NFTs are having ‘A Moment’ - but what even are they?
Before we get into the opinionated stuff, let's break it down. NFT stands for ‘Non-Fungible-Token’ - which doesn’t make a lot of sense, but essentially means that an NFT digital token that cannot be changed or altered in any way. For example, if you have bitcoin you can buy or sell more bitcoin and still have bitcoin. Bitcoin is all the same. NFTs are unique, and if you buy more then they’ll all be different to the NFTs you currently own. No NFTs are the same, they're like digital snowflakes.
There’s a lot of noise about NFT purchasing in the digital art world, as more and more ‘collectors’ purchase the ‘original’ digital artwork for hundreds of thousands of dollars - sometimes millions. Yep, we can still right-click on the image and download it ourselves, but we’re downloading a replica. It’s a bit like owning a print of the Mona Lisa while the real one is hanging in the Louvre.
The below is an image of digital artist Beeple's 'Everydays: The First 5000 Days' which sold at auction for $69million - but you could still print out the below image and stick it in a frame if you're that way inclined.
So is there any credibility - or indeed point - to NFTs? Are the naysayers actually sleeping on something incredible, or is it all over hyped? Is the NFT market a way for artists to make money where they otherwise wouldn’t, or a way for collectors to effectively invest in a new medium?
Talenthouse contributing writer Norbert Daniels Jr weighs in:
"Listen to any NFT evangelist talk about how much good NFTs are going to do for artists, and it quickly becomes apparent that they have no idea what they're talking about. They don't know how copyright works. They don't know what commissions are. If this tweet by Facebook foe Cameron Winklevoss is any indication, it looks like they don't even understand that you can already share images on the internet... right.
"The most popular arguments in favor of NFTs are baseless. Let’s have a look at them.
1. 'NFTs are finally letting digital artists make money!'
"Many NFT evangelists have framed this new technology as a way of finally giving value to digital art. But digital art already has value. Not just in the philosophical sense, but also financially. From a small artist selling a comic on their Gumroad to Disney+ charging $30 for a movie, people have been willing to pay for digital files for a very long time, to the tune of billions of dollars.
"Digital art does not need the legitimacy that NFTs supposedly grant them. Another way digital artists already make money is commissions. If a patron of the arts really wants what NFTs supposedly provide—exclusivity, ownership, authenticity—they can commission a digital artist. Many artists make their living creating custom pieces for customers, and for an additional fee may be willing to sell intellectual property rights to said art.
"An already financially successful artist with a large and loyal audience may very well make a decent chunk of change selling their art as NFTs. But those not already making good money online aren’t likely to fare any better on the NFT marketplace. In fact, since the fees for minting, buying and selling NFTs can be significant, even a “successful” sale may put the artist in the red."
CROSSROAD— Nifty Gateway (@niftygateway) February 25, 2021
The #1/1 from beeple's first NG drop has just resold on the secondary market for $6.6 million.
History has just been made.
Congrats to beeple and of course to @pablorfraile for the sale. pic.twitter.com/mTYG4VABSw
2. 'NFTs allow you to own the original art file!'
"What an NFT is not, is the ‘original’ digital file. There’s no such thing. The process of an artist using their program of choice, exporting to a new file, uploading it to a server, and you downloading it there’s several layers of 'copy of a copy of a copy' before it gets in your hands."
3. 'NFTs provide proof of ownership and authenticity!'
"An NFT is not proof of ownership or authenticity for anything except the token itself. When you buy an NFT, you don’t own the art. You own a piece of code that points to a file hosted somewhere else. And because the artwork is hosted elsewhere, it’s very possible that many NFT-owners may eventually end up with tokens that point to 404 pages. They’re glorified hyperlinks. The art is merely decoration. Purchasing an NFT in no way confers or proves ownership of any kind of intellectual property rights. It doesn’t even prove authenticity, that is, that the art genuinely belongs to the person who originally minted the NFT. Anyone can mint an NFT for just about any file, regardless of if they made or own it.
"When NFTs first blew up in popularity, a wave of fear swept the online artist community. Not only did they have to worry about their art being appropriated for lucrative social media accounts who post art without credit, or bots that would comb the site for designs to sell on T-shirts, but now they had to worry about people stealing their art to sell as NFTs.
"An NFT is not a unique piece of art. The piece of art attached to an NFT is as infinitely reproducible as anything else released to the internet. A particularly-embarrassing example is Annoying Orange attempting to sell an NFT for a 4K remastered version of its first episode. “This video will NOT be released anywhere else, so the winner will be the only person that has it!” The NFT’s reserve price was 3 ETH ($7,394.52 USD at the time). Almost immediately it was discovered that the video could be downloaded for free by simply using a web browser’s Inspect Element function. Less than two weeks later, Annoying Orange deleted the original tweet and uploaded the “exclusive” video onto its official YouTube channel."
4. 'NFTs are a good investment!'
"Can you make money with NFTs? Sure. You can also make money playing the lottery, but I wouldn’t call that investing. For every Beeple, there will be thousands of losers. Stories like a woman selling an NFT she won in a contest for $110k are bait for the masses whose losses will fuel the winners.
"One of the admittedly interesting things about NFTs is ‘smart contracts’ that allow the original artist to automatically be paid a royalty fee every time their NFT is resold. This ostensibly creates a great opportunity for artists to build a nice cache of passive income sources. But that brings into question why people would be reselling NFTs in the first place. If you’re not an NFT creator, but a collector or ‘investor,’ the strategy is to buy low, sell high. It’s like trading stocks.
"The financial value in buying an NFT is in the possibility that you’ll be able to sell it for a higher price later on. And why would someone else buy it from you at a higher price? So later on they can do the same thing and sell for a profit. There’s a lot of hot air around the stock market, but at least some of it is real. When you buy a stock, you are buying a portion of ownership in a company that provides goods and services and hopefully makes a profit. What does an NFT buy you? It isn’t ownership, exclusivity or authenticity. Nothing but the hope that you might make money.
"The truth is that NFTs are not about art. NFTs are about creating a speculative asset in order to make a profit. The art is just a Trojan horse. If you’re a digital artist or one of their supporters, better options have existed for years. If you’re an investor, well… the physical art investing world isn’t great, but it’s somehow more legit than this."
Follow Norbert on Instagram @NorbertDPhotography