NFTs? Why, Just Why?
Hiya,
My name is Cat Laine. I’m a Rhode Island based multimedia artist who decided to go on a wild ride of experimentation with NFTs Fall 2021. I invite you to come along and follow my journey, mistakes, and hopefully successes as I dip my toes into Web 3.0 and the Metaverse.
But before we move on, let us begin at the beginning.
What really is an NFT?
The mostly accurate, lay definition:
An NFT is a glorified proof of purchase and proof of provenance that gives the buyer ownership of a digital work and whatever other rights, utilities, or assets the NFT creator bundles along with it.
The slightly more technical definition:
An NFT, or non-fungible token, is a unique identifier stored on a blockchain, that aims to certify the authenticity and ownership of an asset, usually digital, and that may confer additional rights and/or access to additional assets or experiences. I say “aims to certify” because bad actors do occasionally try to create and sell NFTs for works that do not belong to them.
At the time of writing, the blockchain most commonly used to mint NFTs was Ethereum (ETH). Solana (SOL), Tezos (XTZ), and Polygon (MATIC) are far less popular, but these blockchains allow artists and collectors to get around the incredibly frustrating and equally maddening transaction fees currently associated with Ethereum. Solana and Tezos also have markedly lower carbon footprints.
A helpful video from CNBC on what NFTs are:
Going forward and for brevity, I’m going to use “NFT” to refer to the art associated with the token, though strictly speaking the NFT is NOT the jpeg/png/etc.
Why are people spending so much money on NFTs? Can’t you just right-click and save?
Why yes. Yes, you can. It’s trivial to do so, in fact. So why would someone buy an NFT? I cannot speak to why someone would pay $69 million for Beeple’s 13 years of Everydays as that level of wealth and desire to muck about with financial instruments is beyond my imagination. Nor can I speak to why a person would pay $2.9 million for an NFT of Jack Dorsey’s 1st tweet because that’s absurd behavior.
Let me speak to why someone might pay a more modest sum. Here is why I bought my first NFT.
I liked the art – Afro-futurism or, in this case, Africanfuturism is of interest to me. I will continue to like the art even if the market value goes down to zero, and real talk, most projects will go down to zero. It was within an acceptable, non-tulipmania price range. In making the Asa 1000 collection, Alabi Mayowa, the Nigerian artist known as Shutabug had collaborated with other African artists I liked in the NFT space. I’m very interested in this overall business model, how it will develop in the future, and what unforeseen use cases will emerge. Also as far as my own artistic practice goes, I can’t understand the mind of a collector if I don’t collect work myself.
Here are some reasons a person might buy an NFT:
They are interested in the concepts of digital ownership, cryptocurrency, and smart contracts and have money to play.
The NFT project’s community (collectors and fans), development team, and/or vision suggest that it might increase in value over time (Financial Speculation Part I).
They want to engage in socially acceptable gambling for degens (Financial Speculation Part II).
They want the status/street cred of being an early adopter in an exciting new field.
They like the art and want the artist to succeed.
Yes, yes, but “right-click and save”?*
Some NFTs have accompanying physical items for those collectors who want something tangible.
Many of the most successful NFT projects, particularly the pioneers in the space such as CryptoPunks and Bored Ape Yacht Club, are working to provide more value to their collectors by building robust intellectual property around their brands. Many of these grant commercial rights in addition to ownership rights to the collector and allow for the creation of derivative works. World of Women is a good example of this model.
For example, here is some of the language in the World of Women Digital Ownership License governing commercial rights:
“The Creator shall have the rights to, including but not limited to, reproduce, adapt, modify, use, perform, display, publish, distribute, sale and duplicate the Art, in whole or in part, for any purpose whatsoever, including commercial, by any media and means whether now known or hereafter devised. In particular, the Creator shall have the right to revise, edit, manipulate, add to, create and exploit derivative works thereof, use or not use the Art, and to distribute and exploit the Art in any manner and any medium it may choose.”
Some NFTs like Gary Vaynerchuk’s Vee Friends focus intensively on NFTs as a way to provide access to events and live experiences.
*For lower profile, but promising projects, particularly women-led projects it would seem, some baddies are right-click and saving images and minting the cribbed work as if it were their own. World of Women got around this by associating a lower resolution (800×800 px) image with the NFT and including a higher resolution (4000x4000px) version as “unlockable content” available only after purchase.
What if I’m not interested in a cartoon profile picture NFT?
Because they are currently dominating sales in the NFT market, PFPs as well as generative art projects are getting the most media attention. That said, many artists in the space are single individuals creating [1/1] (pronounced 1 of 1) pieces. Those are the ones that keep my attention and pique my interest the most because there tends to be a wider variety of work and fewer copycats.
