NFTs, or non-fungible tokens. NFTs—digital tokens tied to assets that can be bought, sold and traded—are enabling artists to profit from their work more easily than ever. “At first, I didn’t know if it was trustworthy or legit,” says Jazmine Boykins, a 20-year-old American digital artist, who goes by the online handle “BLACKSNEAKERS” and who has sold more than $60,000 in NFT art over the past six months. “But to see digital art being bought at these prices, it’s pretty astounding. It’s given me the courage to keep going.”
NFTs are having their big-bang moment: collectors and speculators have spent more than $200 million on an array of NFT-based artwork, memes and GIFs in the past month alone, according to market tracker NonFungible.com, compared with $250 million throughout all of 2020. And that was before the digital artist Mike Winkelmann, known as Beeple, sold a piece for a record-setting $69 million at famed auction house Christie’s on March 11—the third highest price ever fetched by any currently living artist, after Jeff Koons and David Hockney.
NFTs are best understood as computer files combined with proof of ownership and authenticity, like a deed. Like cryptocurrencies such as Bitcoin, they exist on a blockchain—a tamper-resistant digital public ledger. But like dollars, cryptocurrencies are “fungible,” meaning one bitcoin is always worth the same as any other bitcoin. By contrast, NFTs have unique valuations set by the highest bidder, just like a Rembrandt or a Picasso. Artists who want to sell their work as NFTs have to sign up with a marketplace, then “mint” digital tokens by uploading and validating their information on a blockchain (typically the Ethereum blockchain, a rival platform to Bitcoin). Doing so usually costs anywhere from $40 to $200. They can then list their piece for auction on an NFT marketplace, similar to eBay.
At face value, the whole enterprise seems absurd: big-money collectors paying six to eight figures for works that can often be seen and shared online for free. Critics have dismissed the NFT art craze as just the latest bubble, akin to this year’s boom-and-bust mania around “meme stocks” like GameStop. The phenomenon is attracting a strange brew of not just artists and collectors, but also speculators looking to get rich off the latest fad.
A bubble it may be. But many digital artists, fed up after years of creating content that generates visits and engagement on Big Tech platforms like Facebook and Instagram while getting almost nothing in return, have lunged headlong into the craze. These artists of all kinds—authors, musicians, filmmakers—envision a future in which NFTs transform both their creative process and how the world values art, now that it’s possible to truly “own” and sell digital art for the first time. “You will have so many people from different backgrounds and genres coming in to share their art, connect with people and potentially build a career,” Boykins says. “Artists put so much of their time—and themselves—into their work. To see them compensated on an appropriate scale, it’s really comforting.” Technologists, meanwhile, say NFTs are the latest step toward a long-promised blockchain revolution that could radically transform consumer capitalism, with major implications for everything from home loans to health care.
Theoretically, climate-minded artists could move to some alternative blockchain platform with less environmental impact. They’re already finding ways to bend NFT technology in other beneficial ways. Some, for instance, are setting up their tokens so they’re compensated every time their work is resold, like an actor getting a royalty check when their show airs as a rerun. Taiwanese tech startup Bitmark has started an NFT-like program to give rights and royalties to music producers around the world. And artists who join NFT-based social media sites, like Friends With Benefits, receive fractional ownership in the platform and can receive direct compensation for the work they create through the network, in sharp contrast to existing tech giants like Facebook and Instagram.
For technology evangelists, meanwhile, the NFT frenzy is just more evidence of their long-held beliefs that cryptocurrency, and blockchain platforms more broadly, has the power to change the world in profound ways. Blockchain technology has already been implemented in attempts to make voting more secure in Utah, combat insurance fraud at Nationwide Insurance, and secure the medical data of several U.S. health care companies. Advocates say it could also help companies ensure transparency in their supply chains, streamline mutual aid efforts and reduce biases in historically racist loan-application processes.
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