Non-Fungible Trouble: The Shortcomings and Consequences of NFTs for Art Distribution
Today’s world is incredibly connected digitally. We develop and deploy ideas to be absorbed by others all around the world in the blink of an eye. Creators and tech entrepreneurs alike race to find or catch wind of the next big thing in the hopes of elevating their craft — or their wealth. In a society so besotted with the ideals of progress and innovation, anything relating to technological advancement combined with high-concept creativity is lauded, especially when the general population can easily access it. NFTs are one of the more recent major developments that fit this bill. At the intersection of technology and art, the craze surrounding NFTs has ensured its persistence in the forefront of our vision, compelling us to participate. Entrepreneur Anil Dash originally created NFTs as a means for artists to have more ownership of their work. They have since grown far beyond this concept, for better or for worse. Though innocuous enough in theory, a considerable amount of discourse surrounds NFTs, and for good reason. In addition to numerous issues regarding scams, exploitation, and long-term viability, the Ethereum blockchain, produces shocking amounts of emissions in handling NFT transactions. Every listing, purchase, and sale takes a certain amount of computing power to complete, and every small transaction adds up enough to raise concerns about their environmental impact. For each staunch supporter of the medium, there is an equally staunch dissenter; yet more people exist in between, apprehensive of the aforementioned issues, but made interested by uplifting rags-to-riches stories recounted by the artists who have found success from the NFT craze. NFTs create opportunities for independent artists to have more control over the distribution of their work, but are unsustainable long-term due to the archaic structures they are built on and their damaging environmental effects. In a world facing a climate crisis, it is imperative that a more sustainable alternative is found — if at all possible.
NFTs, in essence, are a type of digital token meant to represent a certain amount of cryptocurrency; they are a combination of some form of digital media and what is essentially a digital certificate of authenticity. Artists create NFTs to sell, in cryptocurrency, to potential buyers, similar to selling physical art at auctions. However, unlike the physical art collection world, which is often restricted to elite circles, the NFT market has little barrier to entry. Anyone can create a digital image and list it on one of many available online NFT marketplaces. This is appealing to many digital artists, especially those who rely on social media and direct marketing to make a living. After all, if they are already hosting their work on the Internet, it would seem natural to also sell them on the Internet, despite potential risks.
A combination of material costs, limited opportunities, and the risk of losing authorship when posting work online make it difficult for many artists to make a living from their craft. NFTs offer a potential solution for this and are structured such that any artists familiar with using online tools to market and sell their work can easily make the switch. They promote the intellectual protections seen in the music industry, for the visual art industry. Artists can make more money from their work at a reduced cost, something especially relevant in countries where access to supplies, exhibits, and galleries is often difficult. Take, for example, the story of Yatreda, an Ethiopia-based art collective. Prior to the rise of NFTs, they distributed their work through social media or directly to clients. They were unsure of the amount of ownership and control they really had over their work. Being in Ethiopia also limited their opportunities for displaying and selling their work in-person at galleries and museums worldwide due to distance and cost. All too frequently, art dealers will also seek out artists in developing countries and take advantage of their work, flipping it on European or American markets (Brooks). NFTs, by contrast, allow artists to earn money both when they first sell their work and each time their NFT is resold. After transitioning to selling NFTs, Yatreda felt much more certain about how their art was being distributed. For artists like Yatreda, NFTs can be a way to preserve personally or culturally significant art while also presenting it for a wider audience to discover and learn about. The author of the article puts it succinctly: “Cryptocurrency is known for its decentralization. Here, in practice, NFTs also have the potential to decentralize the art world itself by eliminating global barriers and making this market accessible to those who have been historically excluded” (Brooks). Indeed, NFTs represent a real-world application for the decentralized nature of cryptocurrency and help reiterate the importance of accessibility for artists.
NFTs evidently have vast potential to revolutionalize the art world. However, the technology does not come without a cost — a monumental one. The most glaring evidence against NFTs lie in the environmental impact they have. On a technical level, NFTs are extremely power-consuming and create large amounts of emissions. For example, an NFT featuring a GIF image of a cat — a relatively small file — has a carbon footprint “equivalent to an EU residents’ electricity usage for two months” (Calma). This is especially concerning when taking into account that there currently exist millions of NFs, with more being made by the minute. All parts of an NFT transaction, from listing to bidding, require calculating power, and this truly adds up. Proponents of NFTs, predictably, became aware of this early on. In an attempt to take advantage of such a lucrative market while reducing the damage it causes, initiatives have been developed to reduce the environmental effects of the NFT market.
An NFT featuring a GIF image of a cat — a relatively small file — has a carbon footprint “equivalent to an EU residents’ electricity usage for two months” (Calma).
However, “carbon-neutral” alternatives to traditional NFTs do not mitigate enough of their negative effects to be truly sustainable. There are a couple of solutions that are often presented as a counter-argument to the environment-based critiques of the technology. The first is paying for carbon offsets. The idea is that a portion of the profits made off of NFTs go directly to organizations dedicated to reducing emissions. ArtStation, an online art portfolio platform, announced its plans to develop an NFT marketplace, initially justifying it by promising to pay for carbon offsets; however, after a wave of backlash, they scrapped the plan (Hayward). The issue with carbon offsetting is that it doesn’t actually prevent the problem from happening in the first place; it is a reactive measure to damage that has already been caused. In addition, the funds to pay these offsets could very possibly be drawn from the artists’ earnings.
