by Aakshat Sinha
The enigmatic acronym NFT has raised quite a storm of late. The buzz around NFTs can be attributed to one mind-boggling transaction at the Christies’ auction: the work of the artist Mike Winkelmann, known as Beeple, bought for an astounding $69.3 million by Metakovan, now revealed to be Vignesh Sundaresan, a Tamil immigrant based in Singapore. [1] So, what is NFT and what is it about? Knowing the full form of the term – “Non-Fungible Token” – may not help you unless you’ve consciously learned more about it or are part of the growing number of people involved with the booming blockchain and cryptocurrency world. In these times of Covid-induced restrictions the importance of the physicality and relationships of objects have been unduly stretched even as the world gets increasingly more engaged with the digital and virtual space.
Everydays: The First 5000 Days by Beeple, NFT minted on 16 February 2021
(Screenshot, Beeple/Christies)
The Oxford Dictionary of English dates the use of the word fungible to the late 17th century, evolving from the Medieval Latin word fungibilis and further tracing its roots to the word “fungi” meaning ‘perform, enjoy’, and with the same sense as fungi vice meaning ‘serve in place of’. In business and economics fungibility refers to the property of a good or commodity whose individual units are essentially interchangeable, and each of its parts is indistinguishable from another part.
In layman terms fungible today means interchangeable, like for like in relation to the value of each comparable entity. Non-fungible tokens are pieces of digital content linked to the blockchain, the digital database underpinning cryptocurrencies such as bitcoin and ether. Unlike NFTs, those assets are fungible in that they can be replaced or exchanged with another identical one of the same value, much like a dollar bill. [2]
Participating at a recent panel discussion on NFT on the NewsX channel in the capacity of an artist and curator (link given at the end of the article), I realized that there are more questions today than answers. [3] While NFT can represent a unique digital item, we need to identify its stakeholders and understand what it means to them. They are not interchangeable and this is what adds value. NFTs can represent any form of art – audio, video, textual, or any other form of creative expression – but can be carried only as a digital file. They can carry a lot of other details and data as well but we’ll get to that in a bit.
To more fully understand what this development means to the art worId, I started conversations with people from the art fraternity in India and abroad to get a sense of their understanding and expectations. I also reached out to technology experts, economists, scientists, artists, curators and gallery owners for their opinions.
I spoke to Bibin Babu, Co-founder of PAYIZA (the world’s first DLT (distributed ledger technologies) Blockchain base utility service provider application and platform for utility payments using cryptocurrencies and cards)) and my co-panellist at the NewsX panel discussion on NFT. Responding to my specific query on the legality issues in relation to Indian national policy and regulations, he clarified some prevailing myths: “There is no ban or restrictions by regulatory bodies or government on NFTs as of today. In fact, the government has been promoting the usage of blockchain - the underlying technology of cryptocurrency and NFTs. The current craze of NFTs is justified by the value that the artists are getting out of it and due to the robust qualities of blockchain. NFTs are definitely the future due to their interoperability, tradability, standardization, immutability, liquidity and programmability. I believe that NFTs will rather drive more adoption of blockchain. Art creators will get their real due and worth through NFTs. With so much unique content/art being made in India, our country has all the potential to lead this wave. At PAYIZA, we are determined to make NFTs and its usage easier for artists/musicians/creators. We are ensuring that the users will be able to access it as simple as any other e-commerce platform.”
Besides the Christie’s auction of Beeple’s works, there are other sparkling stories doing the rounds like that of the Nyan Cat GIF that sold for $600K worth of Ether (a transactional token that facilitates operations on the ethereum network) and that of Tesla and SpaceX CEO Elon Musk’s offer to sell one of his tweets as an NFT that included a song with the lyrics “NFT for your vanity. Computers never sleep. It’s verified. It’s guaranteed” but quickly retracted when offered $1 million for it. So are the sales and the huge numbers attributed to them related to the subjective value of the art or is it merely because of the novelty of buying such a form of art? Was it because Musk’s name was connected to the tweet that raised the hoopla around it? Many of the artists I reached out to had differing opinions, mostly hopeful though still watchful.
