Art on the Blockchain

This is me thinking out loud—I mean that almost literally, I recorded an earlier version of it one evening as voice memo. I’m not firm in my convictions on this piece and am very open to having my mind changed.

There’s been a lot of news recently about digital art sales using a technology called NFTs*. These are, to give a very, very layman’s explanation, digital tokens which prove the ownership (or transaction history) of a digital object. Digital art can be copied infinitely because it’s digital, but an NFT uses a blockchain to provide proof of provenance so no matter how many copies are in existence you can have the ‘one true original’, certified and validated, which gives it (artificial) scarcity and (theoretical) resale value.

It’s kind of like if a conceptual artist had made a physical work of art using a Mars bar wrapper; you could say, well, anybody can have a Mars bar wrapper, in fact I’ve got one in my pocket, so that’s worth whatever the art is worth. But value is what we assign to things. So there’s a collective agreement that the artist’s work is art (transcending the object itself) and the art world uses certificates of authenticity and ownership to prove it’s the ‘original’ and not just a Mars bar wrapper you’ve just bought from the shop. That certificate maintains that Mars bar wrapper’s value. And that’s what NFTs do for digital art.

I’m torn on this because, in theory, I think it sounds like a good idea—artists getting justly rewarded for their work! But two things give me pause: the environmental impact, and cryptocurrencies.

The issue of the environmental impact is raised because of the way the blockchain (Ethereum in this case) works, which is by using a lot of computational power which is incredibly—I mean, incrediblyenergy intensive.

Because [cryptocurrency] coins ask the investors of tomorrow to buy in at ever increasing computational power, we have ended up in a horrific spiralling excess of energy usage and ecological devastation.

Everest Pipkin

A lot of people claim this is going to be fixed—there are many good arguments in favour of this not being true, but there are also some far less resource-intensive alternative cryptocurrencies.

The other thing is that I don’t have faith that cryptocurrencies aren’t just a big pyramid scheme, and the people spending big money on digital art with NFTs tend to be people who invested in crypto early, when their currency wasn’t as valuable as it is now:

What you have right now are these crypto-millionaires who are trying to create assets with the money that they’ve accumulated. One of the only ways they can do that right now is through the NFT market, because it accepts cryptocurrency

Lucien Smith

These people stand to gain from more people buying the currency and driving its value up, because cryptocurrencies are essentially useless as actual currencies, only as vehicles for speculation. Or, more succinctly put:

NFTs use “art” to make crypto speculation seem pro-social.

Nathan Jurgenson

But putting aside the environmental concerns (as if that’s even an option!) and my own cryptocurrency skepticism, there’s a further critical question to be answered: do NFTs actually work? As in, will they be accepted as actually providing sufficient provenance for a thing to retain a value?

There’s no question that people will buy digital art which has an NFT because they’re doing that right now. But it’s the sell-on which will be the test of whether or not this system works; whether an NFT is sufficient for a secondary buyer to say, I accept that this token that you have is proof that this is a certified digital artwork from the artist and not a copy.

It requires collective belief for this to work. If the tokens are accepted as a genuine guarantee of authenticity by a secondary buyer, then it works. If it doesn’t, if the NFTs are simply not accepted as provenance after the initial sale, then the whole thing falls apart.

So whether or not people are paying hundreds of thousands pounds for pieces of digital art from the artist (or a broker) isn’t the test of whether or not this system works. The test is: does the art retain value (or appreciate in value)? Will secondary buyers and traders accept NFTs as proof? Will there be a collective belief in the system that sustains the market?

And further still: should the market be sustained at all? Is the big money pouring into NFTs, “a devastatingly lopsided, dangerous and unregulated market that exists solely as a form of exploitative mass delusion” as Luke Plunkett puts it, helping to prop up an art establishment that elevates certain art into high art just to maintain its own business?

Like I said before, the idea of artists getting fair reward for their art is a great idea. I’m just extremely wary of the crypto world being seen as the solution for that.

* NFT = non-fungible token; that is, a token which signifies a unique object.