NFTs, or non-fungible tokens are shaking up the art world. So much so that one piece of crypto art recently auctioned for more than $69 million. We explore what non-fungible tokens are, and why they’re disrupting the future of digital art.
Terry Nguyen, staff writer for The Goods at Vox, covering consumer and internet trends. Author of “GEN YEET,” a newsletter distilling cultural trends, technologies, memes and world-altering events relevant to young people. (@terrygtnguyen)
Brendan McGill, co-founder of Offsetra and Carbon.fyi. (@Brendanmc6)
What is an NFT?
Terry Nguyen: “NFTs stand for non-fungible tokens. ... Pretty much any digital asset, whether that be an MP3 file, a YouTube video or as you mentioned, a JPEG image, can be turned into an NFT. So a tweet that I publish on my Twitter account can be made into an NFT. So making it really isn't a big deal, kind of selling it as Beeple did. And usually kind of the creator or the owner of the file needs to certify the asset like Beeple did through Christie's, through a digital NFT marketplace.”
So when something becomes an NFT, what makes it non-fungible?
Terry Nguyen: “To define non-fungibility, you have to define what fungible means. And so the easiest thing to think about fungibility is a dollar is fungible. Like I have a dollar, you have a dollar, we can trade. And that's fungible. But if I have a unique piece of artwork, and you have a unique piece of artwork, and we trade that, those two things aren't equivalent to, that's kind of what makes … unique digital assets … like MP3 files, YouTube videos, that's what makes them non-fungible, they’re individually unique.
How are they made individually unique?
Terry Nguyen: “When a creator makes an NFT, they can upload it onto a digital marketplace, for example, Nifty Gateway or Valuables has recently gained some press. Valuables in the marketplace where Jack Dorsey is selling his tweet. The creator can go through a process where they mint or they certify the NFT. And the platform is pretty much in charge of creating this smart contract on the blockchain. And I know we're kind of getting into complicated territory here. But the marketplace creates this contract that allows the owner to have a track record that confirms their ownership of the work and whoever purchases it.”
How is value created on an NFT?
Terry Nguyen: “The appeal of an NFT is twofold. For the original creator or the artist or the tweeter, for example, they have a track record that confirms their ownership of the work on the blockchain. And for the buyer, and as you mentioned, there's a growing marketplace of buyers who are willing to spend lots of money on unique NFTs.
"The technology allows them to have an original copy or a quote-unquote sort of digital original copy of the art. It's kind of hard to envision it. But the best analogy I've seen, from Mark Cuban actually, is that he describes it as owning an actual trading card versus downloading a copy of the trading card online and printing it out.”
What is an NFT to an artist?
Matt Kane: “For me as an artist, I look at NFTs as providing digital art with unforgeable, trustless, provable provenance. Provenance is simply a record of ownership. Of who owned it, when they sold it and for how much. So NFTs are really replacing the flimsy technology of paper certificates of authenticity and having trust in centralized galleries for provenance. Because obviously certificates of authenticity over the years they can be forged, which can lead to illegitimate sales of art. And then any time you're having to trust a centralized source like a gallery or an auction house, it's much better to do this trustlessly. And that's sort of the ethos behind crypto.”
On how Matt Kane got involved in creating NFTs
Matt Kane: “In 2014, I started to create my own software to make my digital art, and I had previously been a traditional oil painter and then became a web developer. And I thought I might as well put these things together. And so I created my own custom software so I could make digital paintings in the way that I wanted to. So I created my own custom format. And so it's very complex, where my paintings aren't actually like JPEG or pixels. They're actually these databases that contain like map and code.
"And so for me, when I was creating my art this way, I was thinking, how am I going to sell these in a traditional gallery? And I thought I might have to use a USB drive that's like gold-encrusted with diamonds or something to make that transition. But then in the summer of 2017, I learned about art on blockchain and these things called NFTs. They might be able to provide artists royalties in these sorts of things. And so for me, I realized that using blockchain this way would just provide much better provenance and give my creations wings."
On how money shapes both the traditional and digital art world
Blake Gopnik: “It's not art that's been infected, it's the art world. It's the way we think about art that's been infected with those values. Remember, a lot of the greatest art exists in museums. And what's wonderful about that is that it completely pulls it out of that world. And you go into a museum, you can't really talk about how much something is worth, because it's in a sense not worth anything anymore. It's not on the market. And that's what's so great about museums.