I found that it took me a good few months of hanging out on NFT Twitter to find cryptoart that spoke to me. Sadly much was waaaaaaaaay out of my price range, but there are many emerging artists from all over the world creating vibrant interesting work if you have the patience to look for it.
Here are some of my favorites.
Aren’t NFTs a scam?
No, but… scammers abound to take advantage of two human frailties: greed and laziness. Because of the way NFTs are reported on in the media, many people believe they are a get rich quick scheme where any old bit of flotsam will garner millions. In light of that, a lot of crypto newbies greedily put their money into projects without doing any due diligence. Some people do get lucky, but generally there are no get rich quick schemes. You have to put in some work to divine what might have long-term staying power. And even if you do due diligence, you could still get it wrong. My general advice for the NFT curious (#notafinancialadvisor):
In general, only buy into projects you would be happy to own even if the value dropped to zero.
Don’t spend more money than you can afford to lose.
Don’t invest in things you don’t understand on the advice of people you have no business trusting with your money.
Do your own research.
Beware of cash grabs by celebrities, unless you are a super fan, in which case, you do you, booboo.
@NFT1nsight, a good follow on twitter, recently published Making decisions in the NFT space which captures how to understand the Wild Wild West of NFTs.
Aren’t NFTs a Ponzi scheme?
No, but… if you buy into a project where the fundamentals don’t make sense and/or most of the other people who’ve bought in are just in it to flip it as opposed to participating long-term, then it’ll behave like a Ponzi scheme. When the music stops, someone will be left without a seat. If you do not enjoy financial speculation (again #notafinancialadvisor):
In general, only buy into projects you would be happy to own even if the value dropped to zero.
Don’t spend more money than you can afford to lose.
Don’t invest in things you don’t understand on the advice of people you have no business trusting with your money.
Do your own research.
Aren’t cryptocurrencies bad for the environment?
Oh god yes and also no. As with so many things, it depends. Bitcoin and Ethereum, as currently implemented, are appalling energy hogs, requiring vast amounts of computational power to validate transactions on the blockchain (i.e. to make sure people aren’t spending money they don’t have, aren’t inventing money that doesn’t exist, that money goes where it is supposed to go, etc. etc.).
According to Fortune, “[c]urrently, a single Ethereum transaction consumes as much electricity as an average U.S. household uses in a workweek—and has a carbon footprint equivalent to 140,893 Visa credit card transactions or 10,595 hours of watching YouTube.”
The Economist Magazine conducted an NFT auction for its October 30, 2021 issue on decentralized finance and found that their “modest experiment created as many emissions as a seat on a long-haul flight”.
Right now, Ethereum is VERY polluting and even if green energy is used, electricity is being consumed that should likely serve a loftier purpose than creating CryptoDickbutt NFTs.
The Ethereum Foundation is working very hard to implement proof of stake, a more environmentally friendly algorithm for validating transactions. It is hoped that Ethereum 2 (Eth2) will roll out in early 2022.
Other newer blockchains that were built to use the proof of stake consensus protocol out of the gate already exist. In terms of those that support the creation of NFTs, Solana and Tezos are among the most popular though they have far fewer users than Ethereum, the grande dame of smart contract technology.
Why am I experimenting with NFTs?
Having been through the dotcom boom and bust as well as the rise and glide of social media, this feels like the “Next Big Thing”. Those previous movements favored computer scientists (self-taught or academically trained), while this one is the first tech phenomenon I’ve been alive for that had a place for artists from the jump.
For me there is also a feel of fin de siècle Paris and the post-war/pre-war 20’s and 30’s where all these young artists were challenging the establishment on what art was as well as madly and passionately creating. Many of the participants (at least the sample I choose to follow on Twitter) have a hopeful streak, are multilingual and multinational. The community exudes that tech optimism that I really missed before everything seemed to descend into competitive nihilism. Yes, there is some “toxic positivity”, especially around environmental concerns, but overall is the most enjoyable part of the internet I’ve visited in many years.
Lastly, I am attracted to various features baked into some NFT smart contracts, namely royalties. Many artists are better at making art than understanding the long term value of their work in the marketplace and don’t reap the rewards when their work hits the secondary sales market. NFTs offer a way for artists to seamlessly and nearly automatically collect royalties when the token is resold.
Update: While conducting research for this blog post I made a few decisions. I’m likely not going to mint any new work on the Ethereum blockchain until Eth2 comes out given the environmental concerns. I will start making small experiments on Solana and/or Tezos.
If you want to learn more about me or NFTs, follow me on Twitter and subscribe to this newsletter. To keep up with my work, follow me on Instagram.
Let me close out this overly long post with a bit of NFT humor.