🖼NFTs are transforming the art market by solving the problem of digital scarcity🖌
Last week, we took an in-depth look at the impact of NFTs on the gaming world. But gaming is not the only industry being transformed by NFTs. This week, we continue our focus on the revolutionary potential of NFTs by looking at how they are shaking up the art world by helping digital artists monetise their work.
In February and March 2021, Christie’s became the first major auction house to offer a purely digital artwork tied to a non-fungible token (NFT). The work in question — Beeple’s Everydays: The First 5,000 Days — sold for an unprecedented $69million, making it not only the most expensive NFT ever sold but also placing Beeple amongst the most expensive living artists in any medium.
Breathless headlines soon followed, not just in the tech and art press but in major newspapers too. And though, inevitably, much of the focus was on the question, “what even are NFTs, anyway?”, it was impossible to deny that they had finally burst into the mainstream — and there was no going back.
However, the headline-grabbing sales figures are only part of the story when it comes to NFTs in art — and perhaps the least important part. After all, both art and tech history are full of speculative bubbles that suddenly and spectacularly burst. So what’s to say NFTs won’t just be a bleeding-edge version of “tulip mania”?
To understand the truly revolutionary nature of NFTs, we need to look beyond the million-dollar auctions. NFTs are not just a handy way to sell digital art — they represent a fundamental transformation in what ownership means in an increasingly digital world. And however pronounced the boom-and-bust cycles may prove to be over the coming years, the impact of NFTs will likely be irreversible.
In this post, we’ll explore how NFTs have already changed the landscape of the art world by removing long-standing barriers to entry and cutting out the slow-moving and exclusionary institutional middlemen. We’ll also look at how their innovative solution to the problem of digital scarcity is helping to bring digital art in from the margins of the art world.
Finally, and most importantly, we’ll show how the Cudos network will help solve the pressing issues — from high costs to outsized carbon footprints — that are still preventing NFTs from reaching their full impact.
The marginalisation of digital art
Though Mike Winkelmann, aka Beeple, now sits just behind Jeff Koons and David Hockney atop the list of the most valuable living artists by auction price, art world acceptance has been a long time coming. While Beeple had been making digital art since the mid-2000s and was, in his own words, “making a good living from commercial work,” his career was marked by indifference — or outright rejection — from the art market. And he wasn’t alone: despite having a half-century of history behind it, digital art remained peripheral in the art world, a niche concern at best.
And there is a straightforward explanation for this otherwise somewhat strange fact. As Beeple himself put it, if his art was “ignored” by the traditional art galleries and auction houses that still dominate the art market, it’s because “[t]here was no way to collect it”.
Or maybe we should say the opposite: Beeple’s work was of limited interest to the art market because it was too easy to collect. After all, Everydays was a series of 5000 daily artworks, the majority posted on Instagram. These images were freely viewable to his millions of followers and easy to screenshot or save. But, as the host of the interview quoted above summarises, “why would anyone pay so much money for something they could just copy and paste off the internet?”
Lurking behind this question is an issue that has haunted the art world for at least a century: how do you assign value to something that can be easily and indefinitely reproduced? To understand the full scope of this issue, we need to look a little more closely at how traditional artworks have been able to command extraordinary sums from wealthy collectors.
Artworks and auras: The problem of digital scarcity
While Beeple’s $69m sale is a watershed moment in the history of digital art, it still falls far short of the sums paid for the most expensive artworks ever sold.
In September 2015, the American hedge fund manager Kenneth Griffin paid $300million for the painting Interchange (1955) by the Dutch-American abstract expressionist Willem de Kooning. This made it, at the time, the most expensive work of art ever sold. In the same sale, Griffin also bought Number 17a by Jackson Pollock for a similarly eye-watering $200million.
While the sheer amount of money involved in this sale is truly astronomical, it is in some ways quite easy to understand why someone might be willing to spend half a billion dollars on two paintings. The role played by gems and precious metals in even the very earliest human civilisations shows that rarity and beauty have always been seen as a source of value. Art collecting in its modern sense dates back to the Renaissance when noble Italian families highlighted their wealth and culture by collecting ancient and contemporary artworks.
But using art as a symbol of wealth and power relies on the same aspect that gives diamonds and pearls a similar function: as well as being visually appealing, they are extremely hard to come by. Their scarcity defines their value. Artworks, like diamonds, cannot be easily multiplied.
