The digital art world has been set aflame with the rise of the Non-Fungible Tokens (NFT). There is no industry unaffected by this new, somewhat confusing revenue stream. What is an NFT you may ask? Well, dear reader, sit back as we do an almost comprehensible job explaining what we only sort of understand.
What is a Non-Fungible Token?
For centuries, art collection has long been relegated to the physical world. As digital art’s popularity has risen exponentially over the past 20 years, there was no way to own it in the collectible sense (other than a print, which is far from an original).
Enter the non-fungible token. Though “non-fungible” sounds like something you should find an over-the-counter cure for, it means: unswappable (no, that’s not really a word, but it’s okay because you get the point and we like the way it sounds). And “token,” in this sense, means a line of code. So, in essence an NFT is a unique line of code. This code functions as a receipt—or, in the NFT parlance, “a smart contract.”
When you purchase an NFT you are purchasing a smart contract to a piece of digital art.
Blockchains
And now you’re asking, “How can a line of code, that might be easily copied, represent the unique purchase of a digital asset, that might also be easily copied? Wouldn’t that token need to be entered into some sort of permanent unique online ledger that is publicly available for all the world to see as a means of proof-of-purchase?”
That is a great and specific question perfectly formatted for this answer: Yes and yes. Enter the blockchain. We’ll skip a deep dive into cryptocurrency (you’re welcome), but what you need to know is that digital crypto purchases are kept in publicly viewable ledgers called blockchains.
Purchasing NFTs with a blockchain currency (currently Ethereum, yes that is seriously what it is called), you are entering said purchase into a permanent ledger that proves you own it.
People are buying a great many things: art montages, famous tweets, clips from videos, GIFs, and other odd-flavored digital accouterments. Even the NBA now sells video “moments” (read: truncated highlights) for six figures each.
NFT Advantages
Are there benefits to this new system? Maybe.
It allows digital artists to make money off their art in a way that isn’t strictly commercial (advertising, commissions, etc). Instead of just posting cool one-offs on Instagram in hopes it will snag them a job, artists can actually sell that collectible art. It also allows for a marketplace to open up for things people never thought would be “for sale” (see NBA moments above) that might lead society toward exciting ventures.
NFT Disadvantages
Are there disadvantages? Yes. Lots. Make a stiff drink, and we’ll throw a few at you.
Environmental Impact
Ethereum, like other cryptocurrencies, is “mined” by computers that are solving complex mathematical equations. We’re being a bit reductive. The point is that it takes massive amounts of energy to “discover” a “coin.” How much energy? Well, you can review some of those numbers here. It’s due to the fact that cryptocurrency is literally mined by warehouses full of graphics cards—yes, the kind in your computer. Incidentally, this is causing a global shortage of computer parts. Since the Ethereum used to purchase a single NFT can be equal to weeks/months/years of a single household’s energy usage, this new market is having a tangible impact on the world’s energy use and, thus, global climate change.
Art Theft
NFTs are currently in their wild west era right now, and that means that people are selling anything and everything—including other people’s art. Some marketplaces are trying to verify authenticity of the things people are trying to sell, but there’s a great many marketplaces that don’t have the resources to provide that sort of oversight. At this stage, it’s essentially up to the artists and community to find and call-out fiendish practices when they see them.
Questionable Activity
While the NFT world would like you to envision a community where anyone can come and join and be profitable, the reality is that it’s a very closed environment at the moment. Most marketplaces require invitations and only allow known artists with large followings to list. And even when they do, exactly who is throwing around hundreds of millions of dollars on these animated GIFs? There are a lot of theories that paint the community in a less than favorable light. But the $69 million buyer of Beeple’s work turned out to be a player in the cryptocurrency game and has a financial partnership with Beeple himself. Crypto doing good means his business does very well. Not exactly ringing endorsement for authenticity.
Whatever the NFT bubble ends up, today it’s a step in the direction of digital artists being able to create art as a collectible venture. It’s easy to support artists creating worth beyond their hourly rate. Just don’t dig too deep, or you might not like what you see.
Beyond NFTs, a great way to support a bunch of cool creatives is by hiring Mad Genius for your next project. Whether you need a new or improved website, an ad campaign, or a commercial starring human-sized mosquitos, we are willing and able to help. Contact us to get started.