A second, somewhat more viable solution has to do with what is called a “proof-of-stake” system. Proof-of-stake operates on a non-Ethereum blockchain and requires less computing power at the cost of it being more centralized. The main argument surrounding proof-of-stake is that those who have larger “stakes” in the blockchain are more likely to ensure transactions in the blockchain are secure, thus eliminating the need for the power-intensive calculations traditional NFTs require to validate transactions (Wolf). Replacing the current Ethereum-based NFT system with a proof-of-stake model would drastically reduce carbon emissions. However, this system’s more centralized nature presents a major shortcoming, as one of the main appeals of the Ethereum blockchain is its decentralized nature.
Unfortunately, the demand for more eco-friendly NFTs is currently too low to drive enough of a change in the environmental effects of NFTs. Even if these solutions could replace Ethereum-blockchain NFTs, it would require an immense amount of effort and cooperation to make this switch happen. Ethereum itself has long made promises of switching to a proof-of-stake model, but this initiative — originally slated to occur in 2019 — has been delayed several times and will likely not occur in the immediate future (Calma). If these changes cannot be made internally, there is a limit to how much external pressure can make up for it.
Another shortcoming of NFT technology is that it is still heavily dependent on pre-blockchain technologies that are not guaranteed to exist in the future, meaning that the whole system could collapse at any given point. NFTs are not self-sufficient. Anil Dash, the original creator of NFT (who has since disowned the technology), details the instability of current NFT structures: “All common NFT platforms today share…weaknesses. They still depend on one company staying in business to verify your art. They still depend on the old-fashioned pre-blockchain internet, where an artwork would suddenly vanish if someone forgot to renew a domain name” (Dash). The positive hype surrounding NFTs — rife with buzzwords like “decentralized” and “certificate” — has fostered the idea that they are extremely secure and indestructible. Upon analysis of the structures they are constructed on, we can see that this is far from the truth. More conceptually, “NFT culture” is rapidly intertwining with elite culture, trapping art within the reaches of those who can afford it. The original intent of NFTs has become muddled as the world’s financial elite take advantage of it, claiming it for their own financial endeavors. In his article, succinctly titled “NFTs Weren’t Supposed to End Like This”, Dash details how his creation, originally intended for artists, never reached its intended potential due to exploitation, almost becoming the thing it was designed to circumvent. He draws comparisons between NFTs and real estate — both being used as tools for the ultra-wealthy to store their money, with little consideration for the actual asset. NFTs aren’t bought for their art, just as real estate isn’t bought to be lived in. Those with large amounts of crypto-wealth are using NFTs as a means of redistributing their assets and sometimes laundering money — completely removed from the art-preservative aspect the technology was founded on.
In spite of their numerous issues, NFTs have undoubtedly sparked an important conversation surrounding the ownership of intellectual property. Social media in and of itself is limiting to artists, as it only promises visibility, with no set structures for artists to reliably make money from their work. NFTs, currently, are the most lucrative alternative for Internet-based artists, and, judging by their hype, they aren’t going away anytime soon. So, how do we manage NFTs so that the technology’s benefits can be used in the most constructive ways possible while reducing their damage as much as possible? Can a realistic balance be struck?
In an ideal world, only those who would benefit financially or artistically from NFTs should use them, not those who exploit them. There is arguably a difference between those who have been artists before NFTs and those who started creating for the sake of exploiting the hype. However, this distinction is too unclear to be used to determine who “deserves” to sell NFTs or not. After all, if NFTs were introduced as a means for anyone to buy and sell art, it would be hypocritical to exclude even those who are exploiting them. In the end, there is no systemic means for us to judge who can and can’t use NFTs — if any changes are to be made, they must be systemic, and all-encompassing.
I believe that there is promise in some of the alternatives mentioned earlier on. It may be improbable that Ethereum makes a complete shift to a proof-of-stake model anytime soon, but it is not impossible. What we are currently missing is the initiative to advocate for such a change. For NFTs to exist in a non-damaging way, the public must shift its understanding of the environmental effects of NFTs and foster a greater concern for the planet they live on. To combat exploitation of the technology purely for financial gain, we must promote a cultural shift that places the meaning behind art higher than its potential use as a commodity.
References:
Brooks, Ellis. “NFTs Are Critical for the Future of Art.” Medium, OneZero, 21 Dec. 2021,
https://onezero.medium.com/nfts-are-critical-for-the-future-of-art-47229311dcf8.
Calma, Justine. “The Climate Controversy Swirling around NFTs.” The Verge, The Verge, 15
Mar. 2021,
www.theverge.com/2021/3/15/22328203/nft-cryptoart-ethereum-blockchain-climate-change.
Dash, Anil. “NFTs Weren’t Supposed to End like This.” The Atlantic, Atlantic Media Company,
2 Apr. 2021,
www.theatlantic.com/ideas/archive/2021/04/nfts-werent-supposed-end-like/618488/.
Hayward, Andrew. “Artstation Rethinks NFT Crypto Art Push after Environmental Backlash.”
Decrypt, Decrypt, 9 Mar. 2021,
decrypt.co/60795/artstation-nft-crypto-art-environmental-backlash.
Wolf, Jared. “What Is Proof of Stake?” ONE37pm, 4 Jan. 2022,
www.one37pm.com/nft/tech/what-is-proof-of-stake.
