Are NFTs the future of art?

Great power comes with great responsibility, and that is particularly true of new technologies. Each month, Tech for Good discusses the potential benefits and dangers of technological advances that are coming to market. This month we ask: Are NFTs the future of art?

Tech for good:

Traditional art is struggling. The 2021 mid-year Art Market report by Art Basel and UBS Global showed that art sales values dropped by 20% in the dealer sector last year alone. Moreover, with the coming of the digital era, where people can reproduce works of art in seconds without compensating the artist, it is no wonder that artists have jumped at the promise of NFTs.

Non-fungible tokens (NFTs) are original, unique digital collectables. They hold a unique string of code, stored on the blockchain and, in contrast to digital art, they cannot be reproduced, allowing them to become part of the art market. And the profits show it. A few months ago, Sotheby’s Natively Digital NFT auction took in $17.1 million and Christie’s auction of an NFT by Beeple sold for $69 million.

But art is just the beginning. NFTs have the potential to create real authenticity around personal identity, which can be used for any type of transaction. Already, Facebook is taking part in the building of the metaverse, Nike is creating NFT verification on shoes, and Coinbase is building a NFT marketplace. Whether we like it or not, NFTs are here to stay.

What the expert says: “The opportunities with NFTs are honestly boundless. The concept starts with uniqueness and you can apply that to anything. You will be able to NFT any asset you can think of, whether it’s an art piece or the deed to a building.” Dr Merav Ozair, faculty member at Rutgers Business School and research director of the RBS Blockchain Hub.

Tech for bad:

Do the benefits of NFTs compensate their terrible environmental impact? That is the question almost everyone in the art industry is asking themselves.

NFTs are intrinsically connected to cryptocurrency, and the huge amounts of energy that is needed to mine them. An estimate made by cdigital creator Memo Akten and backed by independent researchers found that the creation of an average NFT has a stunning environmental footprint of over 200 kilograms of planet-warming carbon, the equivalent to driving 500 miles in a typical American gasoline-powered car. The purchase of the NFT “Space Cat,” — a GIF of a cat in a rocket heading to the Moon — has the same carbon footprint as an EU resident’s electricity usage for two months.

At a time when the world is pivoting towards sustainable business practices, the rise of NFTs seems to undermine any progress made in that direction. ArtStation, an online marketplace for digital artists, recently cancelled its plans to launch a platform for NFTs within hours of launching it, in response to the backlash received regarding the technology’s emissions.

Perhaps the technology can evolve to a system that isn’t harmful to the environment. Until then, the use of NFTs will be directly opposed to any improvements made in the fight against climate change.

What the expert says: “It turns out my release of six CryptoArt works consumed in 10 seconds more electricity than the entire studio over the past two years. It felt like madness to even consider continuing that practice.” French artist Joanie Lemercier