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.