Proof of Artwork: Ryan Zurrer on His $29 Million Purchase of Beeple’s ‘Human One’
An exclusive interview with Ryan Zurrer who just bought Beeple’s “Human One” NFT for $29 million, including “proof of artwork” and Metcalfe’s Law
Ryan Zurrer ducked into a backroom at a charity event in Miami last week to bid on the latest non-fungible token, or NFT, by the digital artist Beeple. He’d been advised to go into the Christie’s auction powerfully, not timid and holding back until the last second, but active and energetic.
It worked, and after a few celebratory moments with his two colleagues, he closed his laptop and rejoined the Multidisciplinary Association for Psychedelic Studies fundraiser having just dropped $29 million on the Beeple NFT “Human One.”
It’s the second-highest price paid for an NFT. Beeple, who irl goes by Mike Winkelmann, snagged the first spot on that list when his “Everydays: The First 5,000 Days” sold for $69 million in March. Zurrer, a former chief executive of a Brazilian alternative energy company who fell in love with crypto early, was ready to pay more.
“There has been a new energy and a very positive, uplifting vibe that’s been brought to crypto,” Zurrer said in an interview. “It’s melding with the art world, both in the case of fine art as well as in the case of collectibles.”
NFTs of course remain very risky as investments for most people. While the NFT craze of 2021 has made many artists rich, it’s likely that almost all current NFTs will be next to worthless in a few years. Beeple has said so himself, that only a few artists work survives the test of time to remain valuable. Yet the NFT form holds the potential to evolve into new uses that are only just being discovered, like providing a unified digital identity through your avatar.
Zurrer, along with Alex Van de Sande, was among the very first people to get into Ethereum in Brazil. He played a pivotal role in helping resolve the DAO theft of 2016 by donating tokens to the white hat hackers who were trying to prevent more Ether from being stolen. He went on to co-found Polychain Capital, one of the most successful early investors in digital assets. Now he helps run Dialectic, a private office aimed at helping the crypto newly rich manage their wealth.
Rags to riches
He goes way back, and has seen many of the people around him, including himself, amass great fortunes. Yet the relatively recent rise of digital artists and their newfound financial and creative freedom has affected him like no other part of crypto so far.
“My favorite story in the history of this space is this amazing, inspiring rags to riches story of digital artists like Dan Keys and Beeple and so many more who were really struggling to monetize their work and to have recognition,” Zurrer said.
“Human One” is unlike any NFT that I’ve seen – it’s three-dimensional and involves four video screens arranged in an aluminum and mahogany frame. It must weigh a few hundred pounds. Yet its presence in meats pace creates an amazingly natural image of a person in a spacesuit walking through various backgrounds. The Nov. 9 sale is turning 2021 into quite the year for Beeple, who for many years had to work second jobs to support his art.
“Human One”
“For thousands of days Beeple has been creating art and honing his craft with absolutely no clear path toward monetization,” Zurrer said. The two became friends as Zurrer bought Beeple’s “Dick Milking Factory” for $505,000 in May.
Zurrer said the influx of artists into crypto through the NFT phenomenon has made it a much more fun and energetic time to be in crypto.
“I’ve been really concerned for a number of years that you go to conferences and you poke around the space and hey it’s kind of the same group of us just kind of trading tokens back and forth between each other,” Zurrer said. “We haven’t really been bringing in massive new cohorts of people into the space for some time. And now we have.”
Because this is crypto, “Dick Milking Factory” has another thing to teach us other than to laugh. Zurrer can use the NFT as collateral on a cryptocurrency loan that he can then pledge or lend to one of many decentralized finance, or defi, protocols to earn interest. That’s known as yield farming.
Speaking of Beeple, Zurrer said, “I told him the inside joke for us and our team at Dialectic has been our thesis around the merger between NFTs and DeFi. Because a Beeple is a capital asset with a very strong liquid floor, I can get leverage or debt on the Beeple and put that to work.”
He went on, “So effectively I put the Dick Milking Factory to work milking that yield.” Just another day in crypto.
“So much of what has happened from the dawn of Ethereum until now seem completely unimaginable, as if we’re living inside some kind of simulation,” Zurrer said. “Nobody would have predicted that the thing that would bring us into the mainstream and bring millions of new users would’ve been art. But here we are.”
Proof of artwork
A prolific NFT collector, Zurrer is drawn to buying pieces that show “proof of artwork.” A blockchain network like Ethereum or Bitcoin should be worth at least the sum of the capital and operational expense of the network at a given time, Zurrer said.
“What I look for is the same thing in art, that there has been a threshold of artistic merit and time and effort … such that you have very high confidence that what you’re paying for has a specific floor” value, he said.
Zurrer said he was consulting with institutions and others about where to display “Human One,” but that it would be open to the public.
“This piece by Beeple is a deep conversation that humans must have with one another about our entry into the metaverse,” he said. “That is such an important component of this.”
As Zurrer tries to explain NFT art and its eyewatering valuations to the non-initiated, he uses a theory known as Metcalfe’s Law. That is, the value of a network is proportional to the value of the square of the number of its users.
Artist have been forced to survive on patronage for hundreds of years, with basically no network in their favor, Zurrer said. A painter even just 50 years ago would have to hope someone in their region liked their art enough and had the money to support them, which was no small order. Matching buyers and sellers was difficult as well, he added.
“Even just a few decades ago, if you had a Picasso sitting in your house the chances of somebody walking into your house who had both the means to buy that” as well as “wanting to buy that was very, very low,” he said.
Yet today’s digital art market is 24-7 with a potentially global audience taking part.
This is “the Metcalfe's Law effect applied to NFTs,” he said. “Since there's more eyeballs on it and you get more efficient price discovery that accrues more value to artists. That is the great freedom and enabler of artists with this NFT movement.”