The third-highest price ever achieved for an artwork by a living artist has been paid for a digital artwork, a NFT to be more precise. The new owner is now in possession of the digital collage “Everydays — The First 5000 Days ”created by artist Mike Winkelmann (“Beeple”). What are NFTs though and why would someone be willing to pay 69m $ at Christie’s to get a piece of computer code?

Non-fungible tokens (NFTs) are unique digital certifications of ownership which can refer to anything digital in theory. They are currently more often than not used to tokenize digital images, GIFs, videos or songs and function through blockchain technology, the same transparent computer networking technology behind cryptocurrencies like Bitcoin, which are used to trade NFTs. Of course, you can just download and copy digital art, NFTs oftentimes don’t even include the copyright ownership, which usually stays with the artist. However, the transparent blockchain technology allows for a method of verifying the unique ownership of a digital asset, which is what you pay for.  

While NFT technology has been around for a few years and entered the mainstream in 2017 through CryptoKittens, a platform allowing you to trade digital kittens, there is currently a new boom in NFT trading. Artists and social media influencers are seizing the opportunity to monetize their digital creations. As a parallel to the analogue, traditional art market, NFT trading attracts collectors and investors aiming at building a portfolio of assets and speculating on selling later for profit. Similar to the analogue world, the questions arise as to what constitutes something as art, what determines its value, and should it matter in answering these questions whether someone buys out of enthusiasm for the art or for financial gain?

There is a controversial discussion going on about how much the current boom constitutes a bubble, doomed to pop. Further criticism comes through the notoriously high energy consumption of blockchain technology, leading some artists to boycott NFTs, wary of their effect on climate change. Even if the bubble theory is partly correct, however, there would certainly still be a demand for ways to determine and monetize ownership of digital art. Which leads me to the assumption that NFT trading is here to stay.

Sources and Further Reading:
https://www.bbc.com/news/technology-56371912
https://www.theverge.com/22310188/nft-explainer-what-is-blockchain-crypto-art-faq  https://www.nytimes.com/2021/03/11/arts/design/what-is-an-nft.html