Why you won’t make money on NFTs, or JPEGs per million | Articles | Photo, video, optics

The orig­i­nal NFT image of Nyan Cat was sold for $590,000. Image: marketing-interactive.com

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.

*Note Photostore.Expert:

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?

Orig­i­nal “Come­di­ana” by Mau­r­izio Cat­te­lan. Pho­to: Jes­si­ca Klin­gel­fuss / wallpaper.com

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 record col­lage Every­days: The First 5000 Days. Image: Beeple

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.

Inter­est­ing times!

The opin­ion of the author may not coin­cide with the opin­ion of the edi­tors.