NFTs are shaking up a few realities of the markets. That's a good thing. A plea for more digital daring.
In the beginning, when Beeple created an NFT, the market for digital art was a formless void, and darkness covered the face of the art dealers, and the wind of infinite duplication swept over the Internet. And Beeple said: Let my NFT be unique. And it was unique and brought in $69 million. And Beeple saw that the work was good.
It's a creation story that happened on March 11, when artist Beeple sold his work "Everydays: The first 5000 days" for $69 million at a Christie's auction. The event was not a tribute to the past, it was a bet on the future. It did not involve a traditional work of art, but an NFT, a Non-Fungible Token. It was also a bet against the established laws of the market.
A Non-Fungible Token is a digitized token that represents a certified original. Anything digital can be turned into an NFT – photos, GIFs, video, an MRI image of my brain as I am writing this column. Such digital objects can be copied infinitely, but not the NFT, because it is registered on a blockchain, making it unique and unchangeable.
The NFT of a work of art reflects what the German philosopher Walter Benjamin in his essay “The Work of Art in the Age of Mechanical Reproduction” (1935) called "aura" and described as "authenticity", "uniqueness" and “cult value”. Benjamin was worried about this "aura", because the "mechanical reproducibility" of a work of art was destroying it. With the help of the blockchain, this "aura" is up for salvage again. For digital art, this opens up a whole new resonance space in the market. Suddenly it regains what had been lost in the digital era: uniqueness and scarcity. They stand for the material value of an art piece. A collector wouldn't pay enormous sums for a simple print of a Picasso, but the original makes goes for 30 million.
Beeple has earned respect, after all, at least from those who see $69 million as a success in principle. Many others see NFTs as just the next bubble or even the next rip-off in digital capitalism. But let’s not jump to conclusions too quickly.
NFTs open up an elite market for actors who previously had no access to it, and their potential use extends far beyond the arts. Any person who produces a digital product can make an NFT of it and sell it. You don't even need a traditional platform for that, like Beeple used with Christie's. There are plenty of marketplaces where NFTs can be traded. Not every sale brings in millions, but anyone can produce an NFT and offer it for sale to millions of others. When a tweet from Twitter founder and CEO Jack Dorsey rakes in almost three million dollars, you can shake your head in horror – or you can rather use the energy to think about what’s happening.
After all, NFTs, in the spirit of creative destruction, shake up a few realities of the markets. There's the ownership of things, which thought leaders like Jeremy Rifkin wanted to consign to the history books forever and replace with access. As it turns out, people don't always like their possessions to evaporate into the digital realm. Rights to material assets are still part of our economic success. As a symbolic value, they pay into a person's social capital. NFTs now install the proof of authenticity of digital copies and their ownership in the digital source code of our society.
Due to their unique, decentralized, and immutable registration on the blockchain, NFTs also thwart the institutional mechanisms of the market. Trust is created not by the guaranteeing institution, but precisely because no such institution is involved in the process. Because NFTs can be fractionalized, they open up new possibilities for community ownership and crowdfunding.
In the meantime, there is already a lot of whining about how many things can go wrong with these NFTs. That may be so. But every creation story produces failure and is accompanied by destruction. First of all we should figure out how they work and what potential relevance they have to people’s everyday experience. Of the first 5,000 days of the era of NFTs, only a few are past.