The NFT Renaissance — Why NFTs matter for Culture, Art, and the Future of Ownership

Published in

Geek Culture

6 min readSep 14, 2021

A true artist is not one who is inspired, but one who inspires others.
― Salvador Dali

On March 11, 2021, Christie's auctioned a piece of art for a whopping amount of $69 Million, making the artist Mike Winkelmann the third most expensive living artist. But there was something more unusual and unique about this specific auction. Mike Winkelmann is popularly known as Beeple. The buyer was Vignesh Sundaresan aka ‘Metakovan’. And the art was called Everyday: the First 5000 Days, a collage of 5000 digital images created by Beeple every day since May 2007. The headlines of the New York Times article read

JPG File Sells for $69 Million, as ‘NFT Mania’ Gathers Pace.

A transaction like this was not even possible a few years back. The question however that baffles people including me was why is this even needed and what is the point of NFTs.

https://onlineonly.christies.com/s/beeple-first-5000-days/beeple-b-1981-1/112924 — EVERYDAYS: THE FIRST 5000 DAYS by Beeple

A Brief Background

NFTs or Non-fungible Tokens are a unit of data that uses blockchain to certify the uniqueness and ownership of a digital asset. NFTs are similar to cryptocurrencies as they use the same technology as cryptocurrencies in identifying the owner of an asset. The way they are dissimilar is in the fungibility aspect. Every bitcoin or Ether is the same whereas NFTs are unique and not interchangeable.

Artist Kevin McCoy and Technologist Anil Dash created the first NFT way back in May 2014. (a reminder that magic happens when art intersects with technology) It was called Quantum and minted on the Namecoin Blockchain. This was during an era when digital art was proliferating online on platforms like Tumblr. They were frustrated by the rampant plagiarism and an absence of attribution. They named the technology monetized graphics. Apparently, when Dash and McCoy gave a live demonstration of their new “monetized graphics” system at the New Museum in New York City, they were laughed at. Paul Graham once wrote in his essay How to get startup ideas “Just as trying to think up startup ideas tends to produce bad ones, working on things that could be dismissed as “toys” often produces good ones.” Monetized Graphics or NFTs as we know them today in some ways is an illustration of this phenomenon.

The Value NFTs add

To understand what gap NFTs fill in today’s world, we need to take a quick trip into the evolution of art.

An abstract cross-hatched pattern drawn on a piece of rock found at Blombos Cave, South Africa is considered the oldest piece of art. This was created 73000 years ago. Since then, as human civilization has advanced so did the medium on which art is created.

Humans started by painting on rocks and walls. The Greeks in 5400 BC painted on clay jars, Egyptians created frescoes on the plaster of Paris and the Chinese painted on silk. Leonardo da Vinci painted his masterpiece Monalisa on a poplar wood panel. Van Gogh painted Starry Nights on canvas. The medium and tools artists use to create art today has changed.

The video below shows Beeple working on one of his artworks. The tools used include Adobe Photoshop, Cinema 4D, and Octane. The mediums of the 21st century are digital. People create art on screens and these artworks are digital native.

Beeple’s Process

But this change presented a challenge. Digital Art is fungible in nature and can be copied infinitely. In such a case, how do you assert who is the creator and owner of the art?

NFTs solved this by storing the data on the most secure data storage that exists today. NFTs also introduced a new business model which is more creator-friendly. Whenever an artwork changes hands, the original creator gets a percentage of the transaction. This enables artists to access the upside to their sold art pieces as they gain value.

The Limitations

NFTs in its current form is not perfect yet. The file itself is not stored on the blockchain and instead, the NFT has a link to the file stored on a central server. If the server goes down, you may still have a certificate but not the asset itself. Also, the NFTs have minimal or no semblance to real-world ownership. For instance, you may own an NFT for digital art but it does not entail copyright or licensing fees. NFTs don’t limit the access to the art (imagine people swamping the Lourve to see Monalisa) nor do they propagate the ownership where the image is present. Having said that, these are solvable problems and technology will evolve to present a more elegant version of NFTs.

Application beyond Art

While it is the NFT application in arts that has recently gotten the most coverage, NFTs are used for other digital assets too. In 2017, Dapper Labs launched a quirky virtual pet game called Cryptokitties on Ethereum. Each cryptokitty was unique and had traits called cattributes that could be passed on to their offspring (yes! they could be bred too). Cryptokitties got so popular that they once accounted for 25% of the traffic on Ethereum.

The Ethereum Name Service uses NFTs to provide a more human-readable Ethereum address as compared to the complicated hexadecimal representation of your Ethereum wallet address. NBATopshot in collaboration with NBA created digital collectible short videos of key NBA moments. NFTs are also being created as the center of exclusive clubs. For instance, Bored Ape Yacht Club is a collection of 10000 NFTs that not only makes you an owner of an Ape Avatar but also doubles as a membership card that gives you access to virtual worlds.

NFTs not only enable tokenization of any digital item but also provide an extremely reliable and durable way of storing proof of ownership for real-world assets too. Imagine a nation with political strife. When the records of ownerships are stored on the blockchain, it is proof that can be verified globally on-chain. A new regime may refuse to respect it but it cannot eliminate or obfuscate the record of the ownership.

From an adoption standpoint, Opensea, one of the leading NFT marketplace did $3 Billion of trade in August. At the start of the year, Opensea was doing a trading volume of $ 70K per day. By end of August, this had peaked at $225 Million.

NFTs opens up exciting possibilities for the future. A few months back, Michael Arrington, the founder of Techcrunch, sold his apartment in Kiev via an NFT. This illustrates ways in which NFTs can transcend the crypto and real-world economy boundaries.

This is the third part of a series of posts I’m writing on the evolution of the crypto ecosystem. You can find the first post here: Understanding the Decentralized World through the Crypto Winters and the second post here: The Summers of DeFi

Also, if you find crypto and DeFi specifically interesting, check out something new that we’re building: Brew

Acknowledgments

Mehul and Pritesh for the inputs
Eric for explaining to me the relevance of NFTs in art

References