The acronym NFT, which stands for Non-Fungible Token, seems to have the art world buzzing at the moment. As an artist myself I have been looking into the implications of this development in digital art, which is very intriguing but also deeply problematic.

By way of explanation, we first need to consider the difference between art which has been created as a tangible object in the real world, and art which exists in its original form only as 1s and 0s in computer memory.

An oil painting is a singular object. You may be able to buy reproductions of it, perhaps even prints signed by the artist, but the original painting is where the real value lies to an art collector. Even if someone were able to create a completely identical copy, it would have little value compared to an authenticated original.

Mechanical duplication methods such as screen-printing also create a series of unique objects. The number of prints in the run may influence the value of individual prints, but each copy will inevitably have physical differences, however slight. They are all unique, and limited in number. Printing screens or plates will often be worn out in the process or destroyed by the artist, thereby preventing further duplication.

Digital art presents a problem because it does not exist in the real world, and it is infinitely reproducible – it has no inherent value. There are several ways to address this problem. One is to embrace reproducibility as a characteristic of the medium, such as by selling unlimited prints at relatively low cost. Alternatively an artist or photographer might produce a limited run of digital “giclée” prints which are then hand-signed and numbered. This seems like a somewhat artificial way of introducing scarcity. The digital file still exists and there would be nothing to stop the artist printing more of them (except death, which also might affect the value).

NFTs are a way of assigning a piece of digital art uniqueness (and not just visual art – Kings of Leon among others have just released an album this way). Non-Fungible Token essentially means “an asset that cannot be exchanged for another the same” – i.e. unique. A digital file is assigned a unique identifier, authenticated and recorded in perpetuity using blockchain technology. In theory this means an artist can create a digital original which cannot be replicated, no matter how many prints or copies are made, and which can always be traced back to the person that created it (much like an oil painting).

Interestingly this technology makes it possible for an artist to receive a percentage in royalties when a digital work is re-sold, which is not the case with traditional art. It also removes the need for physical spaces such as galleries – useful in a global pandemic.

NFTs became big news in December 2020 when the CGI artist Beeple sold a small collection of his work on the website Nifty Gateway for over $3.5 million. Since then his work has gone mainstream and been auctioned by Christie’s. This is art as currency and asset, and it is being used for financial speculation as investors bet on the crypto art market taking off in the years to come. It is very tempting for artists to jump aboard and try to cash in, and many are. One group of investors/artists made a statement burning a Banksy picture which was itself a statement about the value of art.

Digital scarcity and the virtual economy are not new. For many years people have been treating items available on the video game marketplace Steam as a form of currency. At one point, due to their limited availability, virtual Apple Earbuds became defacto currency on Steam. People have been making a living creating and trading digital items such as hats for game characters. It’s a strange and murky world which the Russian mafia (and others) have apparently used as an effective means of laundering money.

As it involves high value, portable assets, art has always had some connection to crime. So too has cryptocurrency such as Bitcoin, which although becoming increasingly mainstream, has from its inception been used for black market trade in drugs, weapons, and even people. However, this is not the biggest problem with it.

In order to “mine” (create) new cryptocurrency such as Bitcoin, an ever increasing supply of computing power is required. This “proof of work” model is how supply is limited and value created. One virtual Bitcoin now represents a colossal (and ever growing) amount of real-world energy. This is a fundamentally disastrous concept for a planet sliding into environmental catastrophe. It’s a terrible and irresponsible waste of resources.

NFT art is currently traded using the cryptocurrency Ether (ETH). It must be said that the designer of the Etherium network did apparently recognise the energy consumption problems inherent to “proof of work” concept from the outset. Ether is a somewhat more energy efficient cryptocurrency than Bitcoin, and is currently beginning the transition to a “proof of stake” model which promises to cut its energy consumption by 99%. However it will be at least a year until this transition is complete, if not longer, and the proof of stake model has problems of its own.

While people may disagree about the micro-economics and the environmental impact individual artists might be having by releasing work as NFTs, we should all think carefully about when, how, or if, we use this technology. There is no doubt that, for the time being at least, cryptocurrency is based on a fundamentally flawed and destructive premise.

What does it say about our values if we are happy to consume huge amounts of energy turning things which don’t even exist into intangible conceptual art statements, for the sole purpose of accumulating virtual wealth and enabling investors to do the same?

Watch the K Foundation burn a million quid.