Lame copy of the image on the left
The totally-white painting on the left is worth millions of dollars. The identical totally-white painting on the right is worth nothing. Why is that? Because despite being identical in their look, the two paintings differ in their history: one was ``made’’ by a famous artist, who touched it, held it, and signed it. The second one, instead, was made by an ordinary person.
This example illustrates that the value of a piece of art lies, to large extent, in its ability to connect us to a famous artist. This principle is most evident in modern art, but it applies more broadly. There are countless examples of anonymous old paintings that jumped 100x in value after discovering that they were painted by some old master. It is an essential aspect of the value of a piece of art, so much that a large part of the art world (galleries, auction houses, curators) is really in the business of re-establishing and verifying the link between the piece of art and its creator. By the way, you may wonder if this principle implies that every piece of crap an artist produces is, by definition, art. Well, kind of.
The same logic also applies to collectibles: why the copy #1 of a famous book fetches a higher price than copy #5321 of the same book? Or why a pen that a famous person held to sign an important document is more valuable than an identical pen (same brand, model, year)? In both cases, the answer is that the two objects may be identical, and yet they have a different history.
Enter blockchain, the public, tamper-proof infrastructure allowing anyone to send and receive various digital objects called tokens. Some of these tokens can be fungible because two tokens of the same type are completely interchangeable--- for example, a Bitcoin is identical to another Bitcoin. But tokens can also be non-fungible, that is, each token is ``one-of-a-kind’’ and different from all other tokens. Non-Fungible-Tokens (NFTs from now) can represent specific digital files, like a digital signature that applies to a specific file but not to an identical copy. Because of the public nature of blockchain, it can be used to easily track the history of ownership of a specific file back to its creator.
Thanks to NTFs, therefore, artists can produce digital art and, for the first time, distinguish an “original” version of this art from all other, bit-by-bit-identical copies. It connects the owner of a digital work of art with its creator. Even better, because this connection is digital, public, and tamper-proof, it can be verified without the need for curators, galleries, and the usual intermediaries of the art world. Finally, digital communities that have existed for decades and have already created their own culture and memes can also have their art and collectibles. Based on this premise, billions of dollars have been invested in NFTs.
But is this premise correct? To a large extent, yes, but there are also important differences between the world of NFTs and the world of physical art/collectibles.
To start, the fact that an NFT can be easily traced back to its creator means that it can be traced back to the address (for example, an Ethereum address) that created (or minted) the NFT. But who is the person and organization who controls this address? Are we sure it is the person/organization we expect? For example, someone could take an NFT, copy the underlying file (say, an image) use it to mint a new NFT, and then sell it as an original (this practice is called “copymint”). Anyone can verify that different addresses minted the original NFT and its copy, but who knows which address belongs to the artist who created the piece of art in the first place? This is where ``traditional’’ art intermediation can play an important role: art galleries, curation services and marketplace can help establish the connection between the address that minted an NFT and the person/organization that created the art.
Second, NFT allows to connect a digital file to an address and, hopefully, to the person who created it. If the person who created it is (or may become) a well-established artist, then the NFT may have financial value. If this person is just a random guy creating his first JPEG then, most likely, the value of this NFT is zero. This is an obvious observation, which was, however, often ignored in the NFT frenzy of 2021 / early 2022. To say it differently, it is quite difficult to invest in contemporary art, especially for someone who is an outsider: which young artist will become famous? Which famous artist will become super famous or will be forgotten? These are very tough questions, which also apply to the world of NFTs.
Third, the premise that a specific file is the “original” and an identical copy is not “original” is difficult to justify when you look closely. Even on a single machine, files are constantly copied, for example, from RAM to ROM. Also, “uploading” a file means making a copy on some server (or on the blockchain). How can the original be the file uploaded on some server when a different copy is on the artist’s computer? Does an “original file” (to be distinguished from its copies) even exist? This points to an important issue: we identify a given file as the “original” because the artist says so, but there is nothing in the process that identifies that version as the original version.
Fourth, on the more positive side, NFTs allow something new: to create an ongoing relationship between the artist and the art owner. For example, you usually receive updates when you purchase a piece of software. Similarly, artists could send out updates to those who purchased their art, creating different versions of the same piece of art. Or send them gifts or additional items. Or create special events only for NFT owners. This is one of the most active areas of experimentation, with new and exciting ideas popping ours constantly. However, this new and exciting opportunity also raises several questions. If the point of an NFT is to become part of some sort of a club, in what sense is it art? Also, the JPEG may differ for each NFT, but the point of all of them is to create this special connection with the author; in what sense are they non-fungible?
To conclude, NFTs hold the promise of making digital art and digital collectibles economically valuable by connecting specific files to their creators. However, it is important to keep in mind that several open issues still need to be resolved before this promise reaches its full potential.