Last week, my uncle sat me down at his relic of a dining table, beaming with excitement. He pulled out a phone to clumsily swipe through several pages of apps before landing on MetaMask, his “wallet,” as he called it. I waited in confusion as I stared at his leather cardholder perched next to him at the table, probably more worn than the surface itself. MetaMask wasn’t designed to carry a Visa or a Pinkberry loyalty card; it was my uncle’s NFT wallet.
Non-fungible tokens, or “NFTs,” are unique images or gifs stored on a digital ledger called a blockchain. To put it more simply, they are files combined with proof of ownership — a digital deed of sorts — and they are the hottest new thing to hit the art world.
I leaned in curiously, as Uncle Adam rarely gets worked up over digital things. In fact, he was always somewhat of a traditionalist in that regard — choosing paperback over Kindle, vinyl over Spotify. He even drives a stick shift. So, when my uncle enthusiastically scrolled down to reveal a collection of three highly pixelated cartoon characters, I found myself scratching my head.
“These are my CryptoPunks!”
“Crypto-what’s?” I replied. This was all very foreign to me.
“CryptoPunks! There are only 10,000 in existence, and each is unique. They’re NFTs.”
Uncle Adam’s CryptoPunks are part of a collection of non-fungible tokens created by Larva Labs, a software development firm-turned-NFT art collective. CryptoPunks aren’t painted or drawn, but instead generated by a computer algorithm. Larva Labs inputted a series of features, like a beanie or a moustache, and hit “enter.” This automatically spawned 10,000 unique characters, which are valued by the rarity of their features. However, CryptoPunks, like all NFTs, cannot be bought and sold using U.S. dollars. They can only be traded with Ethereum, one of the most widely circulated cryptocurrencies. Because of this, the price of a “Punk” is as volatile as the currency itself. In the last year, Ethereum has risen in value from $353 to $3,317 per coin, a near 1,000% increase, and with it so has the price of the Punks.
I couldn’t wrap my head around this overwhelming buzz. Paintings and photographs made sense to me — they’re tangible, something you can hang on a wall, see, touch and experience. But why would someone, even a seasoned art collector with the means to do so, part with thousands, or in some cases millions, of dollars for a digital work? It seems that traditional art collectors are not the largest customer base for NFTs, and they may never be. Instead, the NFT market has become a parallel art world, allowing a new age of enthusiasts to collect with no prior experience in velvet ropes and vodka martinis — democratizing a once-exclusive and elitist industry.
I very calmly voiced my confusion to my uncle:
“No offense, but who the f*ck buys these things?”
“Lots of people are getting crypto-rich,” Adam replied with a chuckle, seemingly taking no offense to my snarky remark. “They may not live in a mansion now, but they sure as hell could afford one with their Ethereum.”
The so-called “crypto-rich” come from all walks of life — a schoolteacher who invested $1,000 in Bitcoin five years ago, a young hacker who has been mining cryptocurrencies for several years, a Wall Street bigshot who invested in the right coin at the right time. All these people have one thing in common: They were early adopters. But, has that ship sailed for NFTs? Crypto believers seem to think not. They are diversifying their overnight fortunes by investing in NFTs, purely in hopes that digital art will outperform their coins. Although the long-term financial upside is yet to be determined, the creative potential is near limitless.
It seems that NFTs occupy the intersection of fine art and cryptocurrency. These two worlds are similar in many ways — both are highly speculative, spark mass controversy and are widely known to have cult-like followings. The main difference between the two, however, is their barrier to entry. Fine art ownership has notoriously been reserved for the ultra-rich, those willing to spend millions to hang museum-grade pieces above their Upper East Side mantles. Cryptocurrency, on the other hand, is now accessible to anyone with an Internet connection. Exchange platforms like Coinbase allow users to invest as little as two dollars in their coin of choice, meaning that any of the five billion people in the world who own a smartphone can begin their journey with crypto, and now, with NFTs.
For struggling artists, this is great news. Just as cryptocurrency has begun to democratize banking, NFTs provide a platform for all artists to monetize their work, regardless of their financial means. The music industry was similarly transformed through the emergence of streaming services like Napster and Spotify, which opened the doors of opportunity to independent artists. Instead of having to partner with a record label to pre-manufacture 10,000 CDs, musicians could digitally distribute their work to millions with the click of a button. In the same vein, visual artists can now create NFTs with virtually zero overhead using websites like Mintable and OpenSea. These sites act as marketplaces, allowing creators to upload and sell their work on the blockchain from the comfort of their homes. Being represented by a highly acclaimed gallery is no longer the only path to commercial success as an emerging artist.
However, the blockchain is not solely reserved for the unknown. Some of today’s most prolific artists are releasing digital collections of their own on it. Damien Hirst, a British contemporary artist whose physical works have fetched over $10,000,000 at auction, recently released his NFT collection “The Currency,” which offered 10,000 unique works priced at $2,000 each. If you wanted to own a Hirst NFT today, however, the cheapest one available would set you back $28,000. Similarly, contemporary artist Urs Fischer released his first NFT earlier this year which sold for $98,000, nearly 100 times its estimated value. Soaring prices have dumbfounded art insiders and newcomers alike. Critics largely argue that NFTs detract from the essence and core principles of visual art, though this argument seems to miss the point: an NFT is not a piece of art itself, but rather a new medium for artists to creatively interpret, one that has the potential to radically redefine the process of art creation entirely. Some creators have used the platform purely for the purpose of converting physical works into tradeable tokens. This approach, while profitable, is unsustainable and fails to capitalize on the unique opportunity presented by NFTs to reconceptualize art’s visual medium. Only when artists begin to push the bounds of this new digital format will the creative potential for the new medium truly be unlocked.
Maybe I was wrong about Uncle Adam all along. It seems that he isn’t simply the vinyl-spinning, stick shift-driving junkie of the past I had made him out to be, but instead, somewhat of a closeted futurist. Companies like Larva Labs and OpenSea are taking the ironclad conventions of the art world and flipping them upside down. NFTs are bigger than little pixelated cartoons on your screen or the gif that you proudly show off to your friends over a beer. They have forced a reckoning in a world where radical change was long overdue, symbolizing a shift in art culture toward a more inclusive future.