Shovin Bhattacharjee has been creating digital art since 2002. This experience served him well to form the basis for his installations since the proposals for the installation art projects required him to conceptualize them as a digital proposal first before its physical transformation. He has been among the first Indian artists to list his art as an NFT. According to him, “NFT portals create a unique number/code for a digital work. I have always faced the challenge with limited number of buyers and collectors for digital art as the notion still persists that digital art is not authentic art. There are also concerns relating to copyright. NFTs exist as a unique entity. My digital works are now better received and valued. As for my NFT listing experience I must mention that though for me it was not difficult or confusing at all, it wouldn’t be so for most as it involves an understanding of digital transactions and cryptocurrencies. It is not that easy but not impossible. It is a new opportunity for Indian artists. Listing is not very cheap. Most of us will calculate the transaction in rupees and find it quite an amount. The process of listing is unique for each art work and each transaction of the NFT counts separately for each work. Each time the cost of minting and listing the NFT is around $200.” [4]
Shovin Bhattacharjee's NFT listing on opensea.io
(Courtesy of Shovin Bhattacharjee)
The money needed to mint an NFT is also called ‘gas fee’ or ‘gas money’ which is meant to take care of the high energy expenses to create it. Zack Burks founded Mintable in 2018 as a platform for NFT minting and trading. In January 2021 they launched gasless minting. The transaction on the blockchain does not happen until the NFT is transferred or purchased, at which point the buyer pays the fee.
Paramjeet Singh, artist and former Chairman AIFACS, reminisced about the first exhibition of computer art held in the 1970s at the National Gallery of Modern Art, where most of the artists were computer engineers. For many years nothing happened but then later a few well-known artists began making computer art with the support of and collaboration with of these experts. Today, many artists have become well versed with digital art and the technology behind its creation and it will not come as a surprise when more artists take to NFT.
However, artist Nitasha Jaini laments how the Indian art market is not yet mature to adopt it and that most artists are unable to survive only from art sales and need to look for other survival tools to support themselves. The idea of NFTs will certainly help Indian artists, especially those who are exposed to digital art and more aware of the global developments in use of technology in art. Nitasha Jaini adds, “I have myself participated in many virtual shows and believe that the sale of virtual art for virtual consumption is the logical step. Smart phones have provided digital access to every single village of the country that might still not have access to good roads, schools, or hospitals. Selling art as NFTs is quite exciting, as the field of buyers could be phenomenally large. I see great hope.”
Oritecture artist Ankon Mitra says, “Since we don't create the technology, we hang by the coat-tails of the first movers. I am always for innovation, risk and the thrill of the unknown but traditionally Indian society is very risk averse, so by the time we contemplate all the pros and cons, the avant-garde has rolled around the sun a few times and become old hat! It will be slow; at the pace of the Indian elephant and will depend a lot on the general digital (il)literacy of the nation.” Shujaat Mirza, curator and art critic, is more sceptical and feels that we cannot be taken in with NFTs just because of the value addition that it might provide in terms of royalties or by the supposed allure of authenticity, “A cave painting is worth a lot without any provenance while something might not be worth much despite each point of sale being recorded.”
Saurabh Anand (gallerist and Director Art and U) thinks that what is happening is that "Crypto Whales" are parking funds in these concepts and ideas as an alternate source of investment within a crypto-eco system. “I feel that basically this is going to be a parallel world which is being created by them in a fashion so it cannot be ignored by nations and economies around the world. Even India has said they can't ban it and will be open to experiments like this digital format but I feel that as of now, no conventional art collector who owns flat currency will buy this. Or maybe they will? I, as a buyer living in the new-age digital world would still want a tangible piece of work rather than a JPEG or GIF.”
Russian artist Aristarkh Chernyshev whose works will soon be listed on SuperRare (an NFT sales site) feels that this gives an opportunity for regional digital artists who have been hitherto ignored by the local art markets to go international. According the Chernyshev, the fact that the NFT system completely ignores traditional art markets is a positive moment for those who could not get into traditional art institutions. Any innovative process experiences a surge in public and collectors’ interest, and though it is difficult to say what awaits NFT in the future, most likely it will depend on the future of blockchain technology and cryptocurrencies. “I will leave the controversy about the NFT (carbon) footprint to the experts on this matter. Hopefully switching from POW to POS will correct the environmental disadvantage of this technology.”
