What are NFTs? Who is Beeple? A craze for digital art explained

Before Beeple, there was William Shatner.

In July, the actor, singer and author of “TekWar” from “Star Trek” created a series of collectible cards containing images of his career – a telegram from a producer, a photo from his first model shoot, an x-ray of her teeth – and listed them as unique digital tokens to sell online.

In nine minutes, the entire series of 125,000 tokens sold out, for about $ 1 each. At the time, that seemed like a lot of money for digital artifacts with no real value.

Now, not so much.

Known as NFT, these tokens have taken off in recent weeks in what is either an ecologically destructive speculative bubble or a promising new funding model for art and media, depending on who you ask.

In the months since Shatner’s tokens hit the market, companies have sprung up to create collectible cards from popular NBA music videos, and performers have rushed to cash in on the craze. . On Thursday, a digital collage by graphic designer Mike Winkelmann, named Beeple, sold at Christie’s auction for $ 69 million. The auction house declared Winkelmann “among the three most valuable living artists”, but the growing value of his work – as of last month the pieces were in the single-digit millions – reflects a greater frenzy around everything. regards NFT.

The basic idea of ​​the technology is quite simple. An NFT – which stands for non-fungible token – is like a certificate of authenticity for an object, real or virtual. The unique digital file is stored on a blockchain network, with any change in ownership verified by a global network and recorded in public. This means that the chain of custody is permanently marked in the file itself and it is virtually impossible to exchange a fake.

In contrast, bitcoins and other cryptocurrencies are fungible tokens; like a US dollar, any bitcoin is equal to any other, while NFTs are unique. Most of the NFT sales to date have been made in cryptocurrencies such as ether and recorded on the associated ethereum blockchain, although this is not a requirement of the form.

The NFT file does not contain the digital artwork, the video clip, or the Shatner card itself. It’s just a kind of contract, saying that “the owner of this DTV owns this other digital file”, often with a link to the art file itself. NFTs could also be used as tamper-proof digital tickets to events, or even as property records for property sales – all they really are are unique pieces of code with a verifiable chain of title attached.

A game called CryptoKitties used this technology from the start. As of 2017, users can buy and sell collectible NFTs tied to individual virtual chats, and prices jumped to six digits in early 2018. The same company behind CryptoKitties, Dapper Labs, is also behind the booming NBA collectible music video company Top Shot. , which sold $ 230 million in NFT related to basketball highlights from October through January.

The appeal of NFTs to collectors is obvious: Instead of relying on forensic analyzes or patchy document records to prove that a work of art or a collectible card is the real deal, the Authentication is encoded in the NFT file itself.

The appeal of NFTs currently bought and sold for millions is less intuitive. An NFT file in and of itself is not a physical collectible card, which someone might appreciate for its rarity in a historical production run or want to complete a collection. It is also not a work of art, much less a famous work of art with a reputation as an object of beauty or of historical interest. And in the case of digital files typically attached to NFTs today, anyone can watch the same basketball highlights anytime, or save a copy of the same digital image to their own hard drive. All an NFT does is authenticate and record the provenance of the NFT itself, as with a limited edition reproduction of a photograph – but when the art object attached to the NFT is freely available, there is no inherent reason why it would have any value at all.

This is where the collective imagination of the market comes in. Lacking in intrinsic value, NFTs come close to how art and collectible cards can function as financial instruments for investors.

The elite art market, though scaffolded by an industry of experts and taste makers who ostensibly influence the value of individual works of art, has been disconnected from all material reality for decades. Many art buyers buy art because it’s valuable, not because it’s art, and then store it in warehouses until they see fit to liquidate it in as an asset on their books and sell it to a new buyer who also values ​​it as a financial asset. .

The collectible card market was unleashed in 2020, with auction prices for rare cards breaking records at a sustained rate: $ 900,000 for a card with LeBron James and Michael Jordan together in February, 1.8 million dollars for another LeBron card in July and $ 1.81 million for a Giannis Antetokounmpo card in September. In October, a 1909 Honus Wagner card cost $ 3.25 million.

Cards themselves have not changed, but as an asset class they have become, like fine art, more attractive to investors and speculators looking for a store of value and returns. potentials.

NFTs take the same principle – anything unique and verifiable can become a place to park money and make returns – and open it up to any real or virtual object imaginable. Jack Dorsey, chief executive of Twitter, is auctioning an NFT linked to his first tweet on a website dedicated entirely to selling NFT’s tweets, and the auction is $ 2.5 million. Some people sell NFT of other people’s art without their consent. If you want, you can try selling an NFT for the moon.

But this creation of value out of thin air comes with real costs. Processing cryptocurrency transactions requires a huge amount of computing power, which has raised environmental concerns about the boom. Joanie Lemercier, an environmentally conscious French artist who closely monitors her studio’s power consumption, was dismayed to learn that selling just six of her own pieces as NFT used more electricity in one day than in the previous two years. On a larger scale, the computer networks that collectively make up the bitcoin and ethereum blockchains are estimated to consume as much electricity as Argentina and Ecuador, respectively, each year.

Besides the high cost of energy, there is no guarantee that NFTs will retain their value in the long run – just as there was no reason to believe that a piece of paper with a picture of Honus Wagner would ever be worth more. than the card stock it was printed on in 1909.

But for now, many artists are taking advantage of the craze. People who struggled to generate income from their art by soliciting tips or selling physical prints can apply an NFT on a coin and withdraw thousands of dollars.

The world of music has also started to put its feet in the water. Kings of Leon released a new album last Friday via all typical channels, but decided to drop three NFTs at the same time, sweetening the deal for fans (who may also be NFT speculators) by offering bonuses of album, live show benefits and additional artwork to buyers.

Mike Shinoda, original member of Linkin Park, the nu metal rap-rock group who started their own venture capital firm in 2015, became one of the first musicians to release a single alongside an NFT in late February. . Buyers paid thousands of dollars for one of 10 75-second music videos for the song “Happy Endings”, complete with animated illustration, with the proceeds going to ArtCenter College of Design in Pasadena.

In Shinoda’s case, buyers also received a signed physical copy of the album cover art in the mail. But the real world is irrelevant. “Just accept it. It’s not about the physical article, ”Shinoda said in an interview with Input Magazine. “It’s about the concept of ownership. ” Sure why not?

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LA Times Today: The NFT Digital Art Craze Explained

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