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Three letters that have recently been found almost more often than any other are NFT. Non-fungible tokens, or "non-fungible tokens", are a way to provide digital works with a unique signature, so that they can then be traded as if they are physical objects. In March 2021, NFT became a real phenomenon in the world of cryptocurrencies and in the world of art. It would seem that what could be the catch here?
The idea of NFT boils down to the fact that instead of interchangeable tokens that are used as electronic money, unique, non-interchangeable tokens are issued and recorded in the blockchain. Such a token is no longer a currency, but an individual entity, and each one has its own price. In this case, the token can be associated with a certain product and thus transfer the properties of the token to it.
Information about each token transfer is also recorded in the blockchain, so that it is known who the owner of the product is at the moment, and a double sale is not possible. The products themselves are usually digital, but how exactly they are stored and how they are associated with the token is a separate issue, and different platforms solve it differently.
That's the whole theory. Now look at this fat guy in the bear suit and tell him that paying a little over five thousand dollars for him is a normal, sensible idea.
In the full version, it is animated, but this does not make it any easier to relate it to the price tag. The secret lies in the fact that such "chubbikovs" were generated by 10 thousand pieces and not a single chubbikom more. Buyers are guided by a simple logic: if there is a limited amount of something, then it will only become more expensive — just like, for example, Bitcoin. And if you see a serious flaw in this logic, then do not worry this is completely normal!
There are a lot of similar stories now. For example, the virtual worlds Decentraland and Cryptovoxels sell plots in the manner of Second Life, the collectible card game WAIFU Harem sells cards with anime girls, and the authors of the CryptoPunks project came up with the idea to draw and sell pixel avatars so that the treasure literally becomes the face of its owner.
The sites that sell digital art, primarily the Foundation and Nifty Gateway, were the loudest performers. Paintings and animated videos here go for millions of dollars.
How is it that no one sees the catch and people continue to spend a lot of money on something that is not clear? And do these people even exist? Let's get this straight.
NFT World Map
So far, the NFT market is the Wild West, but cowboys also need to navigate somehow. Let's go through the basics quickly to get a better understanding of what's going on. It is possible that in a year or two from the current realities will not remainthere's no sign of it, so check the article's publication date.
What's inside the NFT?
The technical basis of NFT is most often Ethereum, more precisely, the ERC-721 standard, according to which smart contracts are created that allow you to issue non‑interchangeable tokens. Some sites are considering switching to Tezos, as it requires less electricity-read more about this in the TQ Tezos post.
One of the most important features of Ethereum is the need to pay for "gas". This is a virtual fuel that is consumed during each operation with the blockchain — including the issue of new tokens. So an artist can spend, say, $ 50 to put the work up for auction, and then it will be sold for $ 5.
What do they sell using NFT?
Tokens can be divided into three large groups according to the categories of products that are sold using them.
Gods Unchained-a collectible card game in the spirit of Magic the Gathering and Hearthstone
Collection of three-dimensional shoes on Rarible
Where is all this sold?
Platforms can be divided into two broad groups: those that are curated and those that do not impose any restrictions. Among the first — SuperRare, Nifty Gateway, Foundation, KnownOrigin, MakersPlace. Free ad platforms - OpenSea, Rare, Mintable, Portion, InfiNFT, Cargo. The difference between them is quite obvious the former keep track of what is displayed at them, the latter allow you to issue tokens to anyone who wants.
For artists, it is more profitable to get on Foundation or Nifty, since buyers closely monitor everything that appears there. Many platforms of this type (Nifty, KnownOrigin, MakersPlace) specialize in "drops", that is, limited-time sales of collections of famous artists. Nifty also allows the artist to earn royalties from resales.
OpenSea
As for sites like OpenSea and Rarible, they are more likely for those who advertise themselves. At the same time, OpenSea generally stands a little apart, since it not only allows you to issue tokens and trade them, but also acts as a backend for other platforms.
What is metaverse?
A term that can be used to distinguish the most stubborn dreamers of cryptocurrencies. They see an amazing new world in the ability to create their own currencies and sell digital assets for them. More precisely, even different worlds connected to each other by a market economy.
It is possible that there is something in this. However, in roughly the same words and with no less burning eyes, twenty-something years ago they talked about the Web and bought pixels on the Million Dollar Homepage. An amazing future may come, but some things may be delayed for another twenty years, and during this time the current investment will completely devalue.