Personal Information Organism by Aristarkh Chernychev (Biomorph InfoOrganism)
(Courtesy of Aristarkh Chernyshev)
On researching online on blockchain consensus algorithms I found that Proof of Work (POW) which is widely used as of now (Bitcoin and Ether, the most famous of the cyptocurrencies, use it currently), requires huge amounts of energy, with ‘miners’ needing to sell their coins to ultimately foot the bill; Proof of Stake (PoS) gives mining power based on the percentage of coins held by a miner. Realizing that there was more to it than I’d understood, I ventured to ascertain further details around the environmental impact of the NFTs, and discussed it with artist Sukant Khurana (incidentally, I’d curated his first solo show of paintings in India). Apart from being an artist he is a neuroscientist and a big data expert. I sensed a hint of sarcasm when he told me that “blockchain is here to stay for a while because we like a trail of immutable data. Several times it's useful and at times just garbage data. The structure of blockchain is such that at each node such changes are saved as token; the bigger the network, the more the copies of such tokens. Like an expanding universe, for a large network, the data starts to explode. Blockchain and cryptocurrencies (which take a lot of data mining) are not just data expensive but also energetically expensive. The blockchain network involved in several crypto projects consumes more electricity than several small countries. Blockchain, as it stands now, is not environmentally friendly.”
Parv Prabhakar, who is a blockchain and cryptocurrency researcher and consultant, summed up some of the concerns and possibilities: “The NFT market as we know it today is not sustainable. However, the idea and the technology behind it are here to stay. Corporations and governments around the world are looking for the best ways to support and take advantage of new developments in the industry-changing blockchain space, so criminalizing cryptocurrencies here would be devastating for the future of a lot of sectors. Tokenization is an important part of actually making use of blockchain technology and we cannot realize the full potential of one without the other.
“Right now, minting and selling NFTs are out of reach for most artists, especially in low-income countries like India because of the exorbitant network fees. However, considering all the new developments happening in the industry this would soon not be the case. Marketplaces for NFTs are developing at a rapid pace and it's now possible for artists to get royalties for their digital artwork in a lot of marketplaces. The blockchain and crypto community is focussed on democratizing a lot of top-down structures in our traditional industries so in the future artist-friendly features would not be out of the question.
“The technology and usability are still in their infancy though, so right now the possibilities are endless. Anyone could take a picture of an original artwork and mint an NFT out of it. But as the adoption becomes more common these problems would also be solved by legal structures and self-regulation by the marketplaces, a lot of which is already underway. I'm hopeful for the future.”
Delhi-based animator and art director Amrit Pal Singh sold two pieces on Foundation for 15 ETH (Ether, equivalent to more than 19 lakh rupees at the current rates) in February 2021. Chennai-based Siraj Hassan sold 27 works from his Caged series — miniatures trees, human figures encased in glass bell cloches. He mentioned online that in the case of one of his sold artworks that was resold, he earned a royalty on the resale. Since artists can now assign what percentage of royalty they want to earn with every resale, they can actually earn from the secondary market too.
The NFT market is not simply a marketplace where art is just being shared and traded. This is an oversimplification of its enormous possibilities and yet remains unexplored and undefined. From my various discussions with some of the stakeholders, I can see that there is a lot of optimism among most of them, especially the artists. This could be because the traditional practices of selling and buying have largely failed the bigger chunk of the art community; only a few select artists have gained recognition and are able to support themselves solely through sales of their art. Most of the investments in art are still linked to the bigger, established names and unfortunately a living artist commands little monetary appreciation when compared to the long-gone masters. Artists hope that the NFT route will allow them to gain access to an unchartered marketplace where there are a larger number of new buyers and where they might have a better chance of gaining recognition and closing sales. The possibility of getting royalty of future sales that they can track themselves without any intermediaries is an added bonus.
Having said that, I heard many questions, most of them vocalized while many suggestively hinted upon. Digital literacy is a key roadblock. So is the high cost to list works as NFT to be paid up front and that too through wallets that need to be filled with cryptocurrency. It’s heartening to see that companies like PAYIZA are making an effort to provide a bridge between conventional money and cryptocurrencies but the scale to which this needs to be ramped up to serve the colossal number of artists who’d need this support across India is huge. Access is the keyword here. Digital and financial access notwithstanding there has to be educational access for the masses, basic literacy and to understand what it even means to mint and trade an NFT.
NFT trading is not as much about the art as it is about ownership and rights; the physical tangible art is less of the concern. Valuation of an NFT can depend on a lot of contributing factors, exclusivity being one of them. Recently, one of Banksy’s physical screenprints, titled ‘Morons’, then worth $95 thousand ,was burnt by an anonymous group of crypto enthusiasts. They minted it as an NFT and listed it for sale. The NFT by virtue of being the only surviving remnant of the original was picked up for 228.69 ETH (more than $400 thousand by current rate). [5] What can this mean in the long run? For some the burning of the original and minting of the NFT itself becomes a process of creation of an artwork.
