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If you are a visual artist, you have undoubtedly, some time in the past year, heard the term "NFT."
And you may wonder what exactly is an NFT? And why do you keep hearing about them in relation to art?
When it comes to NFTs, most artists I've talked to fit into one of three categories:
1. They've never heard of NFTs.
2. They've heard of them and just know they have "something" to do with crypto and digital images.
3. They are actually minting and selling NFTs of their art.
If you wonder about NFTs, this article is for you. I've spent the last several months paying attention to the crypto world and NFT circles to learn what they are all about. I've taken my time so that I could allow my own thinking about them time to solidify. My next few articles are designed to give you an overview about NFTs and our current thinking about them.
For the sake of completeness, in this article, I'll assume you know nothing about NFTs and start at the beginning.
The term "NFT" is short for "Non-Fungible Token".
So before we get into the art-specific aspects of art NFTs, let's just deconstruct what the name itself means.
Fungible vs. Non-Fungible
"Fungible" is just a fancy word that means "mutually interchangeable." As a quick example - US dollars are fungible. If you loan me ten dollars, you don't really care if I repay you with the exact same ten dollar bills you loaned me. I can repay you with any ten US dollars. Therefore US dollars are mutually interchangeable which means they are fungible.
"Non-Fungible" means the opposite. It means that the items are NOT mutually interchangeable. In contrast to dollars, if you loan me your car, you want me to return the exact same car that you loaned me. You likely won't accept any old clunker I can get my hands on.
So dollars are fungible and cars are non-fungible.
Now let's look at the word "token".
What are Tokens?
Think about Las Vegas and casino chips. Each casino chip is a "token" that represents an asset - in this case, some amount of money. So a token is something that represents an asset that has value. In some cases, the token IS the asset, in other cases (such as in the casino chip example) the token merely points to the real asset (dollars in the Las Vegas example).
Digital Tokens
Moving to the digital world: you've probably heard of Bitcoin and the "Blockchain." You can think of the blockchain as one big shared database. And with Bitcoin, each specific Bitcoin is represented by a specific digital "token" that is stored in the database (the "Blockchain").
Remember our discussion above about Fungible and Non-Fungible assets? Bitcoins are fungible. Just like US dollars, Bitcoins are mutually interchangeable. If you loan me a Bitcoin, you don't really care if I pay you back with a different Bitcoin.
Although people never use the following term, a Bitcoin is a "Fungible Token." (Each token can be replaced with any other token).
Now let's put this all together so we can understand what a "Non-Fungible Token" is.
Non-Fungible Tokens (NFTs)
A non-fungible token, like a Bitcoin, is a digital token that is stored on the blockchain. However, unlike a Bitcoin, each token represents a different asset.
Remember the example with the cars? Cars are Non-Fungible.
If you were at a fancy gala, and the valet gave you a "token" to claim your car at the end of the gala, you sure wouldn't exchange that token with anyone else's because that token represents your unique car. It represents a unique one-of-a-kind, "Non-Fungible" asset that you, and you alone, own. In other words, that token for your car is a "Non-Fungible Token."
And that's what an NFT is. Except that NFTs are digital and stored on a block chain.
NFTs and Art
Now that you have a basic definition of what an NFT is, let's look at how NFTs are used in the art world.
NFTs were originally utilized primarily by digital artists.
What happens is this: an artist has a digital file, like a JPEG, of their visual art. They post that file online.
Then, on one of the blockchains (usually the Ethereum block chain), the artist creates (through a process called "minting") a new digital token. This token is a kind of contract and contains a bunch of information.
Primarily it says, "Whoever owns this token is the owner of the NFT represented by the digital file at the following web address." So the person who purchases the token, now owns a token that represents an asset. In this case the digital file of the artwork. But the person only owns the NFT token itself. They DO NOT own the digital file of the artwork.
There is a lot of criticism of the Art NFT idea.
For example, the token doesn't usually grant any true rights to the buyer. The buyer of the NFT doesn't get any copyrights to the artwork, for example. And other people could download the same JPEG image without purchasing the NFT. The buyer typically owns, not the image, but the token itself and only the token itself.
If this all makes your head hurt, well, you're not alone. And this is why NFTs are so controversial. Some people think they are an incredible new paradigm that gives artists more power and options in selling their artwork. And other people think they are nothing more than snake oil and the buyers of NFTs are basically buying worthless tokens.
What do we at BoldBrush think about NFTs?
I'll save that for next time.
Sincerely,
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