The Paris Review went to the Rare Digital Art Festival in New York earlier in January. The event has captured a great deal of imagination because it melds the mania around the blockchain to the mania around the art market.

Except, the digital objects being sold on the blockchain are collectibles, not the kind of museum-focused art that many think of when they hear the word art. That’s not good or bad.

It’s more likely that rare digital art will succeed on the basis of its own artists developing their own markets rather than established artists making works for the blockchain.

Crypto artists and collectors assess the value of their products in four ways: intrinsic (Do you personally like it?), extrinsic (Does it make you look cool?), utility (Can you do stuff with it?), and store of value (Will it maintain its worth?). […]

So far, collectors have mostly ignored these questions, focusing on the novelty of the underlying technology. In the past year, whole ecosystems of collectibles have sprung up. The most famous of these is CryptoKitties, a game where collectors breed and trade digital cats. The game is so inexplicably popular that, recently, rare CryptoKitties have sold for as much as 253 Ether, which at the time of sale on December 6 was equivalent to just over $110,000 (and, as I write this, is now worth about $251,000). During the CryptoKitties Q&A, an audience member asked Dan Viau, the founder of an app devoted to selling hats and costumes for CryptoKitties called Kitty Hats, whether the company was concerned that CryptoKitties were being used to launder money.

“If you were a money launderer,” he replied, “I think it would be malpractice not to use CryptoKitties.”

Though the crypto collectible market is frothier than ever, traditional fine-art collectors have been slower than the Reddit crowd to adopt blockchain. During a talk called “How the Blockchain Changes the Game for Artists,” panelists agreed that the technology offered great value to artists but were concerned about the structural issues posed by introducing it to the museum world. Michael Xufu Huang—a New Museum trustee and cofounder of the Beijing museum M Woods—expressed reservations. “I’m a little skeptical,” he said.

How Much for That Pepe? Scenes from the First Rare Digital Art Auction (The Paris Review)