A $69 million JPEG file, cryptocurrency purchases of paintings, “tokenized” tracks from your favorite artists — welcome to the brave new world of NFT*! For everyone who is interested in the Art World in its modern form, we have translated an article by Andrew Molitor dedicated to the analysis of the most fashionable cryptographic trend in the art market.
NFT (Non Fungible Token, non-fungible token) is a new blockchain-based technology with which you can buy and sell anything. To simplify as much as possible, a blockchain is a database that is simultaneously stored on many computers. Records are constantly made in this database about all operations performed in the system. Each entry on the blockchain is called a token.
In the NFT system, each element (non-fungible token) is unique and cannot be tampered with, split, or discreetly replaced. Such a system is perfect for securing your rights to any unique object — from a work of art to an apartment. Essentially, an NFT is a digital certificate attached to a unique object.
You buy such a “tokenized” object, and a record is fixed in the system that you are its official owner. Anyone can come in and check your rights to this object.
This year, the system has been actively used in the field of art. Artists and musicians began to sell their “tokenized” works, often exclusively in digital form. That is, you can become the official owner of a painting that exists only as a file on your computer.
The last few weeks it seems that the world wide web is simply flooded with all sorts of explainers and critics of NFT — non-fungible tokens. It’s a pyramid! This is a new word in art! This is an environmental disaster! I make so much money!
A huge number of arguments “for” and “against” have already been made, and I will leave most of them without comment. However, I never found a real answer to the most basic question: can i make money from this?
Short answer: I don’t think so, at least not in the long run.
However, my explanation is not technical, it has nothing to do with blockchain or crypto.
It is social.
The Value of Art
Why is Monet valuable? It’s not that Monet had special skills or that his sense of color cannot be copied. Without a doubt, there are now many competent artists in the world who can create copies of Monet’s paintings all day long. In the World of Art (hereinafter, “Art” with a capital letter corresponds to the spelling “Art” in the original article — translator’s note) you can practically measure by the hour when the next scandal will break out with a mountain of fakes and a bunch of deceived experts.
Monet’s paintings are valuable because we, as a society guided by curators, art historians, collectors and all, have decided that they are valuable. That’s all. Value is socially constructed, and there is nothing else in it. It’s nice to have a physical artifact to put value on, but even that’s not necessary.
In 2019, Maurizio Cattelan taped a banana to a wall at Art Basel and then sold multiple copies of the work for as much as $120,000 each. What the collectors bought is not duct tape or a banana. They bought the right to tape their own banana with their own duct tape to any wall of their choice and name the installation “Comedian” by Maurizio Cattelan. It’s not exactly the same as NFT, but damn, it’s very close, isn’t it? You’re not buying a thing or a copyright, you’re buying a very vague ownership of something that you can’t point your finger at.
Art is like a joke
So why is Cattelan’s “Comedian” worth something? Can someone just stick an apple on the wall, call it “Joke” and sell it for $100,000? Of course not. But why?
I compare it to a joke. It’s not that The Comedian is a hoax (although it is in some ways), but socially it functions in a similar way.
Imagine that you are going with your friends for hamburgers and a cocktail. Someone spills a milkshake on themselves, and one of your friends makes a joke about it, which at this point seems very funny. Joke “went”. It came in because it was said at the right moment in the right social setting. 30 seconds before the cocktail was spilled, it wouldn’t make any sense. A minute later, the joke would be about how long it takes to come up with a joke. If a stranger passing by had joked, perhaps the joke would have gone, or maybe not. It’s not always the same.
If another, “a little weird” friend from your group suddenly decides that now we are joking about milkshakes, and the next 10 minutes is baiting about milkshakes, the situation can get a little uncomfortable, right?
Art works like a joke, with one addition: where we organically, in the moment, decide whether a joke is funny or not, Art has an entire industry of people whose job is to decide how good a given work (or, even more important, valuable). So Art works like a mediated joke. It is socially constructed and depends on the same things as a joke, but there is a whole class of professionals who do the hard work for us, deciding whether we should laugh or not. A joke enters the company; Monet or Gursky go global.
Cattelan felt company just like the prankster friend did. Right now, in this place, with these people. you can sell Art World critique by sticking a banana to the wall. The next guy with duct tape and apples is just that “slightly weird” buddy who made up bad milkshake jokes too late. It’s just embarrassing for him, and no one will buy his apples. You can only occasionally joke in the style of “Wow, the Art World is so strange” and at the same time you should feel the company.
So what about NFTs?
Okay Beeple Feels my company — he was able to sell his work for 60 million dollars (plus 9 million went to Christie’s auction). This is a different group of people, this is not the World of Art, although they probably overlap a little. There are people out there for whom money literally means nothing, and these people can shell out several million if you play your cards right.
Beeple’s work “Everyday” (Everydays) received its value thanks to this social environment, just like Monet, just like Cattalan’s Comedian. The joke is gone.
Rare, Special, Social
Society as a whole wants Art to be quite rare, so while there are literally millions of very talented artists, only a few of them find fame. There is an entire industry that assigns social value to a small selection of Art. Curators, gallery owners, art historians, critics, etc. are all our “trusted voices” that tell us, as a society, what is good and what is bad. They tell us which Art is valuable and which is not.
The fact that it’s all socially and not technically conditioned, and therefore rather arbitrary, is irrelevant: that’s how it works, and that’s how we want it to work. We want Art to be special, to be rare, so we hire people to create artificial scarcity out of an absurd abundance of Art, rejecting almost all Art as bad.
Are there people in the NFT space who we also trust, who will make the choice for us, who will invest their carefully crafted personal and professional social capital in the words: “this is good, but this is crap”? I do not see them.
Who will you believe? A bunch of venture capitalists? Christie’s auction house? People from the traditional World of Art are mostly not eager to fit into this work, although maybe …
Without some kind of mechanism, without a good/bad rating system, I don’t see how it would work. Yes, you can sell Art amazing in its intangibility, but it’s a limited market. He needs the right social environment.
You can’t just make jokes about milkshakes all day long and wait for them all to drop in.
Without some system for creating rarity from the abundance of NFT creations, I don’t see a way for value to emerge. In the Art World, these gatekeepers, curators, and gallery owners literally create value by sheer force of will, carefully using their social capital—the expertise they have earned from their degrees, their books, their newspaper columns, and so on.
The Future of NFT Art
Who will do the same job with NFTs? If not “who”, then “what?” There are a lot of NFT creations being created right now, but the market is limited. If the system does not appear, I do not understand how all this can even survive and become the Thing.
So, in the end, you can make some money, but in order for this to become a sustainable system, a functioning market, certain elements must appear that are currently not there.
The opinion of the author may not coincide with the opinion of the editors.