BIG DEALS - BIG HYPE
From 2017 to 2021, the NFT world lived on its own and was mostly entertainment for the jaded bitcoin rich. But the first high-profile deals attracted the attention of a wide audience, and with it — and new money.
The first such deal was the sale of the Nyan Cat meme.
Its author Chris Torres put up a specially redrawn and improved version of the animated kitty at the Foundation auction and earned 300 ETH, or 637 thousand dollars at the current exchange rate.
Grimes
The heroine of the next high-profile episode is singer Grimes, known among other things for her famous entrepreneur husband and popular microblogger Elon Musk.
Grimes put up for auction Nifty a series of works WarNymph, which she created together with her brother, the artist Mac Boucher. Actually, Mac was responsible for the visual component, and Grimes composed the music for the short videos.
Animation with the track Grimes, which went to Nifty for $ 7,500
Total revenue for WarNymph was around $ 6 million. Some works were left in a single copy, others in hundreds of copies. Additional PR was provided by Musk. Where, in fact, to look for enthusiasts of such things, if not among his Twitter followers?
Bipl
The real turning point for NFT was the sale of the work Everydays: the First 5000 Days by Michael Winkelmann, better known by the pseudonym Beeple. The transaction amount is still an absolute record for NFT - $ 69.3 million. This is a lot even outside the cryptocurrency world: among the works sold during the artist's lifetime, there are only two that cost more. However, it is not only the price tag that is interesting here.
The work itself is also unusual. "The first 5000 days" is not just a picture, but a collage of five thousand images, each of which Bipl spent one day-hence the name. The result is a gigantic canvas that accumulates work over 13 and a half years.
Fragment of "The first 5000 days"
Another difference of this deal is the participation of the Christie's auction house. Although the Nifty platform was responsible for the technical side, formally the painting was sold in the usual, traditional way for big art. The buyer even received a token issued in the form of a physical souvenir. Apparently, the goal was precisely to convince collectors of the seriousness of the whole undertaking.
"The first 5000 days" and other Bipla works in the form of souvenirs
However, it was not some museum or owner of a private collection of traditional art who bought the painting in the end, but someone under the pseudonym Metakovan. It is noteworthy that this Meta-fan is the owner of an investmentfund that invests in NFT, and he has previously purchased Bipla paintings. By the way, even before the "5000 days" story, he sold his works for $ 3.5 million.
Banksy
Shortly before the Bipl story, Banksy was an unexpected participant in the NFT hype . Moreover, he himself was not involved in the event in any way. His work Morons (White), created in 2006, was bought by the Injective Protocol cryptocurrency company for 95 thousand dollars-specifically to put on a show and advertise its SuperFarm platform .
The painting was burned and the process was recorded on video. What partly repeated the trick of Banksy himself, who in 2018 sold the self-destructing painting "Girl with a balloon". Immediately after the sale, she shredded herself with a shredder built into the thick frame.
Banksy, however, wanted to mock the rich collectors, but the cryptostartappers had another idea — they burned the original, but signed a digital copy using NFT. And immediately arranged an auction, where a digital reproduction of Morons (White) went for 380 thousand dollars.
The idea here is simple: this ritual was needed to destroy the original and thus, as it were, transfer this status to the digital copy. So far, no one has repeated this trick. But if the fashion for burning originals for the glory of NFT suddenly starts, it will be an interesting development!
As for me, the level of irony here is simply unbearable. Banksy's painting depicts the same Christie's auction, and it is called an offensive word for a reason. On it, a heavily framed canvas with the inscription "I can't believe you assholes are buying this" is being auctioned off. Well, after migrating to NFT, this is even harder to believe!
Jack Dorsey
"Just setting up my twttr," wrote Twitter founder Jack Dorsey in 2006, and sent this line, in fact, to twttr (vowels were added to the name later), thus posting the first tweet. Almost exactly 15 years later, Dorsey put it up for sale through the Valuables platform.
The current supply is 1,630 ETH - around three million dollars. However, trading on Valuables can last indefinitely until the owner himself decides that the amount suits him.
Another interesting feature of this platform is that the author of a tweet cannot put it up for sale himself. Only the reader can make a suggestion about this. They assign a starting amount and leave a specially generated link in the comments. The author of the tweet, if he likes this idea, starts the auction.
Dorsey's historic tweet is now leading the price by a huge margin. For example, Elon Musk's tweets are still worth only tens of thousands of dollars, not millions.
