Having strong feelings for or against the entry of NFTs into the art market – and the sky-high prices at which some of them are traded – is like arguing about whether it’s raining more these days when we should really be talking about climate change. Whether the NFT is here to stay has little to do with the relevance of technology to art; rather, it is the blockchain’s impact on other areas of society that will prove decisive for its viability. Are we facing an overhaul of the world’s financial and banking system in the form of decentralised operations, faster and cheaper transfers, smart contract loans, and so on? It seems like a realistic possibility in the long run.
NFT stands for Non-Fungible Tokens and denotes a digital certificate that proves ownership of a digital asset (JPEGs, video files, virtual game characters, etc.) or a physical object. Some are associated with contemporary art, but the vast majority constitute collectibles such as avatars, digital pets, 3D animations, and digital drawings. Others represent raw materials or consumer products. Unlike paper certificates, NFTs are cryptographically secured on a blockchain (most often the Ethereum blockchain). In simple terms, a blockchain is a decentralised and distributed digital “ledger” that makes mediating third parties in a transaction redundant by storing information about transfers of ownership of the object in a publicly accessible form that is difficult to falsify. The smart contract technology used to issue NFTs builds on this system and makes it possible to automate various clauses, for example, that a share of each sale must be transferred to the author every time a given NFT is traded.
Bitcoin, Ethereum, and many other blockchains are designed around a proof-of-work algorithm that involves computers competing to solve a mathematical problem. The first computer to solve the problem adds a new block of transactions and receives a reward in the form of currency. Every time an NFT is issued or traded on the blockchain CO2 is emitted because large amounts of energy are used to solve the mathematical problem that confirms new transactions. My Ethereum address, used only for about twenty transactions, accounts for about 230 kilos of CO2 emissions. This corresponds to about half of the emissions attributable to a seat on a flight from Oslo to New York. However, new methods of validating transactions may significantly reduce emissions. Ethereum is planning to transition to an algorithm called proof-of-stake that will supposedly reduce their CO2 footprint by something like 99 per cent.
NFT technology does not protect an image file from being duplicated or a print from being photocopied; rather, it is a social contract that proves ownership. The advantage is that it simplifies the sale of rights online by replacing the traditional intermediaries – the auction house, the art dealer, and the gallery owner – with a digital platform. However, this change in favour of platform capitalism is not primarily technological, but social. The NFT phenomenon does not mean that technology changes the content of art, but that the social contract that already exists in the realm of art is transferred to just about every conceivable type of information that previously lived freely on the web, such as memes. In other contexts than the art market, such as agriculture and transport, NFTs generate fewer headlines even though the potential for change is greater. It is possible to envisage NFTs being used in various production processes, for example, to track raw materials from their point of origin to the store shelf or restaurant table. This could lead not only to increased transparency, but also to completely new financial instruments. Think, for example, of the possibility of dividing a shipping container into smaller units tracked via the blockchain, enabling smaller businesses to buy shares and thus share costs. Or NFTs linked to each animal in a flock of sheep, so that ordinary people can make investments in the production of meat, leather, or wool, thereby giving farmers access to cheaper capital than through the bank.
In a widely circulated note, American art historian David Joselit claims that the NFT phenomenon reverses the logic of the readymade. Duchamp turned the sculpture into information by dissolving the distinction between art and non-art and by giving discourse precedence over the physical object. In this way, he liberated materiality from commodifiable form, according to Joselit. The NFT takes information that basically circulates freely – Joselit uses Beeple’s Everydays: The First 5,000 Days (2021), a digital collage consisting of internet memes, as an example – and turns it into a commodity and object of speculation. This is not a surprising development given how data dealing with interests, social connections, and movement patterns are collected and commodified by monitoring the use of social media, map services, online searches, and so on. From such a perspective, it is the art market that is lagging behind when it comes to leveraging technologies that make it possible to aggregate and analyse massive amounts of data
The blockchain (and NFTs) is in this sense one of several technologies that drive the class formations McKenzie Wark calls the “hacker class” and the “vectorialist class” in her book A Hacker Manifesto, published back in 2004. Wark points out that the new oligarchs do not own natural resources and means of production, but information and the means that give access to it: patents, data, and various online services. Heads of tech-companies such as Mark Zuckerberg and Jeff Bezos are obvious examples. In Wark’s analysis, the hacker class is the workforce that performs intangible work which enables the conversion of information into intellectual property: programmers, designers, researchers, but also artists and writers. The winners – if the NFT trends continues – are thus a few of the artists (Beeple), but primarily the vectorialists who have gotten the rest of us to accept the idea that NFTs prove ownership of almost anything, while simultaneously owning the platforms that mediate buying and selling. The NFT is thus a symptom of how information is increasingly seen as a private asset and investment object, rather than as collectively owned.
