During the pandemic, a particular fever called Non Fungible Tokens gripped the crypto world.
NFTs raised the level of abstract art to the ultimate level of abstraction. Using the same technology as cryptocurrencies, art could be purchased that existed in an ethereal digital form only.
NFT art held both promise and hype. Finally, artists could make a living selling their art by bypassing the middlemen -the galleries and agents who take a cut of sales. Now artists could market their work directly to buyers.
NFTs promised could solve another problem: resale. Artists often sell their work to art speculators for very little. This is especially true for Indigenous artists who work in remote, sometimes Arctic, locations. Speculators sell the art for many times more than what they paid. The price can escalate with each sale, leaving the artist with a fraction of the eventual sales. NFT contracts could include a clause that requires a percentage of the resale price go to the artist.
I didn’t realize that my art was non-fungible two years ago but that was only because I didn’t know what the word “fungible” meant.
Fungible things can be exchanged for something else of the same kind: they are equivalent. A twenty dollar bill is fungible because it can be exchanged for a ten and two fives. A house is not fungible because you can’t exchange it for a garage and two sheds. They are not equivalent.
My art is non-fungible. One of my acrylic paintings can’t be exchanged for a charcoal sketch and two plastic-fork mobiles.
However, my non-fungible art is not in a digital form whose ownership is established by the cryptocurrency ledger called blockchain -it’s not a token. You can hang my art on the wall.
Scott Martin, an artist from Hamilton, Ontario, did very well selling NFTs. After studying art at college, he sold used car commercials. . In 2020, a friend encouraged him to sell his work as NFTs. His first attempt netted a few thousand dollars. “The more exciting part was just knowing somebody would want to pay for my work without actually being able to hold it,” he says.
Then he and partners released 10,000 drawings under the name Doodles. The series sold out within minutes. Since then, more than US$520-million worth of Doodles have traded hands, making it one of the most popular NFT collections in the world.
Not everyone thinks NFTs are a serious investment. Microsoft co-founder Bill Gates alluded to the “greater fool” theory to describe NFTs which says that investors can make money on the most worthless asset so long as someone else is gullible enough to buy it at a higher price.
With the pandemic fever waning, investments in phantom money and art are losing their appeal. In general, the value of NFTs has been slashed in half.
The glow has gone off of NFTs. Investors are looking for safe havens, and it’s hard to think of a riskier asset than a JPG. “The bubble has burst, or still has to burst,” says Pedro Herrera, head of research at DappRadar. “Ninety to 95 per cent of the projects that we currently see in the market, in two years, will be worth close to zero.”