NFT: The business of art vs. the love for art

The rate at which the world is reinventing itself is probably far higher than ever in history. My phone is obsolete every two years and just when I feel I understand the features of a social media platform, I am told that it is old school… a hip and trendier app is now ‘the thing’. Things are no different with the arts. The newest in-thing is non-fungible tokens (NFTs), and a lot is being said about them. Some feel it’s the next best thing since sliced-bread and others say it’s a fad that will go away. I do not feel equipped enough to vote for either. But I will attempt putting a few facts together and share my takeaway, nevertheless.

Non fungibility of NFT is a critical aspect that makes it both, unique and a solution which has helped the cause of digital art. An NFT is the only one in the world. It cannot be copied. It can certainly be traded, and all such transactions are recorded in the blockchain (imagine your old school bank ledger, where every new transaction is recorded as a line item, and entire history is maintained as an archive). A digital work of art, say a photograph, exists as a file in the virtual world. One may print it, but the actual work (the asset) is a ‘softcopy’ of the image. Now, a high-resolution image-file is easily copiable. So, how does one authenticate the original version created by the artist from a pool of digitally replicated versions, especially when they all look (and for all practical purposes, are) the same? I may have the exact same image file with me, as could a hundred others. How does a potential collector know the authenticity of the original image file? This is where NFT format solves the problem. It separates the authentic original with all its copies. While all the duplicates will look somewhat similar, only one of them is an asset worth paying for and owning. Of course, you may ask ‘why buy when I can consume it for free’. True, but everyone can see and enjoy the Mona Lisa but not everyone can own it at the same time. The process of creating an NFT for a digital asset seems to be fairly straightforward too. And the creator of the NFT is the only one who can sell it, while, absolutely anyone can track its movement (peep into the ‘ledger’). So, as you can tell, it is all extremely democratic and inclusive as a system.

An associated and important element of this new ecosystem is cryptocurrency. Without getting into detail of this, let us just imagine it to be the enabler for secure transactions in a decentralised financial system to happen in the completely virtual world.

The first time ever I even heard the term NFT (as may be the case with many others) was in March 2021. It was in the news of Christie’s auction sale of a work titled Everydays: The First 5000 Days, by Mike Winkelmann (aka Beeple). There is no denying that it was the first digital art work auction, breaking all records, making history. It is also noteworthy that the artist in question for this sale was relatively lesser known. But that is that, one blip in the curve. It is crucial that we move on…

So, NFT is a boon for digital art practitioners in ways more than one. They offer undisputed benefits for the creator economy. It allows for authentication of art work. It provides fool-proof and transparent provenance trail. It legitimises transactions. It makes arts more inclusive and allows for the relatively non-conventional art forms to be seen and collected. It decentralises the power and control over art selection process. And finally, the entry barrier is low – the younger generation (that is very comfortable with the virtual world anyway) finds it a lot less intimidating to engage with NFT-based digital art.

That brings us to a fundamental issue. The format encourages ‘investment’ in the asset class called visual art. While that by itself is not wrong and money is not a bad word, it not only fails to address something more fundamental, rather it makes it easier to steer away from it. And that is to ‘develop a love for the arts’. I believe, to expand the art ecosystem and to widen the net for more followers, the most important thing is to connect viewers to the very purpose of art. And that is all about an emotional expression or critically questioning what is accepted as a societal norm. Everything else is secondary.

ArtTactic’s NFT Art Market Report on the sale of NFTs during the period of January 2020 to June 2021 takes the data deep-dive into NFT transactions taking place on Nifty Gateway, the biggest curated NFT marketplace. I bring to attention two key points from the report: (1) The market for NFTs saw a reduction in total sales value, down by 57 per cent in the past 15 months. This is owing to sales taking place at lower price points and not reduced volume; (2) Average sale price has significantly dropped over past months, taking it down all the way to 2020 levels. This data reinforces my hypothesis of an easy point of entry for new collectors. And with a low entry barrier, collectors enter the NFT world, make an ‘investment’, sadly not be concerned to display and ‘consume’ the art, and eventually exit by making a profitable sale. It feels more like a share/stock purchase where naturally you do not display the share-certificate on your wall!

Again, commerce in art is important. But NFT, by its very format, encourages and simplifies transaction and ownership, and, not engagement with art per se. I feel the brick-and-mortar world, though intimidating at times, asks for a commitment. More often than not, people who buy a painting or sculpture, or even a digital work by ‘visiting’ a gallery for instance, do so to place it in their homes and to live with it. Even with eventual resale, the work is engaged with by being viewed over time. A generation that likes its books and music, family photos and all personal documents on the cloud, a generation that prefers to use a cab-hailing app than to own a car, will love digital art through NFTs. But buying art in the physical world demands a higher intention to own for a purpose beyond commerce. Entry barrier is relatively higher, and therefore it is less casual.

That said, it is still nascent days. As I write these words, NFT galleries are being launched. I sincerely hope that while one problem seems to be addressed with the NFT ecosystem, there will soon be a time when the more foundational aspect will follow suit, somehow. And that is to engage with art!

I am thankful to Aditya Chawla for his patience and hours of conversation with me on the topic of NFT. He is himself a prolific digital artist who goes by handle @boltminor on all platforms.