Is it really the future of art collecting?
In the world of cryptocurrency, NFTs and art, it seems like anything can be turned into a million-dollar product. A random Tweet, old videos and digital art can make a huge fortune. Just take a look at Twitter CEO Jack Dorsey, who was able to sell his first-ever Tweet on the platform for a whopping USD 2.9 million. Even Grimes was able to raise cryptocurrency amounting to 6 million USD in selling her digital art. Meanwhile, rapper Azealia Banks sold an audio sex tape NFT for over USD 18,000.
View this post on Instagram
But while major personalities are getting five digits and more by selling a digital token, the rise of NFTs has been highlighting ongoing concerns with other artists on social media. Multiple reports of art being turned into these tokens at a drop of a Tweet or mention have small-time artists wary about posting their art for free. They’re afraid that their creations might get stolen and others get to make a million off their blood, sweat and tears.
So what is it about NFTs and art?
Hold up, what’s an NFT?
NFT is short for non-fungible tokens. An NFT is a unique and irreplaceable digital certificate of ownership over a virtual or physical asset. Its transaction happens in the realm of cryptocurrency and the details of the transaction made are stored in a blockchain, which is a public digital ledger. If fungible assets are equal to breaking down a huge money bill into change, non-fungible assets can be likened to collectors’ items. You need to sell them before you make a fortune, but their uniqueness and rarity give it huge prices.
Owning an NFT doesn’t always include the digital file or the physical asset. It’s more of a contract stating you own a certain file but copyright, licensing and intellectual property may still belong to the creator. That’s dependent on what the contract says when you buy the token itself. The NFT just certifies that you have ownership over the original file. If you need a more technical explanation and more about the law of fungibility, The Wall Street Journal breaks it down.
Why do people sell and collect NFTs?
NFTs can be seen as a method of creating a scarcity of an artist’s creation, especially digital files, therefore driving the value up. So even if you may see the Nyan Cat GIF all over the internet, the one who bought the NFT has proof that they own the original, remastered file from the creator who sold it. But this isn’t a walk in the park, as NFT prices have been going down due to the oversaturation of platforms and the market. Since the industry is new and the hype is driving it into rapid popularity, some fear that this bubble might burst, and the value of their digital tokens will deteriorate.
Though, it’s still very much attractive to some artists. Those who sell NFTs of their creations have the freedom to add in a clause that guarantees a cut every time their art is re-sold and reproduced. This also helps personalities relinquish control over their digital art. Take, Disaster Girl for example. After selling an NFT of her meme, she and her family still get 10% of any future sales of the token, and all proceeds go to her student loans and charity. It’s a fairly easy way to make money, especially if you’ve got some internet leverage or a huge following.
On the collectors’ side, reasons for investing in these may vary. Since NFTs are a one-of-a-kind certificate that’s encrypted, this gives the collector a unique connection to the artist and the item it represents. It very much is the digital version of investing in a physical sculpture or painting: whether it’s a hobby or a means to store your value in assets. Business Insider thinks that it’s also partially due to the skyrocketing rising prices in Bitcoin.
Why is everyone divided about it?
While it’s easy for established people to make bank off NFTs, the market is fairly new and protection laws are underdeveloped. One of the larger concerns surrounding NFTs and art is the lack of authentication or its susceptibility to art theft. Not all NFT transactions verify that the one selling it is the actual creator, especially in online marketplaces, which puts smaller artists at a disadvantage.
Art theft is so rampant in this age: digital works uploaded to the internet get turned into mugs, pillows and phone cases without the artist’s permission. Random people can already make fortunes over creations that are not theirs. So imagine how creators feel if their art, claimed by someone else, becomes tokenized and sold for millions that they can’t even use?
Aside from security, the production of NFTs causes brow-raising concerns for its supposedly huge carbon footprint. Since the transaction is done in cryptocurrency, recording and validating the data would require the work of thousands of supercomputers often hosted by an Ethereum blockchain. According to Wired, Ethereum generates 8.7 megawatt-hours worth of electricity. So that’s why a 10-second sale of an NFT can consume electricity amounting to a regular citizen’s annual consumption. Leaner and cleaner methods for these are yet to appear if they do exist, but crypto art enthusiasts are hoping that more efficient ways get discovered soon.
The relationship between NFTs and art is still complicated and continuously developing. Its lack of artist protection and copyright laws, including the sustainability of its market value, still has the general public wary of investing in such pieces. Plus, the fact that tangible assets aren’t given a premium adds to the unease towards it. But if the crypto art industry wants NFTs to evolve and stay, they need to surpass the hurdles of exclusivity and sustainability, environment-wise and market value-wise.
Art Matthew Ian Fetalver