This past Wednesday at Art, Coffee, & Conversation’s bi-monthly meeting, we discussed NFTs or non-fungible tokens. This blog explores the NFT concept a little further.
For the art world, NFTs made the news when Christie’s sold at auction on March 11, 2021, artist Mike “Beeple” Winkelmann’s digital artwork Everydays: The First 5,000 Days for $69.3 million dollars. His digital artwork sold as an NFT.
It became the third highest art sale for a living artist behind Jeff Koons’ Rabbit and David Hockney’s Portrait of an Artist (Pool with Two Figures).
Fungible is a law term, an adjective meaning interchangeable. Money is fungible in that one is paid money for one’s labor, and that paycheck can be turned around to purchase groceries. Gold, beads, or shells are fungible units that could be exchanged like money.
Non-fungible means unique or one-of-a-kind, like a work of art.
However, non-fungible token is a whole other kettle of fish.
A “non-fungible token” is a term for a unique digital code also know as a “blockchain.” Blockchain technology brought Bitcoin into digital existence. Before blockchain, the (physical) cost of replicating something in the digital world was nil. Now, it requires massive expenditures of electrical power. NFTs are unique, verifiable, and protected by a hard to hack digital code. An NFT has become a valuable financial asset.
NFTs are a version of cryptocurrencies (bitcoin) that have unique assets (i.e., digital video, work of art) assigned to a unique NFT code.
This technology is being used to create digital collectibles.
It is a curious shift in the social value placed on a physical work of art and what is now placed on an intangible entity, like a digital work of art. Perhaps it is the same thing?
Many think all sectors of the economy will find relevant NFT applications. Everything from medicine to fashion.
Currently, businesses, including the art world, are adapting NFTs: the NBA, Formula One, Ubisoft, Atari, and the entertainment industry.
An explanation from the CryptoKitties website. Screenshot courtesy of CryptoKitties.com
The history of the development of NFTs goes back to at least 2012. But, it was in 2017 with the emergence of CryptoKitties that the goldmine was realized. People want to collect and buy unique digital items.
The genie is out of the bottle.
There is money to be made but there remain serious issues that I did not touch upon, the energy consumption generated by these kinds of electronic production and the whole other issue of copyrights.
Easy to guess, that with the rise of the financially valuable intangible assets sector, that art museums that preserve original, physical, unique works of art will only become more valued.
They will be the precious and tangible links to history.