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Part Two: Understanding the NFT Hype

Words:

Edd Norval
March 10, 2021

Abuzz with the speculation of its possibilities after a 10-second video recently sold $6.6 million, NFTs are on the tip of everybody’s tongue. Spoken of in the same breath as cryptocurrencies like Bitcoin, we look at this disruptive new force in the art world and try to understand its potential.

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As we discussed in part one, NFTs are a way for artists to authenticate original digital productions, whilst retaining more autonomy from dealers and middlemen. Digital art, unlike physical art, can be easily reproduced to the same standards as the original. This notion is a point taken up by many of the critics of NFTs recent explosion.


Why pay for something you can have for free? What NFTs place value on isn’t only the art, but the concept of authenticity in art. How important this is will depend on the individual. Blake Gopnik reflects in The Art Newspaper about the overwhelming sense of absurdity surrouding the way we judge authenticity in NFTs:


And then there are those, probably in the majority, who can only see absurdity in the very idea that someone might buy a digital illustration of a rainbow-toting cat, which already exists in millions of identical copies, and pay an extra half-million dollars for their particular copy just because it comes with a certificate of authenticity - a “non-fungible token (NFT) - that will live forever on the blockchain, unchanged and unchallengeable, as proof of the buyer’s ownership.

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Gopnik then goes on to discuss the token as a symbol of authenticity, lightly challenging the value placed on this in art when it overrides other valuable factors like aesthetic beauty or, for example, technical prowess. This strikes at the heart of the recent NFT hype because, as with Bitcoin in 2017, much of the hype stems from a public discourse that is extremely fascinating to those outside of the art and crypto spheres because of how crazy it sounds.


Boiled down, NFTs are quite simply a way to authenticate a piece of art that can be endlessly reproduced, to the same standard, and used in any way that the digital world pleases. So, why are images of cats and rainbows - the kind of art that is commonly found on messageboards all around the internet - selling for $590,000?


What constitutes an artist’s art is regularly explored by artists and critics. From Gopnik’s compelling example of Warhol’s mass-produced posters, some signed and some not, yet all from the artist to art signed by Damien Hirst, despite actually being produced by his assistants. Which is more authentic? In the view of the art world, it’s the signed Warhol or Hirst. Purely because of their signature. Yet, isn’t Warhol’s unsigned work, created by him, more authentic than Hirst’s that may have been signed, but wasn't created by him?

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Focussing on authenticity in this way may be one of the most prominent themes in discussing NFTs, but it mightn't be the best way to think of it. This perspective is very much tied up in the here and now. It is understanding an emergent technology’s future possibilities from a contemporary perspective. For the purpose of evaluating NFT’s potential, it may be best to assess not the what of the token, but the how. That is, not what the token is currently ie a digital certificate, but how it could operate and, potentially revolutionise, the way we perceive digital art in the future.


Currently the price is driven, as with cryptocurrencies, largely through speculation. Evaluated through a lens of our contemporary understanding of digital art, these tokens no doubt sound absurd. Then again, so does $55,000 for a completely digital asset with very limited real-world viability at the moment (Bitcoin). Bitcoin is, just like NFTs, still negotiating its place in the real-world. It is also a far more established technology than NFTs currently are. 


Bitcoin’s potential, and therefore its price, is largely scaling for a future world. One where, with the rise of cryptocurrencies, physical money may eventually be phased out. NFTs benefit from being understood for their potential in the future, rather than application now. The internet democratised access to art, empowering artist’s to create and share their work with easily reachable audiences. But digital art's democratisation also means that a work that would have netted the artist huge amounts in royalties in the past, had it been a physical product with authentication, can be endlessly reproduced. 


In this instance - are we really valuing art and the artist? As music has largely become more difficult to illegally download through streaming services like Spotify, art too is now ready to begin this process.

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Copyright infringement online is a minefield, especially with art that is released in the public domain. Banksy’s recent legal case illustrates the nuances of this. With an NFT, the artist gains yet a further shield of protection, but so too does the owner who, as would an owner who has a physical Jackson Pollock original in their office, retains an element of control over who gets to enjoy it. It sounds very business-like, but art has been dictated by such terms for a long time now.


This could completely shift the way that digital art is created, viewed and traded. Just like video games, which have been utilising similar technology to NFTs for a long time, a separate and more insular art market could emerge, distinct from the one dealing in physical art. In this new market, we could see values begin to correlate to ‘digital art’ prices, rather than mimic physical art. It also has the potential to completely revolutionise how artists conceive their own work as they are unbound by physical constraints. 


The potential is, given NFTs relatively recent emergence into mainstream discourse, largely unknown - but it’s wise to keep an open mind. How NFTs function now is part of our physical art market and as such, we understand it on those terms. That’s a bit like trying to understand online banking at a time when money was kept in crates at the bottom of your bed. It will take time to develop and the value of these pieces shouldn’t be seen as a sole reflection of the absurdity that the art world can be guilty of, rather as a gamble on the future - just as you’d invest in Tesla on the back of their hopeful move into operational space travel. It’s an exciting time, one to be embraced. 

Our final part of our examination into NFTs will be online at the end of the week, detailing other real-world limitations like the environmental cost associated with crypto mining.

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