The main innovative aspect of the NFT concerns the way in which it makes the art object’s social contract applicable to culture as a whole. The previously free internet culture can now be subjected to the same market logic as the art object. You or I can “own” Nyan Cat, even though the brief animation loop has been uploaded to social media countless times. I can collect pixel characters in the NFT project Cryptopunks, characters that are supposedly “unique” despite the fact that JPEGs of them are everywhere. The astronomical turnover of Cryptopunks and similar projects seems to have inspired many established artists, for example, Bjarne Melgaard who has initiated an NFT project that aims to sell 1,110 unique copies of his character Lightbulb Man. Damien Hirst has for his part revived his spot paintings through the NFT project The Currency. Buyers of Hirst’s NFTs can choose between keeping the physical work on paper or keeping the NFT, meaning the certificate, with Hirst destroying whichever is left over. Although the jury is still out in Melgaard’s case (his project has not yet been launched), such use of NFT technology does not seem particularly enticing aesthetically. Nor is it technologically or conceptually innovative, and we sense a certain commercial opportunism when tropes from old projects are revived.
The auction house Sotheby’s NFT site Metaverse aims to offer “a curated selection of NFTs.” On the Metaverse website, selected digital pets, 3D animations, artworks, and memes live side by side in a massive grid, all bound by astronomical prices, not infrequently reaching hundreds of thousands of dollars. On less selective platforms, such as the largest NFT marketplace to date, Open Sea, anyone can buy and sell with few restrictions, as long as they don’t infringe on copyright, engage in hate speech, or publish personal information. Here we can endlessly scroll amateur art: dogs with heart eyes, pixel characters, and abstract 3D animations, but sometimes also projects that look more like contemporary art – although these are not easy to find. The most traded and valuable projects, like the aforementioned Cryptopunks, are avatars.
A decentralised and “open” structure is something that contemporary art often strives for and describes in positive terms. But in the case of Open Sea, the structure creates a rather repetitive visual scrap heap. Getting a grip on the exact meaning of terms like “open” and “decentralised” in an NFT context is (as in contemporary art) not always easy. After all, the platforms choose which collections and projects are displayed on the front page of the shop, and in most cases also control the URL that the NFTs themselves point to. The feeling of browsing an endless and depressing supermarket is exacerbated by the user interfaces, which mainly allow you to filter the selection based on price criteria or see which collections and collectors are popular.
A recent socio-technological innovation on the blockchain is Decentralised Autonomous Organisations (DAOs). By buying or being given tokens, you become a co-owner or a member of an organisation that is regulated by a smart contract. Often, but not always, this works rather like a mix between a publicly traded company and a chat room; members vote on the use of resources, casting a number of votes determined by how many tokens they own. The dividend is usually received in the form of more tokens, meaning that by participating, members speculate on whether the value of a given token will increase over time. The whole process is logged and managed via smart contracts on the blockchain, but founders often issue the majority of tokens to themselves at the start of the project, meaning that they retain a controlling stake. There are also examples of DAOs where the money in the treasury has evaporated, either because the founder runs of with it, or because the underlying smart contract is weak and gets exploited by hackers.
Striving for profit is often an inherent aspect of the DAO’s structure. Take, for example, Friends with Benefits (FWB), a DAO that describes itself as “the ultimate cultural membership powered by a community of our favourite Web3 artists, operators, and thinkers bound together by shared values and shared incentives.” New members need to pass a membership application process and subsequently buy a prerequisite number of tokens. Members can then earn additional tokens through various forms of participation, which can be resold on the market at any time. As such the structure comes across rather like a cross between a pyramid scheme and an “exclusive” members club. Often, the DAO’s treasury is used to finance projects. For example, FWB has launched a blockchain magazine where contributors are paid in cryptocurrency, including the organisation’s own token.
Other initiatives are less obviously motivated by profit, although still reliant on market mechanisms. The Swedish artist Jonas Lund has turned his entire artistic practice into a DAO. In order to be awarded tokens, you need to have performed certain actions that promote the artist’s career. If you write about Jonas Lund in an art publication, as I am doing here, you can claim one hundred Jonas Lund Tokens (JLT). Lund’s project may parody the eagerness to move all parts of life and culture “on-chain,” but at the same time it takes seriously the idea of the artist as an entrepreneur and brand. Holders of JLT can take part in polls about Lund’s career choices and projects, a move that can be understood as a kind of blockchain-assisted rationalisation of the art world’s social mechanisms. Perhaps such attempts to make the blockchain’s ability to transform both culture and social relations into commodities represent the greatest potential for an engaging and critical blockchain art. At the same time, such projects will inevitably point back to the historical avant-garde and its play with commodity status and contract mechanisms, exemplified by works such as Duchamp’s Monte Carlo Bonds (1924) or Yves Klein’s Zone of Immaterial Pictorial Sensibility (1959–62). So far, the NFT phenomenon is market first, art second.