Words: Joseph Bullmore
If the art market didn’t exist, you’d struggle to make it up. Too silly, your editor would say; people just don’t behave like that. Viewed from any sort of distance at all, the groaning, rickety artifice seems like one big, bizarre in-joke; a spaghetti junction of back-slapping contacts, racketeering gallerists and pretentious drop outs, post-rationalising meaning into an ironic photo collage where Linsday Lohan appears to be the Queen, only everyone is also a dog. It’s an avant garde theatre show, where lithe men in good suits at august establishments with expensive townhouses tell you that a really quite ugly and not very nice thing is actually really quite lovely and very brilliant indeed, and also $26.6 million. But thus far, at least, you could just about keep up. There was some logic to this dramatic universe, no matter how fantastical or twisted or self-reflexive. It was like Star Trek, or perhaps Game of Thrones. I get it, fine — you have fun. But I’ll leave you to it, if that’s okay. Too many dragons.
Now, however, the art market has finally jumped the shark. And it comes in the form of the NFT — A crypto-currency-and-digital-art conflagration that is raging out of control. Recently, an NFT piece called CROSSROAD by the artist Beeple (which featured a big, fat former president lying naked on a lawn) made history when it became the most expensive piece of digital art ever sold — $6.6 million, at the end of February, which seemed like a heck of a lot for something you could never actually hold in your hands. But this was small fry. Yesterday, on March 11th, a Beepl piece sold at Christie’s for $69.3 million. And when Christie’s is cashing in on a trend, you know something’s going down. But WTF is an NFT? Good question. Here’s some sort of answer.
The Beeple collage that sold for over $60 million at Christie’s this week
What are NFTs?
NFT means Non-Fungible Token. It’s basically a digital certificate, establishing that you own something — most usually these days a piece of digital art. NFTs can be traded. In that way, they make up a new digital alternative asset class. And like any asset class, they are subject to scarcity value, market whims, fluctuations in price, and rabid, sky-rocketing trading patterns.
The key difference, however, to a usual investable asset class — like an antique car, or a case of wine, or a painting — is that anyone can view, screen-shot, even print out the piece of art in question. But only one person can really claim to own it, or only one group can claim to own the constituent parts of it. And to keep on top of who really owns what, NFTs rely on a blockchain, in this case Ethereum. So you buy a piece of digital art, say, and the unique smart contract concerning that piece of art is stored on the Ethereum blockchain, as proof of ownership.
What’s the point of NFTs?
This is the question most often levelled at this burgeoning market. It becomes particularly poignant in the case of pre-existing video files, for example. A little clip of LeBron James dunking, say, is changing hands at $179,000 at the time of writing. I just watched it for free. Click on that link and you can too. It seems like a pretty good dunk. I certainly couldn’t pull that off. But it exists in hundreds of thousands of locations on the internet. So why on earth would you decide to buy it for the price of a supercar or a lesser Chagall?
To understand it, we have to turn to Nifty Gateway, the principle auction site for NFTs. The founders of that site use the analogy of collectible shoes. If you owned a pair of expensive Air Jordans, and Nike went bust — you’d still own those Jordans. They wouldn’t vanish into thin air. Digital goods — whether that be pieces of art, or video game skins — should be the same. To do that, the marketplaces like Nifty Gateway create a unique NFT for that digital asset, and store it forever in their ledger. And then anyone can log on and see who owns that asset.
Essentially, we’re just talking about digital collectibles. And the NFT is the bragging right that tells the world you own it.
‘Battle of the Warnymphs’, a digital piece sold by musician Grimes as an NFT
What are some notable NFTs?
NFTs have been around since 2017, but have exploded in the past few months, largely spurred on by the lack of galleries to go to, creative outlets to explore, and just general things to do. The devil makes work for idle thumbs, etc etc. There have also been a few celebrity-flavoured case studies that have pushed coverage out from the backwaters of Reddit et al and into the mainstream.
Grimes, the musician and wife of Elon Musk, recently sold $5.8million of her digital artworks as NFTs (they are post-apocalyptic future-scapes filled with murderous cherubs, if you’re interested), while last Friday, band Kings of Leon released their eighth album as an NFT, and Charlie XCX is following suit. The Banksy-ish headline star, though, is digital artist Beeple — whose work has become so lucrative that Christie’s, as mentioned, are handling his sales. (You can also get Banksy NFTs, of course, if your taste is more conservative.)
A server farm. The environmental cost of NFTs could be huge
Are NFTs controversial?
Yes, they are. The first thing to consider, slightly counterintuitively, is the environmental cost. The process of minting NFTs and adding them to blockchains, the sheer volume of transactions to keep track of, and the server space used to store the digital work could combine to use up a gargantuan amount of energy. Blockchain technology, which is still fairly fringe, already guzzles up an ungodly amount of fuel in electricity bills, server cooling costs, etc. If NFTs break out into the open, and everyone begins to get in on the act, and there’s a greedy arms race as people pump values higher and are struck by FOMO — the energy spike could be alarming.
There are also more straightforward questions of plagiarism and fraud. Artist RJ Palmer recently warned Twitter that trading accounts were stealing art works from people’s tweets, and setting them up as NFTs for a profit. Like any market, there is a huge potential for exploitation of the raw creativity by greedy middle-men, copycats and fraudsters. As the bubble rises, it seems unlikely that buyers and traders will always be able to do the proper due diligence when it comes to proving that the person minting the NFT actually created the work. Cryptocurrency transactions are already opaque and relatively anonymous by their very nature. Add that to the already largely illogical and vaguely insane world of art itself, and you have a very potent Kool Aid indeed.
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