By the way, the most popular topic here is jokes about cryptocurrencies. So if you have a suitable vintage tweet, then the first buyer may be knocking soon.
And others
Not every transaction is accompanied by the same hype, although the amounts are sometimes impressive. For example, an artist named Pak sold his work to Finite in mid-March for 444 ETH - almost a million dollars.
Finite
The gold rush has not spared the Russian creators. For example, their most famous works were exhibited by Gudim (his meme Drowning High Five went for about five thousand dollars) and Duran-the famousGnvoerk brought him in the region of four thousand dollars at the current exchange rate of ether.
Even more successful is the sale of the work of the Pussy Riot group, which is widely known abroad. Pieces of clips go for tens of thousands of dollars, and the first one was sold for 100 ETH, or more than 200 thousand.
NFT ISSUES
NFT enthusiasts like to respond to all doubts with phrases like "you just don't understand". A new reality has arrived, they say, and those who do not understand it will simply remain grumbling and spoiling the air on the sidelines of history. However, it's not too late to come to your senses, get your savings, convert them to "ether" and have time to jump into the last car of the departing train.
With some effort, you can really convince yourself that everything is fine. But the more aggressively you are persuaded to accept something on faith, the stronger your suspicions should grow. Therefore, we will still try to understand, understand and find at least the most obvious flaws in NFT.
Problem 1: The copy is completely identical to the original
NFT advocates insist that authenticity is important in art and collecting in general. But is it possible to simply take it and synthesize it using digital tokens?
Here, for example, is the very" Starry Night " that Van Gogh painted while looking out of his bedroom window in the hospital for the mentally ill (where he ended up after the famous ear-cutting incident). People specifically go to New York and pay $ 25 for a ticket to the Museum of Modern Art, so that they can hang out in front of it, and not in front of the reproduction. Here they are, jostling, and I'm jostling with them.
And here is the very" Garden of Earthly Delights " that Hieronymus Bosch wrote back in 1500. People go to Madrid and go to the Prado Museum to see exactly the same triptych (despite the fact that it is much more convenient to look at it on the Internet). I went too.
And here's the trollface. The author of this masterpiece recently sold it through Foundation for $ 70,000.
You don't have to follow him anywhere, and yet you see exactly the same trollface as me on the screen. It is completely identical to what the author drew, just like any other image created on the computer. It was replicated indefinitely before the sale and will continue to be replicated after. Even after 500 years, it will still be the same, and no one will be impressed that it has been preserved and passed down to posterity through the epochs.
To be fair, there is still something similar to NFT in the art world - these are pictures signed by a photographer. You can print as many physical copies as you want from a digital image or from a film negative, so auctions usually sell cards signed by the photographer by hand. Here, as in the case of NFT, the signature itself is valuable, standing next to the work (for more information, see Jack Rasher's post).
Photographer Henry Levy's signature on the printed image
However, on photographs, at least the signature is made directly by the author's hand, and NFT is at best an analog of a stamp. But much more buyers should be concerned about the lack of a direct connection between the token and the product…
Problem 2. Weak connection with reality
It may seem that investing in an NFT is about the same as buying art objects. Alas, this is only a cleverly created illusion. When you pay for an NFT, you don't buy a product, but a token, and you won't own anything other than the token.
Do not confuse NFT with copyright either. Te is also an informational entity in its own way, but it is completely different. The rights to the sold work remain with the artist, and if you suddenly decide to use his picture for commercial purposes, the author will be able to successfully sue. It is considered, however, that this is not a bug, but a feature.
INFO
There is a scheme in which the author will receive interest on subsequent transactions (for example, a fifth). Isn't it fair that not only the collector will get rich, but also the artist?
Another side effect of the virtuality of what is happening is the complexity of guarantees. Since we are dealing with non-physical entities, it becomes much easier to deceive the buyer. For example, the person selling the token may not be the author of the work. This seems to be an obvious scam, but since you are buying a token, and not a product, this trick will not even violate the law under certain conditions.
To ensure that this does not happen, the platform must also respond with its reputation. But while the platforms are multiplying daily, it's too early to talk about it. An unscrupulous developer may even indulge or collude with scammers.
Speaking of collusion! The classic thimble method is to use fake players to engage the public. The same thing sometimes happens in the world of big art: an artist or reseller comes to an agreement with a fake buyer and pretends to sell the work. And then they advertise the amount of the transaction in every possible way in order to raise the price for this and other products of their own. On the Internet, such things are easier to deal with, because instead of the real names of buyers, we see nothing that says nicknames, and transactions are made for cryptocurrency.
