What is an NFT?
NFT stands for “non-fungible token”. In essence, it means that this “token” is unique and therefore, irreplaceable.
NFTs are a token of data stored on a ledger. This ledger is digital (blockchain) and ensures the uniqueness of this specific token.
Most NFTs are part of the Ethereum blockchain, which is a cryptocurrency, but has a blockchain that permits the Ethereum NFT. This requires extra information and allows the NFT to act differently than a Bitcoin or ETH coin.
Blockchain is a special type of database which acts as a ledger of transactions. Cryptocurrencies use this database to keep track of transactions. Bitcoin’s blockchain is used in an interesting way, such that all users have control and access to the blockchain, meaning there is no person or group of people in control, but rather all those who use it.
NFTs are a form of cryptocurrency (think Bitcoin), however there is one fundamental difference between NFTs and Bitcoin. Bitcoin is fungible, meaning if you trade a Bitcoin for a Bitcoin, it is the same. However, think of NFTs as a one-of-a-kind currency, you cannot trade for anything else of the same value. It doesn’t mean it is necessarily priceless, just that it is unique.
So now that all this is cleared up, here’s why I think NFTs are not the best.
NFTs are typically used to acquire digital art and other media, so long as it is stored digitally. Selling digital art as NFTs essentially means the highest bidder owns the original file of the digital art, along with a receipt of ownership and proof of authenticity.
The culture around cryptocurrency is that of democratization of money and freedom from institutions that control our funds. However, cryptocurrency and its associated technologies and processes are very complex. Blockchain and the transactions associated with fungible cryptocurrency, are difficult for the average Joe to understand, let alone NFTs. A blockchain-fluent artist, Addie Wagenknecht, describes NFTs as “a feedback loop fixated on Silicon Valley idolatry” (Artnet, 2021). The idea that cryptocurrency is an advancement in democracy, and many believe that it will one day replace cash, is absurd. Cryptocurrencies themselves are inaccessible to the average person, let alone NFTs. Selling digital art for NFTs just adds another layer of inaccessibility to the whole mix. Wagenknecht also said “the same people who disrupted banking or technology or the web in the Valley are now claiming that they have changed the world again, when really it’s just the same people making the same stuff for the same people to get rich from” (Artnet, 2021). Selling digital art as NFTs is not a form of innovation or advancement of any kind, just an opportunity for bourgeois people to flash their privilege, supposedly “superior” intellect, and wallets.
Due to the non-fungible nature of this currency, you cannot resell or redistribute the piece you have bought easily as you would be able to with a fungible currency or good. If you plan on reselling digital art purchased with NFTs, good luck. You have to hire a tech lawyer to write a contract against the contract set by the crypto platform. Each platform of crypto has its own limits concerning resale and redistribution, but Ethereum, the most common cryptocurrency NFT in the digital art world, has a contract which does not include any component to allow for this.
Furthermore, Ethereum’s blockchain is outdated and cannot keep up with the growing demand. What this means is the platform on which the ledger of transactions is kept is consuming lots of energy to maintain an untraceable path and shared control over the currency. Emission rates of mining Ethereum are comparable to annual carbon emission rates of Ecuador. (Mining cryptocurrency means you earn cryptocurrency without having to pay money for it. Cryptocurrency miners receive cryptocurrency as pay for “completing ‘blocks’ of verified transactions that are then added to the blockchain” (Investopedia, 2021).)
Tim Schneider, an author at Artnet, brings up an interesting point: “Glossed over in most descriptions of NFTs is a crucial fact: what lives on the blockchain is data describing and tracking the asset, not necessarily the asset itself. Remember, the token is basically just an inventory number. It links to an artwork, but … “the vast majority” of cases, the artwork is hosted off-chain somewhere else.” (ArtsHub, 2021). This raises the question of ownership and permanence. Does whoever purchased the NFT of digital art actually own the digital art or a license for its access? What happens if the file is corrupted? What happens if you run into technological difficulties? A question that has not left my mind since I read it is “So what happens if the NFT marketplace goes out of business – does your NFT and its value evaporate?” (ArtsHub, 2021).
With all of their uncertainty, environmental impacts and lack of resale value, I don’t see NFTs as a sustainable or particularly innovative marketplace. It is yet another area for the bourgeois to flaunt their superiority, whether it be through their knowledge of crypto that is very inaccessible and complex or their affluence. It brings to mind the worship of Silicon Valley culture and the song Rät by Penelope Scott (give it a listen and the lyrics a read).
Leon Ripley
Nice article. I just started learning about these NFTs. There’s this scammer that stole $500K from buyers of his NFTs by taking another project’s art. He basically made these fake CryptoPunks. And people bought them thinking they were real! He did this all while he was anonymous under another name. But he just changed his name and that’s some scammy behavior. It’s probably an attempt to get away from his scammy ways and he goes by his real name Eric Rhodes. This guy is bad news. It’s so funny because he thinks he created a new art movement, something called Trash Art. This makes sense because his art is trash. He basically steals other people’s art and makes it his own. He has a history of doing this. And he’s not the only one. NFTs are full of these trashy artists. Artists like them are the reason NFTs will fail. It’s just a Ponzi scheme and they’re after people’s hard-earned money.
Leon Ripley
Nice article. I’m learning about these NFTs. And there’s this scammer that stole $500K from buyers of his NFTs by taking the CryptoPunks art. My friend told me he spent almost $5K thinking he was getting the real deal. This guy was anonymous and just changed his name to get away from his scammy ways. His real name is Eric Rhodes. Blow this up! People like him need to be exposed.