Digital art and the non-fungible token
Lesson summary
Hi there, I’m Jeff, and this is Plain English lesson number 352. JR is the producer and JR has uploaded the full lesson to PlainEnglish.com/352.
Coming up today: Non-fungible tokens, or NFT’s. They are where the worlds of art, technology, and finance collide. NFT’s are a way for digital artists to sell their artwork—even though anyone can copy it an unlimited number of times. If it sounds confusing…that’s because it is. I’m just preparing you. This one is going to make your head hurt. But hang in there because I think I can explain this. Like always, we have an English expression; today it’s “bragging rights.” There’s a video online, too, transcripts, translations, flash cards, exercises, the full and complete lesson at PlainEnglish.com/352, but for now, let’s dive into today’s topic.
Tokens and digital art sales
The first-ever Tweet from Jack Dorsey. An animated flying cat with a Pop-Tart body. A collection of NBA basketball highlights. An image of Lindsay Lohan’s face. This is art in the year 2021, and if you’re laughing now, just wait until you hear the prices.
Digital art is all the rage in 2021, thanks to a new way of authenticating and owning the ones and zeros that make up the digital world. That new way is called the non-fungible token, or NFT. The NFT is an entry in a blockchain ledger that gives exclusive ownership over digital art and media.
The digital artist Beeple—his real name is Mike Winkelmann—Beeple is the face of this new way of owning, and selling, art. An auction from his catalog generated over $3 million in a single weekend in December. An image of his called “CROSSROAD” sold for $6.6 million on February 24; it was a not-safe-for-work illustration of a public figure with graffiti on his body. That was the most expensive sale of a piece of digital art ever in history; the record stood for about two weeks. On March 11, the auction house Christie’s sold a piece of Beeple’s artwork for $69.3 million.
To understand what an NFT is really, though, you need to forget everything you thought you knew about the word “ownership.” Think about what it means to own a Rembrandt painting—and forget it. Think about what it means to own the rights to a song—and forget it. Think about what it means to own a house—and forget it. An NFT is something different entirely.
An NFT is exclusive: you, as the owner of the NFT, are the only person who owns the NFT, the token. The token is an entry in a blockchain. A blockchain is a transparent ledger that unambiguously states who is the owner of a digital good: it’s the same technology that powers cryptocurrencies. Therefore, as the owner of an NFT, you are, without question, the owner of a digital good. Nobody else has that same ownership; you can sell your token to someone else.
This gives digital art some of the benefits the traditional art world has enjoyed: authenticity and scarcity. Authenticity means, you are definitely the owner of one legitimate thing. Scarcity means, it’s not unlimited. You can duplicate the file as often as you like, but you can’t duplicate ownership over the token.
So far , that sounds somewhat like ownership in the non-digital world. But here’s where things get tricky. Ownership doesn’t give you many rights in the way we typically understand rights to physical or intellectual property. Your token is an entry in a ledger: that’s it, a public record you are the owner. The proud new owner of Jack Dorsey’s first Tweet on Twitter doesn’t have any exclusive right to view it. Anyone can view a screenshot of it. A tweet is an entry in a database, which is backed up multiple times; the new owner doesn’t have the right to pull that entry out of Twitter’s database. The computer it was written on is probably long gone. The only thing the token owner really gets is…the token.
It’s similar for artwork. Take Nyan Cat. It’s an animation of a cat with a Pop-Tart body and a rainbow tail. People have seen it millions, if not hundreds of millions of times. The buyer of the token—who paid $580,000—has no right to exclusive enjoyment of the artwork. You can pause the audio right now and view it online: you can get just as much enjoyment out of it as the token owner can.
A token buyer may not even have copyright, in the legal sense of that word. Copyright laws protect ideas and works of art. Under copyright law, nobody can reproduce the original work of another. The creator of a piece of art—visual art, literature, music—has the right to the creation.
A token is not the right to the creation; in fact , an artist often retains the legal copyright even if they sell a token. The buyer of the token only has the entry in the ledger attached to one file. The artist could take the exact same piece of art, change it by one pixel, and create another token around the new file—and sell that. They could theoretically do this an unlimited number of times, not unlike an artist painting and selling multiple copies of essentially the same image.
So what, you may be asking, is the point of buying a token? If you buy a Monet painting, you get exclusive enjoyment of that physical good. You can display it in your home or loan it to a museum; either way, you decide. Not so with a token. If you buy the rights to a song, you can license the rights to radio stations and streaming platforms and collect payment every time that song is played. Again, that’s not true with tokens. If you buy a token, all you get is bragging rights .
That may be about it. People who buy the token are the recognized owners…of the token attached to the file. That’s all they get, and for them, that’s enough. That, and if they buy directly from the creator, they get to support the work of the artist. Some sales are just bizarre: Lindsay Lohan created an NFT of her face and sold it for $17,000. The buyer made a quick profit, reselling it for $57,000.
The market is growing. Last year, 220,000 people bought non-fungible tokens for a total of $250 million in sales—four times higher than in 2019.
Rights to art over the years
One day, we’ll look back on this and say, “Why didn’t we think of this sooner?” I just finished reading a huge biography of Mozart. And one of the things I learned is that most of Mozart’s work was written for a specific performance. There were music publishers, and Mozart did publish some of his music, but there weren’t strong copyright laws.
So as an artist, he would write a piece of music for a single occasion. Someone would have a party or an event or a diplomatic reception and they’d want music, and they’d hire Mozart to write the music. And then Mozart would rush to get it published. But once it was published, it was out there in the world and Mozart wouldn’t derive much additional benefit from it. And if a piece of music were played in public repeatedly, someone in the audience would copy it and rush out to publish it themselves.
And I remember thinking, how different that is to our time—and what a tragedy. Mozart, one of the greatest composers, if not the greatest, was simply a servant of people who had an immediate need for music. It’s just a reminder that the idea of art, and the idea of how artists should be paid, changes over time. There was a time when literature, theater, music—none of that was considered art, until our definition of art evolved. So maybe an economy around NFT’s will develop and maybe we’ll look back and wonder how the art world survived without them.
Or maybe we’ll look back and say, “Seventeen thousand dollars for a JPEG of Lindsay Lohan’s face? Really?”
Learn English the way it’s really spoken
