Crypto Art In The Digital World: What Is An NFT?

How did we get here? And what exactly is an NFT? Image Credit: steved_np3/Shutterstock.com

On March 11, 2021, the British auction house Christie’s – founded in 1776, having sold works by Picasso and Leonardo da Vinci – concluded their first digital-only art auction. The artwork, titled “Everydays: The First 5000 Days” by the artist Beeple, sold for $69,346,250, becoming the most expensive piece of digital art in history. The first-ever tweet by Twitter co-founder Jack Dorsey is also currently up for auction, with the current highest bid at $2.5 million. Both this tweet and the artwork by Beeple are what are known as NFTs.

So, how did we get here? And what exactly is an NFT?

NFT stands for “non-fungible token”. When something is fungible, it is interchangeable with other identical items. For example, you can exchange a penny for another penny of the same worth and come out with essentially the same thing at the end. However, when something is non-fungible – such as a painting or a unique trading card – it is one-of-a-kind and does not have an interchangeable counterpart.

An NFT can really be anything digital, from a picture to a song to a tweet about a cat. However, digital files are pretty easily duplicated and viewed by many people, and aren’t tangible physical objects that you can put in your house or in a gallery. Therefore, the NFT is more like a certificate of ownership of the digital item rather than anything actually directly connected to the digital item itself.

NFTs are part of the blockchain, the same as cryptocurrencies such as bitcoin – the blockchain is essentially a digital ledger containing records of cryptocurrency transactions. In fact, according to Coindesk, one of the earliest forms of NFTs arose as early as 2012 as an offshoot of bitcoin. These were “Colored Coins”, fractions of a bitcoin tagged with unique information linking them to real-world assets.

Being part of the blockchain means that the records of an NFT cannot be forged, as the records of ownership are indisputable. Also, as NFT marketplace Nifty Gateway puts it, NFTs “live on a blockchain, so no one can ever take them away from you, not even the person who created them.” Artists can even code their NFTs to make income off future trades of their work, usually taking a cut of between 2.5 and 10 percent. Some NFT marketplaces even allow NFTs to contain unlockable content, only able to be viewed by the buyer.

The recent hype around NFTs has led to some famous faces getting involved. William Shatner, famous for playing Captain Kirk from Star Trek, released “an intimate collection of photographs from his personal life and film career as digital memorabilia cards that can now be bought, sold, and traded on the WAX Blockchain.” One of these digital cards went on to be resold for $6,800.

Musician Grimes has collaborated with Nifty Gateway to auction off $6 million worth of NFTs, including audio and visual artworks. One, titled “Death of the Old”, was a one-off piece that sold for $388,938. Another, titled “Earth”, had 303 editions minted and sold for $7,500 each.

However, NFTs don’t come without their drawbacks. The blockchain is maintained by “mining” – computers working to verify cryptocurrency transactions, using immense amounts of power in the process. For example, the sale of six NFTs by artist Joanie Lemercier consumed 8.7 megawatt-hours of energy. According to the Guardian, the 303 sales of “Earth” produced 70 tonnes of CO2 and used the same amount of electricity as an EU resident would use in 33 years – although a percentage of the profits were donated to Carbon 180, an NGO working to reduce carbon emissions.

People have also pointed out that anyone can turn something like a tweet – and therefore also art posted in a tweet – into an NFT, meaning that they can go on to make a profit from content that they did not produce themselves. This raises questions of how legitimate some NFTs are as an actual "certificate of ownership", especially if something was made into an NFT without the consent of the original creator. There have also been reports of the theft of NFTs and thousands of dollars of unauthorized transactions due to Nifty Gateway accounts being hacked.

Some people see NFTs as a revolution in the world of art, others see them as a passing fad, and many see them as an absolute disaster for the environment. Time can only tell what will happen with NFTs in the future. However, speaking to the BBC, Beeple himself (real name Mike Winkelmann) said that "I actually do think there will be a bubble, to be quite honest. And I think we could be in that bubble right now."


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