A few days ago, the musician Grimes sold some animations she made with her brother Mac on a website called Nifty Gateway. Some were one-offs, while others were limited editions of a few hundred – and all were purchased in about 20 minutes, with total revenue of over US $ 6 million.
Despite the high price tag, anyone can watch or (with a simple right click) save a copy of the videos, which show a cherub ascending to Mars, Earth and imaginary landscapes. Rather than a copy of the files themselves, eager buyers were given a special type of redeemable certificate called a “non-fungible token” or NFT. But what they were really paying for was an aura of authenticity – and the ability to someday sell that aura of authenticity to someone else.
NFTs are a cultural response to the creation of technical shortages on the Internet, and they enable new types of digital goods. They are making forays into the realms of great art, rock music, and even the new mass markets of NBA virtual trading cards. In the process, they also enrich some people.
How NFTs Work
NFTs are digital certificates that authenticate a claim of ownership over an asset and allow it to be transferred or sold. The certificates are secured with blockchain technology similar to that underlying Bitcoin and other cryptocurrencies.
A blockchain is a decentralized alternative to a central database. Blockchains typically store information in encrypted form on a peer-to-peer network, which makes them very difficult to hack or tamper with. This in turn makes them useful for keeping important records.
The main difference between NFTs and cryptocurrencies is that currencies allow fungible trading, which means anyone can create Bitcoins which can be exchanged for other Bitcoins. NFTs are by definition non-fungible and are deployed as individual chains of ownership to track a specific asset. NFTs are designed to uniquely restrict and represent a single claim on an asset.
And this is where things get weird. Often, NFTs are used to claim “ownership” of a digital asset that is otherwise completely copyable, pastable and shareable – such as a movie, a JPEG or other digital files.
So what is an original genuine digital copy?
Online it’s hard to say what authenticity and ownership Really nasty. Internet culture and the Internet itself have been motivated by copying, pasting and remixing to spawn new forms of authentic creative work.
On the technical level, the Internet is precisely a system for effectively and openly taking a series of ones and zeros of this computer and make them accessible on this computer elsewhere. The content available online is generally what economists call “non-competing goods,” which means that one person viewing, sharing or remixing a file does not in any way prevent others from doing the same.
The constant sharing adds to an almost endless array of material to display, share, copy, or remix into something new, creating the economies of abundance on which online culture thrives.
TikTok is built around reinventing common audio loops with seemingly endless yet unique visual rituals, which are themselves mimicked in seemingly endless variations. On Twitter, tweets are only valuable to the extent that they are retweeted. Fake news only exist to the extent that Facebook’s algorithm decides to share them, it will increase engagement by generating more sharing.
Information wants to be free
The life and longevity of digital content depended on its ability to spread. The pioneering cyber-libertarians of the Internet had a motto to describe it: information wants to be free. Attempts to prevent the dissemination of information online have historically required revolutionary aspects of technology (like encryption) or legal regimes like copyright.
However, NFTs bring code and culture together to create a form of control that does not rely on law or sabotage existing systems. They create a kind of unique “authenticity” in an otherwise shareable world.
Almost 40 years ago, Canadian science fiction writer William Gibson described cyberspace as a “consensus hallucination” in which billions of users agreed that the online world was real. NFTs take this to the next level: they are a consensual hallucination that this the string of ones and zeros is different and more authentic than this String (identical) of ones and zeros.
NFTs work by reintroducing a mutual hallucination of scarcity into a world of plenty. There is no shortage of buyers: the NFT market is already worth hundreds of millions of dollars. Even the humble sports collectible cards will never be the same.
Are NFTs Different Enough to Break the Internet?
The real function of NFTs is to create a clear line between the creators and ordinary consumers of online content and those who are privileged enough to be paid to produce content or claim to own “genuine” work. The internet has decentralized content creation, but NFTs are trying to re-centralize the distribution of culture.
NFTs facilitate the exchange of fungible money for non-fungible authenticity. It is a well-known movement that occurs in all kinds of industries, and has a long history in the history of art.
How the NFT culture code will evolve is an estimate, but for now, it opens up many new ways to change hands with money.
At first glance, it may seem like this presents artists around the world with a recourse to be paid for their otherwise copiable work. Yet the creation of prescriptive rules around payment for online content hasn’t gone smoothly yet: think about the mediocre payments musicians receive from streaming services like Spotify.
NFTs have also been criticized for consuming excessive power, as they rely on a lot of computing power to encrypt their tokens. According to CryptoArt’s online calculator, the calculations needed to create NFTs for each of Grimes’ animations would have used enough electricity to boil a kettle 1.5 million times – and resulted in around 70 tonnes of CO.2 emissions. I’m not sure the cost to future generations has been factored into the current market value or appreciation as tokens change hands cryptographically.
Other than their tonnes of CO2 shows, what’s real about NFTs is how their creation of technical scarcity allows for a new cultural accord about how something can be authentic and who controls that authenticity. NFTs are creating new forms of hierarchy, power and exclusion on the wider web. They have already created a new kind of haves and have-nots.
This article by Luke Heemsbergen, PhD, Media and Politics, Deakin University is republished from The Conversation under a Creative Commons license. Read the original article.