What are Non-Fungible Tokens (NFTs)? And How Can a Work of Digital Art Sell for $69 Million

Value in the art world depends on manufactured desire for objects that serve no purpose and have no intrinsic meaning outside of the stories that surround them, which is why it can be easy to fool others with fraudulent copies. Collectors and experts are often eager to believe a well-told tale of special provenance. As Orson Welles says in F is for Fake, “Lots of oysters, only a few pearls. Rarity. The chief cause and encouragement of fakery and phoniness.”

“Concepts of fakery and originality bounce off one another as reflections,” Lidija Grozdanic writes of Welles’ documentary on “our innate infatuation with exclusivity,” a film made when the internet consisted of 36 routers and 42 host computers — in total (including a link in Hawaii!). Now we are immersed in hyperreality. Copies of digital artworks are indistinguishable from each other, since they cannot be said to exist in any material sense. How can they be authenticated? How can they become exclusive placeholders for wealth?

The questions have been taken up, and answered rather abruptly, it seems, by the architects of blockchain technology, who bring us NFTs, or “Non-Fungible Tokens,” an acronym and phraseology you’ve surely heard, whether you’ve felt inclined to learn what they mean. The videos featured today offer brief explanations, by reference especially to the case of South Carolina-based digital artist named Mike Winklemann, who goes by Beeple, and who first harnessed the power of NFTs to make millions.

Most recently, in a first-of-its-kind online auction at Christies, Beeple’s montage “‘Everydays — The First 5000 Days’… became the ‘What Does the Fox Say?‘ of art sales,” writes Erin Griffiths at The New York Times.

A crypto whale known only by the pseudonym Metakovan paid $69 million (with fees) for some indiscriminately collated pictures of cartoon monsters, gross-out gags and a breastfeeding Donald Trump — which suddenly makes this computer illustrator the third-highest-selling artist alive.

The criticism is perhaps unfair. As Christies argues in its defense, the piece reveals “Beeple’s enormous evolution as an artist” over five years. Specialist Noah Davis calls the collage, stitched together from Beeple’s body of work on Instagram, “a kind of Duchampian readymade.” But it doesn’t really matter if Beeple’s work is avant-garde high art.

The libertarian econo-speak “nonfungible token” reveals itself as part of a world divorced from the usual criteria art historians, curators, auction houses, and others apply in their judgments of authenticity and worth. Instead, the value of NFTs rests mainly on the fact that they are exclusive, without particularly high regard for what they include. One may love the work of Beeple, but we should be clear, “what Christie’s sold was not an object” — there is no object — “but a ‘nonfungible token,’” which is “bitcoinese for unique string of characters, logged on a blockchain,” that cannot be exchanged or replaced… like owning a Monet without owning a Monet.

Unlike the Wu Tang album Once Upon a Time in Shaolin, bought for $2 million in 2015 by Martin Shkreli, content attached to NFTs can be shared, viewed, copied, etc. over and over. “Millions of people have seen Beeple’s art,” the BBC explains, “and the image has been copied and shared countless times. In many cases, the artist even retains the copyright ownership of their work, so they can continue to produce and sell copies.”

Other sales of NFTs include a version of the 10-year-old internet meme Nyan Cat that sold for $600,000, a clip of LeBon James blocking a shot for $100,000, and a picture of Lindsay Lohan for $17,000, which then resold for $57,000. Lohan articulated the NFT ethos in a statement, saying, “I believe in a world which is financially decentralized.” This is not a world where judgments about the value of art and culture can be centralized either. But power can be, presumably, in the form of currency, crypto-and otherwise, traded in speculative bubbles.

“Some people compare it to buying an autographed print,” the BBC writes. Some compare it to the age-old scams warned of in folk tales. David Gerard, author of Attack of the 50 Foot Blockchain, calls NFT sellers “crypto-grifters… the same guys who’ve always been at it, trying to come up with a new form of worthless bean that they can sell for money.” This eternal scam exists beyond the binaries posed by F is for Fake. Originality, authenticity, or otherwise are mostly beside the point.

Related Content: 

The Art Market Demystified in Four Short Documentaries

Banksy Shreds His $1.4 Million Painting at Auction, Taking a Tradition of Artists Destroying Art to New Heights

Warhol: The Bellwether of the Art Market

Josh Jones is a writer and musician based in Durham, NC. Follow him at @jdmagness.

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