What are NFTs and Why Should the Art World Take Note
Written by Jack Neary
Since March, there’s a good chance that the acronym you’ve heard most frequently is NFT. But just because something is topping Google trends doesn’t mean it’s immediately clear what it is or why we should be paying attention to it. Let’s dive into why NFTs are shaking up the art world and how this affects creators of all kinds.
What is an NFT?
An NFT is a digital collectible asset such as a piece of art or a trading card (or something even more at home on the internet such as a meme or a tweet) that provides a record of its ownership and authenticity and thus allows it to be sold and collected like a Picasso at Christie’s. Because they model the scarcity and uniqueness of traditional art works, they’re also quickly becoming an investment vehicle.
This tweet-turned-NFTt, the Twitter founder’s first entry on his social media network, recently sold for over $2 million.
This tweet-turned-NFT, the Twitter founder's first entry on his social media network, recently sold for over $2 million.
How does that work?
NFT stands for non-fungible token. Non-fungible means non-interchangeable. Unlike the way one US dollar is exchangeable for another US dollar or one bitcoin is the same as another bitcoin, each digital work and its corresponding token that holds the record of its value is unique. Because NFTs and the marketplaces they trade on are linked to the blockchain (the digital database that supports cryptocurrencies with a public ledger), these files now have a unique digital identifier that cannot be copied, substituted, or subdivided, and that is used to certify authenticity and ownership.
When you buy an NFT, you’re getting a digital file as well as a certificate of authenticity. Though there might be other copies of the file out there on the internet, the NFT system provides proof that you own the one that matters. Can you still download a copy of Beeple’s record-setting “Everydays - The First 5000 Days”? Sure, just right-click it like any other digital image. But can you claim to own it? Only if you were the $69.3 million winning bidder with the corresponding entry in the blockchain’s digital ledger.
Beeple's record setting collage, Everydays - The First 500 Days
What could this mean for creators?
Similar to the ways that the internet has democratized the spread of information, art, and culture, this digital revolution empowers the creators of digital art who have seen their work bounce around the internet with little to no attribution let alone payment. Whereas before there was no outlet for some of these online-only creations, NFTs have provided a legitimate marketplace.
Anyone (yes, even you) can create and market an NFT on specialized marketplaces such as OpenSea. As with other collectibles, notoriety will help set the price. If your Aunt Christina and Georgia O’Keefe use the same materials to create the same sized painting, it’s pretty obvious whose auction will start with a higher bid, but that doesn’t mean that up-and-coming creators can’t take advantage of this rising tide. Much the same way that other creator-centric platforms like Patreon and Substack allow artists and writers to foster their own communities and receive direct support from their patrons and subscribers, NFTs offer a chance to form a special (and potentially lucrative) bond with early superfans.
Take Beeple, now one of the most valuable living artists in the world, for example. His record-setting NFT was the result of a solitary quest to publish a new piece of digital art every day for 14 years. Along the way, the most he ever sold an individual print for was $100, but he did amass over 2 million followers on his social profiles. As the NFT wave started to crest, he found himself in prime position to capitalize on his years-long campaign.
Are there downsides?
Because of their reliance on the digital power of the blockchain, NFTs consume a lot of energy and are being criticized for their contribution to greenhouse gas emissions. There are alternatives in the works that require less energy, but as long as NFTs work closely with the cryptocurrency ethereum, they will take a toll on the planet.
Aside from environmental concerns, the meteoric rise of popularity in this form has seen huge brands like The New York Times and Taco Bell jump on the bandwagon, creating NFTs just for the sake of being part of the conversation. Because of the unique nature of each NFT, Taco Bell’s entry might not directly impact the average illustrator making art for art’s sake, but it does provide a clear example of ways the form may be exploited by larger players.
Wherever NFTs go from here, they’ve previewed a future where more digital creators can sustain themselves on their art alone. And while it’s possible that an artistic titan like Jeff Koons or David Hockney won’t be able to resist the current upside of NFTs and decide to mint their own work, it’s already true that established digital artists are in a great position to market their work to online communities who appreciate it just as much for its artistic value as its new investment potential.