NFTs have the capacity to democratize the art market but the access barriers for most of the citizens become a roadblock, particularly artisans and craftspersons living in remote villages in developing countries like India. Apart from issues of understanding the technology, access to internet and online banking access or access to the English language, or even availability of electricity or the financial wherewithal to pay for the cost of each NFT’s minting and listing are all legitimate concerns.
Blockchain despite its adverse environmental impact seems to be here to stay and become a part of our lives one way or the other, with or without our knowledge. Based on blockchain technology to keep the transaction chain continuous, NFTs can today be used to represent any form of art that can be digitized, be it a visual art like a 2D painting or a 3D sculpture, a recording of music or song, a theatrical or dance performance, a game or sport or a captured moment, a speech, a collectible or memorabilia like trading a sports card, a piece of writing, and even things like the first tweet of Jack Dorsey, the CEO of Twitter (which sold for $2.9 million on 21 March 2021). I read somewhere about NFTs where an individual’s weight or height had been minted. Once listed, it’s up to someone on the platform to find a connection, desire or reason to acquire it.
The natural question that arises is that given that NFT is basically a code that gives exclusive digital rights to the owner, what does one do with it once it’s been acquired? Beeple was giving a physical product with his NFT digital art but the one for Christie’s that broke the market was an exclusively digital option. One could always print and display, or if it’s a GIF or video it could be screened in a loop on a special screen, but these are restricted possibilities of using an NFT.
Given below are five things that one can do with NFTs that I’ve been able to identify:
Make an online space, room, or real estate with the different owned NFTs on the walls, in the sky, moving around, with avatars in games, etc. This could be a ticketed or restricted entry space that is open for a select few;
Convert them into logos or branding that can be rented or sold further;
Provide limited listed editions that people can buy with a privileged access to an exclusive club/group that prerequisites ownership of one of the listed editions;
Create an online avatar with the NFT as your image; or
Wait for an opportune time and trade it ahead.
The obvious challenges that I’d mentioned earlier can act as speed breakers but eventually I think everyone will want to climb onto this bus at some point in the near future. This market works on the idea of caveat emptor or ‘let the buyer beware’. The ownership and subsequent transactions can obviously be traced to the NFTs but who is there to stop someone from taking a photograph of an artwork by another artist and list it as their own? At the minting stage, one can state their ownership and continue with the process. The physical art market which has its own challenges with fakes has art experts called in to authenticate works. It would much easier for one to list the artwork of an artist from a remote area who’d probably never even come to know that their ‘art’ has now been minted into an NFT and being traded upon. Ownership rights of videos and photos or even recordings could equally be a challenge. Taxation is another aspect that is still a grey area as this will probably happen only once the cryptocurrency can exchanged against flat currency. There are increasing options nowadays where one can use their crypto-account to pay off for travel, stay and other transactions to avoid this. Framing of the required tax and legal policies is not complex and will take time.
India has seen a lukewarm response towards cryptocurrencies and NFT. The Finance Ministry and Reserve Bank of India have not released any specific policy decisions or framework as yet. There have been some statements in the press from time to time, including about banning them, but there hasn’t been any official word on this. In an informal chat with a friend that I play cricket with on Sundays, we discussed the possibility of how NFT can be used for money laundering or ‘hawala’ (illegal money transfers), or even funding terror – though the end-to end transaction chain is public, the actual norms for registration on the platforms are quite relaxed.
In conclusion I’d like to share my optimism that the advent of NFTs would strengthen the artists foremost and allow them to gain wider recognition and value of their work. At the same time, they will need to be extremely careful with what they list and how they promote themselves. The market is definitely huge but creators will need to be smart since there are heavy initial investments involved. I hope that the advent and popularizing of NFT would not only help trading in art and open fresh avenues for artists to reach newer audiences, but would also enhance art appreciation and open up more nuanced conversations around art and its important role to build a more wholesome human existence.
Reference Links
Sundaresan’s journey in his blogpost: 'NFTs: The First 5000 Beeples’ https://metapurser.substack.com/p/nfts-the-first-5000-beeples
NewsX panel discussion on NFT https://youtu.be/tWMATasKzzg
Shovin Bhattacharjee’s listed NFT on opensea.io https://opensea.io/assets/0x60f80121c31a0d46b5279700f9df786054aa5ee5/507081
Banksy’s ‘Morons’ burnt before minting as an NFT https://youtu.be/C4wm-p_VFh0
Aakshat Sinha is an artist and curator. He also writes poetry and has created and published comics. He is the Founding Partner of artamour.