In the cryptographic scene, they’ve been seen as a leading technology for some time and the classic art market is listening too: NFTs – “non-fungible tokens” – aim to bridge the “value gap” created by the lossless duplication of digital objects. Representatives expect new payment options and fraud-resistant management for digital collectibles. NFT is a non-falsifiable certificate (a digital sequence confirming the origin of certain transactions) generated through a power-intensive cryptographic process. This sounds innovative, but the bottom line is above all one thing: the penultimate attempt in digital capitalism to preserve the imagination of intellectual property.
Whether it’s an original or a copy – no matter when it was created, it doesn’t really matter with computer files. Both versions are identical. In principle, files can be copied without loss and often. If these copies are now distributed on the Internet, it is difficult to determine who actually owns the original. For a moment, the utopia of property-free space appears: at last everything is available, everything belongs to everyone, all artefacts – images, sound vectors, texts and so on – are no longer the subject of speculation to financially powerful potential buyers. But appearances are deceiving, because in reality a few of them have a lot. Monopoly-like platforms such as Spotify or YouTube steered the free exchange of data between users in their favour, and kept most of the revenue from the creative offerings themselves. The authors rightly complain that their work is poorly paid or not paid at all.
With the help of NFTs, this digital value gap on the part of producers now has to be technically addressed: a unique, non-copyable certificate is issued to authors of “premium” works – including digital works, but also digital works later. , NFT. “Tokens” are something like entries in a digital cadastre, the so-called “blockchain,” which records all business activities, values and rights, encrypted, and is anti-counterfeiting, and distributed decently across multiple computers. Unlike “replaceable tokens”, “non-replaceable tokens” cannot be divided or exchanged, they only exist once. NFT is paid for in cryptocurrencies, in particular “Ether”, the currency of the Ethereum network.
Copyright and user rights for the artwork are not granted by NFT, only the work is “represented” by NFT. The asset associated with the NFT, for example a digital photo, does not therefore belong to the buyer of the NFT and is usually copied and distributed accordingly. Only the certificate itself, represented by a digital image, for example, cannot be copied or replaced. The owners hope for social recognition in the NFT community, but above all a profitable resale.
While NFTs are marketed as digital tokens of ownership of an original artwork, the bottom line is that they are just a form of premium ownership – with no actual ownership rights. Example: Strictly speaking, a printed newspaper page is always in a unique form, even if there are thousands of copies of it. Thus, the copy that you, the second reader, now holds in your hands is factually unique, even if the other copies look, smell, and feel the same way. In principle, such a paper page could become scarce if the current newspaper circulation was insufficient. Suppose I wanted to mark up my “private” press page – after all, I hold in my hand a hard copy of the article I wrote myself, and who knows what a loyal second audience would be willing to pay for this original – then I can create an NFT that should represent exactly the page This newspaper. I can then sell this digital certificate of authenticity without losing the copyright to my text and without changing the selected newspaper page in front of me.
Burning money (and electricity)
There are no limits to the imagination when it comes to the things that NFT represents and are supposed to be artificially shortened in order to make money selling them: digital images, things in video games, domain names, … he – she. For example, the NFT for the first Twitter post brought in the equivalent of 2.5 million euros in the spring of 2021, and the NFT for the first source code for the World Wide Web brought in more than 5 million euros. Above all, NFTs of digital artwork are auctioned at high prices, for example pictures of pesky monkeys for the “Bored Ape Yacht Club”, which is currently trading at 52 ether (about €200,000).
The hype really gained momentum in the spring of 2021, when digital artist Beeple, after selling several digital works at high prices, auctioned NFT for $69 million for a collection of his work. The “everyday” collage can still be viewed online and saved as an image file, but the NFT buyer is believed to be the sole owner of it. With NFT, the buyer acquired ownership of the original Beeple group, but without gaining exclusive control of the business. This separation of ownership and disposal is novel, because the power to act has so far usually been the meaning of property rights: it allows the owner to exclude others from access to the item in question. However, NFT does not do this, it is proprietary without any physical content.
The media hype surrounding Beeple’s “Everydays” and fashion makers encouraging participation in the NFT markets led to a veritable rush for gold outside the cryptocurrency networks. Hundreds of thousands of users have since invested tens of millions of dollars or euros in NFTs in the form of cryptocurrencies – hoping that it will pay off later. But what is celebrated in the crypto scene as a decentralized investment is ultimately more unfairly distributed than traditional monetary assets: it is estimated that less than one-tenth of NFT owners own 80 percent of the assets acquired using NFTs.
In addition, there is massive energy consumption associated with the auctioning of NFTs. It is estimated that creating a single code consumes about 140 kWh – more than the average electricity consumption of a family of one person in a month. This is expensive on the one hand and leaves a greasy carbon dioxide footprint on the other. In addition, the process consumes necessary hardware components, especially graphics cards, within a few months until they fail. Under the current circumstances, this means that while many people don’t know how to finance their electric and gas bills this winter, crypto enthusiasts are happy to leave their graphics cards hot.
Proud owners vs right-click idiots
For wealthy art and pop culture fans who have strayed into the realm of NFT, it’s all about getting a bit of the magic of the original artwork. In order to fulfill these desires, physical testimonials, donations from artists, and other fan articles have recently been added to the NFT purchase. In this respect, NFT buying is no different from offline art trading. There, too, it’s about distinction, authenticity, hoped-for origins, and (insulting) appearance of peers.
But there is resistance, albeit unnoticed so far: regular users, called “right-click” in the NFT world, because they copy or save digital files with a right-click of a computer mouse. In September 2021, after a social media post in which someone boasted of their NFT photo of a cartoon monkey, a few NFT opponents got together, saved the photo, shared it, and loudly declared that they now had the photo too. Right clicks like you and I are the bastards of NFT students who don’t want to understand that having a digital copy on a computer is very different than having an NFT of the original file. Often NFT buyers themselves do not realize that they do not own the thing, which everyone else can handle by right-clicking, but only a non-copyable character string in a decentralized database.
Finance of daily life
Despite this craziness, the discussion of NFTs is by no means trivial because it highlights some important ideas in general trends in capitalist society. On the one hand, it shows that the financialization of everyday life does not stop at digital things that can be copied without loss – until all conceivable assets at some point in time have been accumulated in financial instruments. NFTs are exemplary in showing that buying on speculation, regardless of the subject matter of speculation, works only as long as imagination can be maintained about the value itself and about future increases in value.
Ultimately, NFTs can’t solve the fairest author pay problem either. For example, since the NFT boom, there have been many cases where artists, to their surprise, discovered that their artworks could be found in the NFT markets through no fault of their own. Last but not least, NFTs are proof that discerning buyers of digitally protected documents are primarily interested in a truly rare commodity: social validity.
Marlene van den Acker is a Research Associate at the Cooperative Research Center “Structural Change of Property” at Friedrich Schiller University in Jena. She is doing a PhD in Sociology of Intellectual Property in Digital Capitalism.