Formalising Value Without Institutions: NFTs as a Stress Test of Art Market Architecture

The rise and collapse of the NFT art market is commonly explained through speculative excess, technological immaturity, or cultural backlash against financialisation. This paper argues that NFTs failed as art markets for a more fundamental reason: they attempted to constitute a market for symbolic goods through technical representation and transaction recording, without the institutional authority required to stabilise value across time. Treated as a natural experiment in market constitution, NFT infrastructures closed several deficits long identified as sources of art-market fragility — token-level standardisation, persistent provenance, public transaction histories, frictionless global exchange. âš ï¸ The first is narrower than it is usually stated: what a token records unambiguously is ownership of the token, and buying one does not ordinarily transfer copyright or ownership of the underlying work. For a brief period one further rule, enforced creator royalties, introduced partial temporal continuity between primary and secondary markets. Those mechanisms had no constitutional grounding. Royalty enforcement rested on voluntary platform coordination rather than binding mandate, and was unstable under competitive pressure. As marketplaces disavowed governance authority and competed on volume, the constitutive rules collapsed: comparability fragmented across venues, arbitrage displaced judgement, and creators were pushed back into high-velocity primary sales. â–¶ The episode is evidence rather than analogy because one constitution succeeded while another failed. A transactional constitution governs who may exchange and whether the exchange binds, and here it was unusually strong. An informational constitution governs whether what was exchanged stays comparable to what is exchanged next, and here it never existed. A market can have excellent records and no memory. â­ The result is a stress test, not an anomaly. Where authority is absent, increased visibility and liquidity amplify volatility rather than stabilising value — and the two things this paper calls authority turn out to be different.