Or can they?
If you’re wondering what this $300m painting looks like, you can simply Google it. Almost immediately, you’ll be presented with a range of images of the painting — endless digital reproductions of varying size and fidelity. You can easily save one of these images to your device, send it in a group chat to your friends, or post it on your social media. All this within seconds. This painting, worth almost a third of a billion dollars, has been and will continue to be reproduced endlessly.
At the same time, it’s clear to even the most ardent digital natives that something is missing here. Head over to the Wikipedia page for the painting, and you’ll see that it’s a relatively large work — just over two metres tall and almost the same in width. It is far larger than most people’s computer monitors, never mind your smartphone screen. It’s also clear from even the lowest-quality images that the painting is thickly textured and layered. You can imagine — but only imagine — that if you were to stand in front of the physical painting, you would be able to see the actual material of the paint, see the traces of the brush de Kooning used to apply it to the canvas, smell its vague chemical residue. You would be able to see the actual, physical impression that de Kooning’s gestures made — the origin of the work itself right in front of you, towering six and a half feet tall. And no digital reproduction can substitute for this unique experience of the thing itself.
What the reproductions miss, and will always miss, is what the German-Jewish critic Walter Benjamin called the “aura” of the work of art. The aura is the invisible, ineffable thing that makes people crowd before the Mona Lisa or make long detours to see their favourite Vermeer. Benjamin argues that this aura comes from the “authenticity” of the work — its “unique existence in time and space” and the history through which it has passed. This history connects the viewer standing before it today back through the centuries to the gestures and movements of the artist.
Benjamin, writing in 1935, saw that the emergence of the technologies of mass reproduction — he was thinking of photography and cinema — posed a challenge to the traditional work of art. But he also recognised the very thing we can experience for ourselves by comparing our flat digital image of Interchange to what we imagine of the painting itself. We experience the distance that separates, and will always separate, the copy from the original.
This leads us back to Beeple, the successful digital artist fielding commissions from major companies but soundly ignored by the art market. Beeple’s work is natively digital — which is another way of saying, there is no original. The copy is the thing itself; the jpeg you save to your phone cannot be simply or straightforwardly distinguished from the “real” work out there in the world somewhere. And this means, ultimately, that the scarcity that underpins the value of art disappears. After all, why buy something when you can just right-click and “save as”?
Reproducibility is core to the disruptive power of the digital. The entire purpose of encoding information as a string of digits is to make it endlessly and easily reproducible. But in the context of the art market, it’s a major threat. For digital artists, this can be a death knell for their careers.
While Beeple could earn a living from commercial clients, other artists aren’t so lucky. For digital artists, struggling to monetise their work means compromising their ambitions, limiting their output, or just giving up and getting a day job. Ultimately, the art market closing itself off to natively digital work means that a vibrant and ever-growing community of skilled artists will struggle to make a viable living from their work. The fact that they are working in a medium that is increasingly shaping our daily lives makes this even more troubling. Today, we need digital art more than ever — and that’s why the importance of NFTs cannot be overstated.
The NFT revolution and the future of art
NFTs are a solution to digital scarcity. By tying ownership of natively digital artwork to an entry in a public, immutable ledger, the artwork becomes collectable. There is now a clear, verifiable way to distinguish the actual owner from those right-clickers who happen to have a copy on their hard drive.
The philosophical debates over whether this is a significant distinction — equivalent to that between Kenneth Grffin and those with a saved jpeg of Interchange, for instance — are ongoing. But for digital artists, the practical consequences have been immediate and transformative. This is because NFTs not only allow artists to assign ownership of digital works but they also can be minted and sold by anyone with access to an internet connection, using a range of open, decentralised marketplaces. As a result, they’re not only allowing digital artists to enter an art market still dominated by their peers working in paint and plaster but also to sidestep the art world’s exclusionary, slow-moving institutions entirely.
A few weeks after Beeple’s game-changing auction sale, Time magazine highlighted the work of the artist Jazmine Boykins. Boykins goes by the name “BLACKSNEAKERS” and moved into making digital art in 2019. She posted her work — colourful, vibrant representations of Black life — on Twitter and her website. In so doing, she faced the very same difficulties that had led Beeple to rely on his commercial work. But for Boykins these difficulties were compounded by the social, economic and institutional constraints that have long conspired to make the art world overwhelmingly white and male. Needless to say, the art market has not only been largely reluctant to engage with digital art — it has also been resistant or outright hostile to work by artists from marginalised backgrounds.
