The Ineffable NFT
Back in my grad school days there was a relatively new player in the marketplace. Its name was eBay, and it offered up a new way to connect buyers and sellers. As the site grew in popularity, it seemed everyone began digging through their garages and attics, placing newly rediscovered knickknacks for sale. In 2001, I noticed and wrote about an unplanned side-effect this was having on the marketplace—with millions of sellers worldwide, all those “rare” objects suddenly weren’t so rare anymore. Fast forward twenty years and I see another disruptor take the lead—NFTs.
No matter what industry you’re in, you surely have heard of non-fungible tokens by now. Even so, despite being seemingly everywhere (and nowhere at the same time), they can be difficult to understand for non-technoids accustomed to consuming products they can actually hold. For a basic crash course, the Wall Street Journal produced an excellent video (complete with cartoons) describing what they are and how they work.
In the past few weeks NFTs have exploded onto the world stage, in part due to a recent sale at Christie’s of a digital collage by the artist Beeple. Since then, it seems everyone is jumping onto the Nifty bandwagon. But don’t fool yourself into thinking this is just a passing fad. Even if you’re not ready to payout $9,000 for a slice of pixilated pizza, NFTs are here to stay, promising to disrupt the way we create, consume, and collect.
Just like eBay did for historic ephemera and Peanut’s lunchboxes, the digital revolution put the world at our fingertips. But where eBay made the obscure seem commonplace, NFTs do just the opposite—they provide rarity to what’s now easily copied. Why is this important? Ask any artist that works in digital media. Before NFTs, creators of digital art had no way to authenticate original work. Because these digital files are so easily shared and reproduced, it was impossible to distinguish which of the thousands of versions was an original. NFTs change that. By creating a blockchain ledger, ownership is easily tracked. What’s more, artists can also add a resale royalty to the file’s metadata, thus receiving a percentage whenever the artwork is resold. Though such payments are commonplace in Europe and industries like film and music, visual artists in the United States have long fought for the right to receive compensation when their work appreciates on the secondary markets. In short, NFTs will be a game changer.
While artist equity is important, it’s difficult for many to understand the appeal of collecting art that can’t be hung on the wall. I won’t go into the many social and psychological reasons why people collect what they do—some people value Picasso, others value YEEZY. To understand the future for these digital creations you must first foresee the future of the metaverse. With rapid advancements in AR and VR, we are quickly blurring the distinction between the physical world and the digital one. By 2030, AR glasses will allow people to live in both simultaneously. Just like a Snapchat filter, MR (mixed reality) will superimpose digital assets over physical ones—and also include haptic feedback. Instead of teleconferencing on Zoom, people from distant locations will appear virtually in your office, no screen needed, and be able to shake your hand when the meeting is over. The quality of this technology will improve to such a high quality it will rival real life. So that Beeple can hang on your wall after all. While all this may sound like science fiction, such technology is already in the works. And while I agree there’s something eerily Matrix-like about being plugged into a machine and fed different realities, here’s hoping such tech will also offer opportunities to unplug (perhaps literally).
I am not recommending you should sell your house and buy a digital one—yet. NFTs are most definitely in a Beeple Bubble right now. And while the tokens offer promise, they are not without their faults. Bill Gates has already come out against blockchain, the technology that powers NFTs, because of its large energy consumption. Others have pointed that piracy is rampant since anyone, not just the original creator, can create an NFT for an image. Lastly, there’s the pesky little issue of broken links obliterating the blockchain that ties you to your multi-million dollar investment. But it’s important to remember that this technology is still quite new. I’m confident these issues will be worked out as the it advances.
It’s also worth noting that Beeple has already swapped out his Ethereum wallet for a real one. Probably a good call.
