As we transition into a completely digital society, new ways of owning digital content are being pioneered. Over the past year, NFTs have gained extreme popularity. Celebrities such as Quentin Tarantino, Grimes, and even Logan Paul started selling their own NFTs at exorbitant prices. The rise of NFTs has been beneficial to many digital artists selling their art online, as there was no real market for them before. However, because this phenomenon is still in its infancy, there has been a lot of experimenting and misuse. This calls into question whether people really understand what NFTs are, their purpose, and if that purpose is the only option.
By Adan Flores and Marcella Olivieri. All illustrations © Adan Flores, 2022
NFT stands for Non-Fungible Token, which means that each token created has a different value. This is different from fiat money, where any one-dollar bill can be exchanged for another. Each non-fungible token is unique and one of a kind, thanks to the solid authentication process of blockchains.
Non-fungible Tokens can be associated with anything that is digital, whether it be music, videos, or even tweets, if paired with a new token, that due to its uniqueness can provide proof of authenticity and therefore proof of property.
Currently, their most popular use is to sell digital art. For these reasons, NFTs can be very beneficial for artists, who can use them to sell their work directly instead of through a proxy. Now creators can also make a profit every time their work is sold.
However, the rise of NFTs has also caused a big misunderstanding. Damian Hirst confused everyone when he announced that we would be selling 10,000 NFTs in a collection called The Currency1. These NFTs would be digital pictures of actual paintings by Hirst. After purchasing said NFT, you would have the option to keep the digital version and destroy the painting, or vice versa. This whole concept was extremely confusing as it totally failed to understand the purpose of NFTs. Differently from a physical object, digital art is that it can be identically replicated infinite times, so you need a digital verification process. What Hirst has done is simply jump on the bandwagon of selling NFTs without actually creating a fully digital piece.
Non-fungible tokens come with benefits for buyers and collectors as well, such as the ability to easily verify and transfer artworks. Collectors will usually buy a piece in hopes of the value increasing over time to sell it for a profit. Most importantly, the biggest benefit from buying NFTs are bragging rights, that is, it grants the buyer the ability to say that a piece of digital art, like an image by digital artist Beeple, is now theirs.
Their appeal is easy to understand; just imagine owning the Nyan Cat gif, or even the first tweet ever tweeted. It essentially boils down to humans’ inherent psychological need to own things, despite these things being easy to view, download or reproduce infinitely by anyone for free.
Galleries are acutely aware of this, with a great many of them venturing into the NFT space. A prime example is the König Gallery, which hosted a digital art exhibition called “The Artist Is Online”2 on March 2021. The exhibition showed 70 artworks that challenged contemporary art and its market. This was a bold move from the König Gallery, but apparently not bold enough as they quickly launched their own NFT marketplace five months after the exhibition named “Misa Art”3. The König Gallery is clearly making a big wager on NFTs and it’s paying off, with many NFTs continuing to sell for hundreds of thousands to millions of dollars.
NFTs may have many benefits, but they also have drawbacks. One of the main concerns is their negative environmental impact. The backbone of NFTs is the Ethereum blockchain, which relies on computers making little calculations of every transaction ever made. These computers work all day and night, meaning that Ethereum uses a tremendous amount of electricity which is generated by burning fossil fuels and releasing large quantities of pollutants into the atmosphere.
Earlier this year, Nyan Cat, which is a gif of a cat on a rocket flying to the moon, was sold as an NFT. Memo Akten, a digital artist, analysed that Nyan Cat’s carbon footprint was equivalent to that of an EU resident’s electricity usage for two months4. Not all NFTs have the same carbon footprint, of course, but by using the Ethereum blockchain, they are causing a lot of harm to the environment.
Another big problem with NFTs is the lack of curated platforms and strategies, which probably comes from a lack of understanding of the actual purpose of an NFT. Yes, an NFT can be anything that is digital, but should youtuber Logan Paul really be selling clips of his videos, that you can still watch online for free, for up to $20,000?
This lack of care has filled the NFT market with people selling absolutely anything for high prices, making the market look lackluster. Another drawback to NFTs is that they are also likely to end up as scams. In these schemes, scammers ask buyers to provide them with their crypto wallet access codes in order to deliver the NFT and then steal all their assets. This obviously discourages buyers from buying NFTs, but also artists from posting their own art online.
The popularity of NFTs has grown extremely fast over the past year, but they can still be hard to understand entirely. Despite them being talked about literally everywhere, I believe a lot of us still don’t understand exactly what they are and what their purpose is. Sadly, this is also the case with many of those who are now selling them. NFTs have been able to give value to the work created by digital artists, but that value comes at the cost of the environment.
- Salapa, G. (2021). Ok, NFTs are too hooligan even for Damien Hirst. [Online] Medium. Available at: https://medium.com/thatmeaning/yes-its-fine-to-hate-modern-art-dac77ed08daf [Accessed 13 November 2021].
- Artnet (2021). As the Market for Digital Art Heats Up, König Galerie Is Hosting a Show on the Virtual Blockchain World Decentraland. [Online] Artnet News. Available at: https://news.artnet.com/art-world/konig-gallery-decentraland-show-1953730 [Accessed 15 November 2021].
- Art Rights (2021). Misa Art, König Gallery’s new NFT marketplace – Digital Art Rights. [Online]. Available at: https://www.artrights.me/en/misa-art-new-marketplace-nft-of-the-konig-gallery/ [Accessed 15 December 2021].
- Calma, J. (2021). The climate controversy swirling around NFTs. [Online] The Verge. Available at: https://www.theverge.com/2021/3/15/22328203/nft-cryptoart-ethereum-blockchain-climate-change [Accessed 4 November 2021].