A plus indeed. In this series, Art Plus Magazine takes a close look at the science behind the art, looking at fields, disciplines, and practices that shape what we enjoy.
By Pao Vergara
You’ve probably heard about it at this point, the buzzword of the luxury collectible world that’s boomed in recent months: the NFT, or non-fungible token. Likely, the people who’ve been talking about it in your circles are also those who have experience with blockchain mining and investing in cryptocurrencies.
NFTs have been around for a longer time, but the early months of 2021 have noted a sizeable boom in NFTs being used for a vast range of collectibles, from music, to sports merchandise, and most recently, fine art.
Cryptocurrencies are considered as revolutionizing investment and finance, and NFTs, when viewed within the ecosystem of cryptocurrency and the technology that powers it all, could be the digital counterpart to how art is seen as an alternative investment vis-à-vis financial and money market products.
NFTs, it could be argued, form part of a diverse digital investment portfolio. And like luxury collectibles, these tokens play on one major principle: scarcity (albeit digital).
But wait! In this era of copy-paste, of screencapping, how can scarcity be digitized?
That’s where blockchain comes in, and in order to understand NFTs, we first have to understand how blockchain works. Think of it as getting the fish by knowing what enables them to swim – water.
Blockchain’s logic and operation was first conceptualized in 1991 by two researchers but only implemented in 2009 by the pseudonymous Satoshi Nakamoto (it’s unsure whether he/they are an individual or group).
It’s precisely the fraud afforded by digitization which blockchain tries to tackle by being a decentralized database in contrast to the centralized servers that power most digital transactions today. Most transactions that happen today are managed through intermediaries, be they brick-and-mortar banks or marketplaces, or digital banks and e-commerce platforms. Blockchain goes around that by making transactions peer-to-peer.
But how is fraud avoided? What ensures the uniqueness of a transaction?
Blockchain’s physical component is a network of linked computers, (the “blocks” in the chain) and whenever one computer makes a transaction with another in the system, copies of that transaction are copied into all other computers. These digital receipts can be used to verify the authenticity of one block in future transactions by making it easier to spot dubious transactions.
Data can be added to blockchain, but once added cannot be changed.
It’s a decentralized ledger that constantly updates itself through user actions, rather than having an all-seeing bank manage all the data. Even then, blockchain technology is offered by quasi-intermediaries (albeit run more as public, open-source coops rather than as private firms) such as Ethereum, Bitcoin, NTX.
A few other blockchain networks are created by private companies, but in the end, these become more public by the very nature of blockchain technology as more people opt-in to the network. One need not trust the other people using blockchain, an expert reveals in a 2017 Wired video interview, but users trust the system itself.
Blockchain, before bitcoin, before NFTs, was intended by its founders to be a decentralized system that makes transactions between electronic devices more secure, making it harder for “the logistics processes of bad actors” as New York University historian Finn Brunton puts it. A digital notary, so to speak.
NFTs now come in the form of music, art, and literature, and a creator and their audience will have to sign up for a blockchain-powered marketplace.
Between the three mediums, literature seems to be the easiest (albeit very painstaking) to pirate. Music is somewhere in the middle, but a .WAV file from the studio itself is likely what you’re buying. Finally, you can probably take a screenshot of your NFT, but the quality won’t be the same as what you paid for.
Who actually owns the token? A Vox explainer in 2018 likens owning a digital collectible to collecting trading cards: while you own a particular card containing a particular image, the company who produced the card actually owns the copyright to the image.
In the case of digital collectibles, you own the code containing the work while the creator owns the image, writing, or music. Here, you can’t legally reproduce the token though you can resell it to another collector through the blockchain market that you, the artist, and your buyer are all a part of.
But wait a minute, you ask, it was hard to enforce illegal downloading and uploading of music in the early 2000s, forcing the market to radically change its practices, adapting to the reality that old enforcement methods won’t work, what makes this any different?
That’s where blockchain tech kicks in. All other users in a blockchain network know which user purchased a specific token from a specific artist. The NFT is yours once all other computers in the system verified the transaction between you and the artist.
The artist can choose to create more of the same digital collectible, however, and thus an NFT acts more like a proof-of-ownership, analogous to owning a print from a series.
As everything above implies, blockchain relies on massive computing power, essentially translating to massive electricity consumption spread through computers across continents. This raises the concern that blockchain-driven products harm the environment.
Another concern but focused on the collector is the possibility that if the right to the image is sold to another entity, your token will disappear. Imagine, you have the code, but not the image, and your favorite artist sells the image to Disney: the latter can copyright it exclusively for a film thus rendering your token a string of random numbers and letters on a white background.
NFTs may change the landscape and mores of the creative and luxury collectible market. Or perhaps be seen a fad from 2021 we’d rather forget. Only time will tell the true value of this emerging enjoyment.