"So it is possible to talk about works of art as I and hundreds, thousands of other critics and art historians do without ever thinking about how much something is worth. And what's really sad, what breaks my heart about all of this discussion about NFTs is that it's only about the money. You know, people act as though the fact that Beeple's work went for $70 million somehow certifies that it's good art. And it used to be we'd say, This is a fabulous work of art. It's so great. Maybe someone wants to spend money for it. But now we say, Look, someone spent $70 million bucks on this. It must be great art.”
Hasn't that been happening for a while though?
Blake Gopnik: “For probably 500 years, we've been saying, Wait a minute, ignore the damn dollar value, ignore the signature. Because this is really just about putting people's signatures on things. And it's stupid in the art world as well. We moan about it just as much in the old fashioned art world.
"Where, you know, at one moment Rembrandt's Polish Rider is a Rembrandt and everyone says, isn't it fabulous? And it happens to be worth a lot of money, too. And then an art historian says, wait a minute, that's not by Rembrandt. And we all say, oh, wow, isn't that a shame? That used to be a good work of art. Now it's trivial because it's by an assistant. You know, the work hasn't changed. All of those issues are just what art critics like me are attacking in the traditional art world.
"So what saddens me is that this so-called disruptive new form of NFT art is actually buying into the very, very worst features of the traditional art world. Instead of fighting them. Instead of saying no, the things that matter aren't dollar signs and issues of authenticity. It's buying into them. It's actually becoming conservative, reactionary, neoliberal in the very worst sense.
"It's as though capitalism [has] so eaten people's souls that they can't even see that there's something wrong with that. I mean, you know, in the evil age of robber barons ... you bought art to say, look, I'm buying into these important values. But now it's exactly the opposite. You say art is kind of icky, it's elitist. There's something weird about it. But I can clean it up by spending a whole lot of money on it, by attaching dollar signs to it."
On what the sale of NFTs means to artists
Matt Kane: “What's not crazy is supporting a living artist. And for many years, digital artists have been making this content and they've been participating in something of like a social capital where they've been getting followers and attention. And it's just kind of a wish and a prayer that they're going to translate that kind of like follower count on Instagram into money. So what we're seeing right now is these NFTs are helping support living artists. You know, who would've otherwise not been able to sell their art or who had been struggling.
"I would say that I'm very concerned for a healthy market for each individual artist to slowly build their prices. And that these prices should really scale for everyone. I'm not interested in the huge sales. … You know, in 2019, we started to see NFTs sell for over $100,000 for the first time.
"And one of those was one of my NFTs. And it was this great feeling because I had dwindled down my savings account for seven years and I was down to borrowing money and suddenly I was able to sell an NFT $1,750. This is life changing for me. I was able to make different plans for my future just on that. And that's a very modest price. And you have to realize that behind the $69 million and the $600,000 sales, there's very modest prices that are supporting a lot of legitimate artists.”
On the future of NFTs
Terry Nguyen: “A lot of artists and creators that I've spoken to are really hopeful that this technology, in terms of building community, in terms of getting artists to own the rights to their work and receive royalties from them, they hope that this model will be sustainable for years to come.”
From The Reading List
Vox: "NFTs, the digital bits of anything that sell for millions of dollars, explained" — "Arc, a visual artist from Saudi Arabia, was initially skeptical of how cryptocurrency could be adopted in the art world. He didn’t know much about the technology and was doubtful of its reputation."
TechCrunch: "The explosive (and inclusive) potential of NFTs in the creative world" — "Digital collectibles are having a very large moment. Just last month, a piece of digital art by Beeple sold for $6.6 million on online art marketplace Nifty Gateway. Meanwhile, Linkin Park’s Mike Shinoda recently sold clips of a song via online marketplace Zora."
The Art Newspaper: "The NFT craze encapsulates the absurdity of the art world—and its obsession with authenticity" — "Chris Torres sold his Nyan Cat meme with an NFT for $590,000 in an online auction last month."
The Verge: "NFTs, explained" — "'There’s nothing like an explosion of blockchain news to leave you thinking, 'Um… what’s going on here?'"
New York Times: "Beeple Has Won. Here’s What We’ve Lost." — "'I want to be a machine,' Andy Warhol once said. Apparently the public wouldn’t mind either."
This program aired on March 16, 2021.