NFTs: the future of selling digital art but at what cost?

Every day for the last 13 years, Mike Winklemann has created a digital work of art and shared it on the internet.

From a 3D teddy bear drawn at 5am before taking his pregnant wife to the hospital, to a green bacteria with the words “KILL ME” bodily written across the screen when he had food poisoning, Winklemann has never missed a day.

Under the artist handle Beeple, his talent and consistency have seen him skyrocketed to digital fame, boasting 1.8 million Instagram followers who admire his off-beat, satirical, pop culture images.

And for the very first time, the major auction of a purely digital NFT by Beeple is going ahead at Christies from now until the 11th of March. Depending on the results (which have already reached a bid of USD $3 million), this could be one of the biggest developments that the art world has seen in decades.

The work in question is a digital collage made up of the art Beeple's produced every single day for the past 13 years, starting on May 1, 2007, through to January 7, 2021, titled EVERYDAYS: THE FIRST 5000 DAYS.

The layout of the artwork is reminiscent of the Instagram feed where Beeple has been uploading his art for 5000 days. Organised in colours and themes, EVERYDAYS: THE FIRST 5000 DAYS represents the enormous growth Winklemann has had as an artist. From basic drawings that eventually take on a life of their own when he began developing them into 3D models, the work is the culmination of Beeple's never-ending dedication to his art.

Since the advent of Nifty Gateway, Beeple's numbers have already been reaching record-breaking figures. In December, his 2020 EVERYDAYS COLLECTION made up of more than 20 works sold for more than USD 3.5 million. But how can a digital work sell for so much when it’s at such a high risk of copies?

This is where the groundbreaking technology of NFTs has begun changing the saleability of the digital art world forever. That's right- digital artists are finally going to be paid their dues.

So what are NFTs?

NFT stands for Non-Fungible Token- fungible meaning replaceable. One Bitcoin dollar is the same as any other Bitcoin, it is fungible. But the Blockchain NFT isn’t interchangeable, each token is unique and allows for one of a kind items.

Okay, but what is a Blockchain and how does it make art uploaded on the internet scarce?

It helps to think of a blockchain as a sort of bank- your own personal bank. Through a process of peer to peer validation (otherwise known as a public ledger), transactions are verified through the platform. (In the case of the NFTs I’m talking about, the platform is called Ethereum and the currency is Ether). On top of this, transactions are decentralised and immutable which means everybody can see the transactions and they cannot be altered, making it very hard for hackers to commit fraud.

Alright, I’m on board but how does this have anything to do with art?

Well, this technology is being used to create digital objects that are verified as being one of a kind, or one of a few. They allow for digital ownership in a space where digital works are typically stolen, uncredited or spread across the internet in droves every day. It lends credence and scarcity to a digital piece of artwork that it logistically was not able to have before.

This is dope! Tell me where can I buy NFTs!

Launched in March last year. Nifty Gateway is a crypto-based platform that sells exclusive digital artwork made specifically for their website through the blockchain technology of Ethereum. Founded by 26-year-old twins Duncan and Griffin Cock Foster in 2018, the business model was to finally allow digital art the same exclusivity as the rest of the art world. In June 2019, the Winklevoss twins (think the twins from 'The Social Network' in 2010) acquired the company through Gemini.

Nifty Gateway is a solution to not being able to sell digital art. In the past, you would have to go through a high-end gallery to verify and authenticate a digital artwork. I don’t have to tell you that this is not the most accessible form of verification which has meant that digital art has continued to be left outside of the investing art market.

Artist Matt Gondek likens the process to a video game- “you can pay actual money to get a crazy gun but if that game goes offline, you no longer physically own the gun you paid money for. But once you buy a digital artwork through this medium, it can’t go away- you have ownership of it forever.”

Considering the short life the company has had so far, it has been making millions of dollars supporting artists who have struggled to make money on their digital artwork alone. Between March and December 2020, the total value of nifties sold was $11+ million with the largest single drop by the powerhouse artist Beeples for 4.2 million.

But at what cost?

If you keep up with digital artists on Twitter then you may have heard some of the concerns floating around in regards to how NFTs are sold, and digitally stored through the Ethereum blockchain.

Memo Atken breaks down the staggering ecological cost of crypto art on his website (see graphic below), where one artist's multi-edition NFTs have a carbon footprint of 260 MWh and 160 tonnes of CO2 emissions. This is the equivalent of an EU resident's electricity consumption for 77 years.

With that being said, there is still some hope for the potentially groundbreaking technology to have a sustainable leg to stand on.

In an interview with Ocula Magazine, one of the founders of Nifty Gateway, Cock Foster responded to the ecological impact of his website. Nifty Gateway will release 'a new minting system, hopefully by March 1, that will cut the amount of gas to less than 1% of what we currently use'.

This is in conjunction with Ethereum's proposed shift from a Proof-of-Work protocol to a Proof-of-

Stake protocol which will see a reduction in energy consumption by 99%. This shift should be occurring within the next 18 months.

Follow Beeples on Instagram, Twitter or visit his website.