What is NFT art anyway?

I finally figured NFTs out by accepting they make little sense.

‘I still don’t understand,’ I groaned, burying my head in my hands as a very patient friend tried yet again to get the concept of NFTs into my skull.

Beeple was all over the news having closed a whopping $69 million sale for a digital image that millions of people like me just right-clicked and hit save on. I felt like I’d stepped through the looking glass and found myself in some topsy turvy land. People were just accepting the fact someone paid all that money for what was essentially just bragging rights.

Before we try to make sense of NFT art, let’s go one step back to the ‘basics’:

What the hell is an NFT?

NFT stands for Non-Fungible Token. Which is… still confusing.

‘A good is said to be fungible if it is identical and interchangeable — the simplest example is paper money, where we would happily swap dollars with each other since we agree they all have the same value. A non-fungible item, being unique in nature, is exactly the opposite.’ — Faisal Khan, making my brain hurt a little less.

A physical non-fungible item would be something like the Mona Lisa. There is only one; you couldn’t swap her for any other ‘token’ of equal value because any other token would, whilst potentially having the same monetary value, not have the same cultural or historical value. The data contained in the painting makes it unique.

Currencies (traditional ones or crypto ones) are fungible. Their values may change in relation to each other over time, but in the moment they can be traded at completely equal value.

‘Bitcoin […] proved that decentralized, digital currencies could actually work, and it solved a number of problems. Bitcoin allowed anyone to make secure, transparent, and verifiable transactions thanks to its public, distributed ledger (the blockchain).’ — from a brilliant article by Decentraland

Digital currencies can be passed from one person’s wallet to another without needing to go through a central body such as a bank. This means the currency is decentralised. A distributed ledger is the same logic applied to a book containing a list of transactions — this book is not held by a central body, everyone has a copy.

Hopefully, you’re still with me.

It’s okay if you’re a bit lost, because that’s kind of the point I’m getting at: it’s not a simple system anymore.

Money kind of isn’t real anyway

Hear me out.

When did you last receive a physical pay packet? It’s probably been a while if you ever did at all. We don’t really deal with cash these days, even less so during the pandemic. On payday some numbers appear on my screen, the numbers go down as my rent comes out.

I go to a shop and wave my phone over a machine, it goes beep, my numbers go down (and theirs go up). I walk out with items because the person serving me has seen a number on their till go green.

Money is real in that value exists and we can exchange these imaginary numbers for things, but money only functions as a symbol for this value because we all agree it does. It’s like one big act of magical thinking, and the more you think about it the more bizarre it all becomes.

Placeholders of value

Cryptocurrencies and NFTs are, like other currencies, ‘nothing more than a representation, record, or placeholder of value’. So, when considering NFT art, we need to look at it away from the general understanding of the art collector — NFT art is not collected because of its artistic beauty or artistic value, but its monetary one.

That offhanded comment I made earlier about Beeple’s piece only being bought for the bragging rights? It’s kind of true. The buyer possesses the equivalent of a piece of paper that says ‘I own this $69million dollar thing’ — and that’s something that holds value because it can be sold on. Someone else would probably like to own that piece of paper and all the publicity it entails.

It’s all nonsense

This is my final verdict. It’s nonsense. And that’s where its brilliance lies. The numbers of standard currencies like £GBP or $USD are only symbolic anyway, so why not take them to their next abstract extreme?

The extremely bizarre world of NFT art is the next logical step to our ever more abstract system of value.