For Boykins, the rise of NFTs was transformative in how they helped solve the problem of monetising digital art and enabled artists to work outside of the narrow parameters of the art institutions. As she puts it: “You will have so many people from different backgrounds and genres coming in to share their art, connect with people and potentially build a career.” Sian Morson, founder of TheBlkChain, echoed Boykins’ sentiments in an interview with Forbes: “NFTs are providing an opportunity for diverse artists to make a living from their art. They are reaching collectors and are showing and sharing their work in ways that didn’t exist previously.”
Perhaps expectedly, the traditional art world itself has exhibited a mixed response. While auction houses such as Christie’s and Sotheby’s have embraced NFT auctions and the long-running, influential art fair Art Basel highlighted NFTs in its Miami-based event last September, there remains dissent over whether this is simply a short-term fad. Even more significantly, there is an ongoing debate over whether NFTs should be counted as art at all. Indeed, the editors of Wikipedia recently decided that NFTs should not be included in the art category but given a category of their own.
Of course, debates over what should and should not count as art have a long history. While Jackson Pollock’s work might now seem like the familiar, traditional option for collectors with hundreds of millions to spend, his “drip paintings” — produced by laying the canvas flat on the floor and dripping, pouring, and flicking paint onto it — were once subjected to the very same questions. But for an art world long used to accepting urinals and unmade beds as significant works, reluctance over jpegs seems hard to justify.
The environmental dangers of Ethereum-based NFTs
Of course, there are some legitimate causes for concern around the NFT boom. The attention drawn by Beeple’s success soon brought to light a significant issue that was already making artists wary of entering the NFT space: the environmental cost.
The NFT revolution was enabled by the Ethereum blockchain’s incorporation of smart contracts used for minting and transferring NFTs. Smart contracts are core to the value that NFTs offer to aspiring artists, including the ability to assign perpetual royalties to the original minter — in most cases, the artist themselves.
But Ethereum shares a problematic design feature with the most widely used blockchain protocol, Bitcoin. Both utilise proof of work as the consensus mechanism to ensure consistency across the network, They also vary the difficulty of the proof to manage the speed at which blocks are added to the chain. As the number of users competing to add blocks to the chain increases, the difficulty of the proof increases in tandem, and so too does the computational power required to solve it.
The result: the exploding popularity of NFTs, and the corresponding increase in transactions on Ethereum, results in increasing computational demands for miners on the network. And this computational power bears an enormous environmental cost. Joanie Lemercier, a French artist and climate activist, noted that his NFT collection “consumed in 10 seconds more electricity than [his] entire studio over the past two years”, undermining his years-long effort to reduce the environmental impact of his practice.
For those historically excluded from the art market looking to NFTs as a way to make a viable living from their art, there’s another problem: gas fees. Users wanting to make transactions on Ethereum are required to compensate miners for their trouble. The more complex the transaction and the more transactions taking place on the network at a given time, the more expensive the fees. In many cases, those artists most likely to benefit from the open, decentralised nature of the NFT market are those who can least afford to pay a premium for minting.
These problems, however, are not strictly NFT problems. Тhey are Ethereum problems. Cudos’ blockchain, which will be launching its mainnet in February, is built for sustainability and scalability — this means a significantly reduced environmental impact and minimal gas fees. By minting on the Cudos network, artists will no longer have to choose between compromising their environmental commitments or embracing the revolutionary possibilities of NFTs.
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Cudos is powering the metaverse bringing together DeFi, NFTs and gaming experiences to realise the vision of a decentralised Web 3.0, enabling all users to benefit from the growth of the network. We’re an interoperable, open platform launchpad that will provide the infrastructure required to meet the 1000x higher computing needs for the creation of fully immersive, gamified digital realities. Cudos is a Layer 1 blockchain and Layer 2 community-governed compute network, designed to ensure decentralised, permissionless access to high-performance computing at scale. Our native utility token CUDOS is the lifeblood of our network and offers an attractive annual yield and liquidity for stakers and holders.
Originally published at https://www.cudos.org.