Estimated reading time: 7 minutes
This essay was v1, published on November 25th, 2021.
Following great additional feedback, a second version has been published on December 8th, 2021 under the title “A beginner’s take on NFTs (v2)“.
Unless you have been living under a rock in recent months, you probably have heard of NFTs.
I am trying to document my discovery of web3 technology, philosophy, and memes, mainly to gather and organise my thoughts. Maybe this can be helpful to others following through the same journey, just a step or two behind.
What I mean by this is: this is not an in-depth analysis and won’t be very technical; if you already know what NFTs are, you probably won’t learn much. If you don’t, though, I hope I can shed a little light on the matter.
Let’s start by unwrapping the acronym: Non-Fungible Token. In a nutshell, “fungible” is the characteristic of something that one can replace with something similar performing the same function—money, for instance.
There’s an old joke I heard as a kid about this dude asking his employee to go buy him stamps and cigarettes. “Here’s 20 bucks for the stamps, and here’s 20 for the cigarettes. So the employee leaves, but an hour later, he still isn’t back. The boss, angry at that point, goes out and finds him sitting on the curb, a 20 bucks bill in each hand, looking lost. “What are you doing?” does he yell at his employee, “I have been waiting for you for one hour”.
“Sorry, boss, by the time I got here, I couldn’t remember which bill was for the stamps and which one for the cigarettes.” And the boss, angrier now to reply: “Did you lose your mind? You can’t remember which bill is which? And you waited here for one hour? How do you think I can remember now, an hour later, which bill is which?”…
It’s moderately funny but illustrates quite well that money is fungible. A 20 bucks bill is a 20 bucks bill, regardless of the purpose one person gives to it. It can be used for something different and replaced in its original role by another bill of the same amount. Or even a mix of different ones.
Non-fungible, well, it’s the opposite; it characterises something that one can’t replace, that is unique. Paintings, sculptures, antiques, domain names, apartments, the list is long and probably open to debate as the fungibility of some items might be subjective.
For the sake of simplicity, though, we will limit today’s exploration to art. Digital art, to be more specific.
For better or worse, the notion of private property is at the core of our societies. Of course, it is interpreted and handled differently depending on the regime governing each country but is always central to it.
In the online world, various ways to certify and enforce property have existed for years, the most common being end-user license agreements (EULA), software licenses, and Digital Rights Management (DRM), to name a few.
These mechanisms are better suited to manage one to many or many to many relationships. A corporation regulating the usage of the operating system they sell, a music label or movie studio distributing their media to the public, an open-source community handling the software they develop.
No mechanism until recent years was available to practically certify the ownership of a single digital artefact by an individual.
The first role of an NFT is to provide a property certificate, easily verifiable, almost impossible to falsify. (I say “almost” because I fundamentally do not believe in anything being entirely secure, but let’s leave my paranoia for another day).
You’ll hear this time and time again: “In the digital world, there are no originals because digital copies are perfectly identical to the original. Therefore, they are all copies, or all originals, it’s all the same”.
Now, bear with me; this is at the same time technically true, but also not new to the digital world and is something we solved a long time ago.
Before computers and the internet, several techniques existed to create multiple copies of a work of art, like photography, serigraphy, cast metal sculptures.
I am not an expert in this field, and I suspect that laws regulating these matters are quite different across countries, but if we take the example of France, the country where I studied photography, and one with a very mature art market, here’s how it works:
Decree n°95-172 of 17 February 1995 on the definition of second-hand goods, works of art, collectors’ items and antiques for the application of the provisions relating to value-added tax.
Article 2 of 19 February 1995
The following shall be considered as works of art:
1. paintings, collages and similar tableaus, paintings and drawings, executed entirely by hand by the artist, excluding architectural, engineering and other industrial, commercial, topographical or similar drawings, hand-decorated manufactured articles, painted canvases for theatrical scenery, studio backdrops or similar purposes
2. Original engravings, prints and lithographs printed in limited numbers directly in black or in colour, of one or more plates executed entirely by hand by the artist, whatever the technique or material used, with the exception of any mechanical or photomechanical process;
3. With the exception of articles of jewellery, goldsmiths’ and silversmiths’ wares, original productions of statuary or sculpture in all materials, provided that the productions are executed entirely by the artist; sculpture castings limited to eight copies and controlled by the artist or his successors in title;
4. Tapestries and wall textiles made by hand based on original cartoons supplied by the artists, provided that there are no more than eight copies of each;
5° Single copies of ceramics, entirely executed by the artist and signed by them;
6° Enamels on copper, entirely executed by hand, within the limit of eight numbered copies and bearing the signature of the artist or the art studio, excluding articles of jewellery, goldsmiths’ and silversmiths’ wares;
7° Photographs taken by the artist, printed by him or under his control, signed and numbered up to a limit of thirty copies, all formats and media combined.(Translated by yours truly, Deepl, and Grammarly from the original Décret n°95-172 du 17 février 1995 relatif à la définition des biens d’occasion, des oeuvres d’art, des objets de collection et d’antiquité pour l’application des dispositions relatives à la taxe sur la valeur ajoutée)
While the maximum number of copies varies across media of expression, the central ideas are the involvement of the artist across the entire process, their signature, and a limited, numbered series.
There is an anecdote, real or apocryphal I don’t know, about Pablo Picasso having dinner in a restaurant and drawing on a napkin. At the end of the meal, the restaurant owner allegedly offered to not charge for the meal in exchange for the doodle. Picasso agreed. When the owner remarked he had not signed the napkin, Picasso replied: “I want to pay for my dinner, not buy your restaurant”.
The signature would have made it an original Picasso.
The NFT provides a digital signature of the artist and proof of unicity. If part of a limited series, it can certify that the work is part of it and its number in it.
“But, I can right-click and save, duh!”
Yes, and you can go to a museum and take photos of the artwork there. You can even buy relatively cheap copies of any painting by any master in the world, made with paint and brushes, just like the original. You can hang them on your wall, and that’s fine.
Similarly, you can right-click on any digital artwork, save it, and use it as your desktop background. That doesn’t make you the owner of it.
And you might be perfectly ok with this. And it’s ok to be perfectly ok with this.
See, this is the beauty with art, and it’s even better with digital art. Some people don’t care, some like looking at something or listening to something else, and some people like to collect. Others store value in art. A lot of these things and many more are possible.
The NFT make it possible to buy a digital work of art and sell it and guarantees that it will have only a single owner at any given time.
While the roles described above are nothing new, and merely the digital transposition of legal instruments available for years offline, what is new with NFTs is the visibility and transparency of transactions.
While it’s not always possible to know who is behind each wallet purchasing NFTs, at least the transactions and their amounts are public, unlike most traditional art markets.
I believe that transparency is a fundamental improvement in any market or industry, so that’s progress.
Last but not least, I get a sense that, by being deeply anchored in modern technologies and memes, NFTs are attractive to a much younger population than traditional art markets. Considering we are already 20% done in the 21st century, it’s probably a good thing to refresh things a bit and get rid of the dust. Picasso, after all, would be 140 years old by now.
I warned you at the top that I wasn’t going to go very deep. I am still in the exploration phase. I probably will in the future, but if you are impatient, I can recommend checking these Twitter threads: