Non-fungible tokens (NFTs) are all the rage with artists, as well as cultural personages in the social media world. Purchasing digital property is easy to conceive when you’re talking about a license to play a song from your own digital library, costing less than $5, or a license for software to manage your finances, costing less than $100. These are NOT NFTs, but a file of computer code where its duplicates are identical to the original and each other. More difficult to conceive, though, is when you hear someone bought Jack Dorsey’s first tweet (“just setting up my twttr”) for $2.9 million, or purchased a 10-second video clip by an artist called Beeple for $69 million. These ARE NFTs, unique files of code that cannot be duplicated.
NFTs are bought and sold with the cryptocurrency Ethereum. Like Bitcoin, Ethereum is a blockchain-based currency that can be used as a digital form of money. Broadly speaking, a blockchain is a public, decentralized ledger that records transactions. The Ethereum blockchain also contains blocks of code that can be used to build and publish smart contracts. These smart contracts can be applied to just about anything, whether it be a traditional asset like a house or a collectible like a baseball card. But they can also be applied to assets where the original only exists in digital form, like a tweet or a piece of digital art. This is why I can print the text of Dorsey’s first tweet in this article without devaluing its original.
NFT licenses address all the typical concerns: e.g., the copyright should stay with the artist while the work can be bought and sold among collectors; the owner can be prohibited from reproducing, distributing, or changing the work. The NFT contract can do more, though, such as automatically depositing a “resale royalty” into the author’s digital wallet every time the original work is sold among collectors. Similar automation could also go a long way to solving the problem of “orphan works”: instead of searching for the author or author’s estate through search engines, the NFT could have a confirmed contact with the author, or at least the author’s digital wallet. In an industry like theater, where each production of a work is unique, author’s prior written consent will still be required for certain contemporaneous decisions, of course. Still, we could see a day when NFTs contain data about what is allowed within a certain production, such as removing curse words for student productions, or allowing gender reversals in casting.
There’s a healthy amount of skepticism regarding digital collectibles. The usual retort to skeptics is usually something like, “Isn’t owning an original Van Gogh always better than owning a copy?” But owning an original Van Gogh allows you to look at the painting from all angles to see the thickness of the paint, touch his brush strokes, tangibly connecting to a century-old creation by a long-deceased genius. It’s easy to understand why the owner of a physical work of art claims more enjoyment out of the work than someone with a reproduced print. The owner of an original tweet has “bragging rights” to ownership of an original tweet, reducing the calculus to, “Would I rather have bragging rights over Dorsey’s first tweet, or brag that I have $2.9 million of extra cash lying around?” I guess it depends on what parties you attend.
Perhaps more significantly, the prices for collectibles like Beeple’s videos seem rather explosive. A collectible like Doc Ellis’s original baseball card, a first edition by Charles Bukowski, or the 1968 Ford Mustang GT from Bullitt, while fluctuating in value, have slowly built value, enduring the test of time. We know certain things are valuable collectibles because they’ve been around for a while. It would be awful for the person who bought the Beeple video for $69 million if the artist’s legacy suffered some demise, such as a sexual or political scandal. Even if the NFT contained some morals clause, there’s always the possibility that people might just stop caring.