. Those were strong blockers to their actual growth in cultural significance and therefore in economic value.
In 2021 for Generative Art and 2023 for AI art, we saw a new generation of collectors entering the market and starting to collect NFT-based collections that they immediately recognized as iconic, culturally significant, and museum-ready.
The AI art segment took more time to get recognized by collectors and it was only at the start of 2023 that the growth in popularity of ChatGPT and MidJourney (among others Large Language Models based IA software) led to AI art collections from the previous years (2018-2022) gaining large attention and price appreciations. Collectors have basically bet on the pioneers of the art movement, before it was easy to create art with an AI tool, basically.
CS: What advantages of the metaverse do you see for the artistic environment? Could you name the pioneers of the AI and generative art scene? Who are the digital artists of today who attract attention and are most active?
JMP: The metaverse might have generated a lot of expectations in 2020 and 2021, with an experience that so far failed to really be seen as game-changing for digital art and culture. But if the experience is not yet “as good as” in real life, we can expect that the continuous progress in AR and VR technologies (such as the recent Apple Vision Pro) in the coming years will contribute to - finally - the emergence of a fully immersive metaverse experience for art and culture that really compete with on-site visits.
There are many generative and AI digital artists on blockchains who attract the attention of the public, art institutions, auction houses, and collectors. We can arbitrarily name Tyler Hobbs, Refik Anadol, Claire Silver, Robbie Barrat, Erik Calderon (aka Snowfro), Dmitri Cherniak, and Roope Rainisto. But many more are building great art in digital form (and sometimes also in more traditional forms) that might enter the greatest collections of both museums and art collectors in the coming decades like Emily Xie, William Mapan, Matt Kane, Pindar Van Arman and so many more that I forget.
CS: Which of the existing metaverses are most actively attracting digital artists to implement projects in their virtual environments?
JMP: After a growth in interest in 2020 (because of Covid) and in 2021 (because of the NFT discovery bubble), metaverses for art have lost traction, and apart from a few artists and collections who are still using them, I don’t know a lot of active and really dynamic projects going on there. It might change in the (near) future, obviously, especially with the arrival of new AR and VR technology that rapidly gains mass market adoption.
CS: How do you understand Singularity and when it may come?
JMP: If we take the definition of Singularity as the point in time when advances in AI can create machines that are smarter than humans, it seems we might be seeing this in the next 10 years. I don’t have any crystal ball though and I like to see myself as an optimist technologist, who believes technology can do good (and has - mostly - done so since we went out of our caves ten thousand years ago). So, I’m just a spectator there and it looks as if the World has many other problems right now that are only created by human beings. So, I tend to believe that technology might be able to solve some of our biggest challenges, especially if it is smart enough to outpace us in many fields.
CS: How would you describe in short, the situation in digital art and culture at the beginning of 2024? What are real scenarios?
JMP: In early 2024, the situation for digital art and culture on blockchains is relatively like moments in history after other art currents’ emergence and technological breakthroughs: a quieter moment for creators, collectors, and institutions.
CS: Can you predict some growth in the market?
JMP: After a buoyant 2021 and two very difficult years (2022 and 2023 until the end of June) we have seen more good news coming up in the sector and we see many interesting digital art projects, exhibitions at international art fairs and collectors donating digital artworks to museums permanent collections.
The digital art and culture market on Ethereum was 7Bn$ at the end of 2023 on adjusted market cap terms. We expect the market to grow to 10Bn$ by the end of 2024.