It is rumored that the Bipl "sold" (that is, transferred) "The First 5000 days" in this way. Since Metacovanus had already bought Bipla's work, the hype surrounding the deal made it much more expensive. When asked if he received the money, Bipl says, "100 percent, man!" But you can say anything.
At least in the case of this transaction, it is known that the Christie's auction received its share — about $ 15 million. On the Internet, intermediary platforms also take their share, but this does not prevent us from suspecting that the percentage of unfair transactions may be high. The accompanying expenses may seem like nonsense to businessmen compared to future profits.
Work of the Bipla on "Christie's"
The final touch is the lack of existing examples of how controversial issues are resolved through the courts. Something suggests that the judges will not be happy to face the bizarre world of tokens and blockchains, and the geographical dispersion of the entire system will give fraudsters an additional chance to escape from punishment.
Problem 3: Technical difficulties
"Out of curiosity, I dug up information about how NFTs actually link to media that you "buy", and my eyebrows went into the orbit of the moon", writes Jonty Waring on Twitter continues to conduct a detailed analysis of what is happening.
The root of the problem is that the token and the work are stored separately. For example, the Nifty Gateway platform works like this. A description is created in JSON format for a media file with a piece of art. The most important thing in it is a link pointing to the Nifty server, which, when requested, redirects the browser to the image stored in the IPFS distributed file system.
Does that sound convincing? If so, then don't be fooled. The fact is that the token you buy is a hash sum from the JSON file, and not from the product itself. The token is stored on the Ethereum blockchain. If something happens to Nifty, the connection between them will be severed. And IPFS is not a guarantee of reliability: information is stored here only while it is actively requested.
INFO
A small caveat: IPFS may lose the file, but it leaves the option to download an exact copy of it again. The system stores the hash from the original file and checks it to avoid forgery. For more information about these nuances, see the @scanlime thread.
Both buyers and sellers, in fact, are completely dependent on the owners of the site. What if they turn out to be dishonest? For example, they can just declare some transactions invalid, and nothing will stop them from generating other tokens and selling the works again. Or suddenly the owners will want to roll back the blockchain, giving rise to a fork? This has already happened in the world of cryptocurrencies. Or here's another idea-start blackmailing customers by demanding that they pay for keeping links afloat. There are plenty of options!
While the reputation of trading platforms is at stake, it is unlikely that their owners will do anything that will scare off customers. But what if things get worse and there's nothing to lose? The painting in his personal vault would not have been affected by the collapse of the auction house, or the sudden decision of its owners to have plastic surgery and escape to Ecuador. NFT is very different in this respect.
Problem 4. It may not take off
"I have two cryptokits, I want to sell them and stop doing this, "I saved the link to this post on Reddit three years ago as an excellent demonstration of the problem with such stories. The author writes: "I paid $ 300 for them and I think I overpaid. Can someone show me how to sell them so I don't have to think about them anymore? And how much do they cost? How do I evaluate them at all? I'm ready to lose money, I just want to get it over with."
In response to him soobthey think that kittens now cost around $ 5 for both, and he laments: "Why did this happen?" Kittens, by the way, are still not sold.
The CryptoKitties project was one of the first cases when NFT attracted the attention of the general public. According to the idea of the developers, players were supposed to acquire and cross cats, breeding rare breeds. In reality, it turned into a typical pyramid. Only their creators and first breeders earned money on cryptokits. And most buyers, as happens in such cases, were left with illiquid assets in their hands, as soon as the hype subsided and the influx of suckers began to dry up.
INFO
The developers of CryptoKitties (Dapper Labs) avoided high-profile accusations of fraud, because they cleverly came up with the idea of calling what is happening a game. Kittens, they say, are bought for fun, and if someone wanted to seriously invest in them and lost money, then this is their problem.
Artistic works, unlike endlessly breeding kittens, at least are released either in one copy or in a limited edition. However, nothing insures them from oblivion. If public interest in the technology suddenly begins to wane, prices will go into a tailspin and may never return.
Traditional art genres are associated with similar risks the paintings of a fashionable artist can also be overrated. But at least it doesn't happen that the paintings will be overrated in principle, or in a couple of years everyone will decide that the sculptures are bullshit. With NFT, and even more so with some specific sites-it's easy! You don't have to worry about artists - they will easily move to a new place, but expensive purchases will not.
HOW WILL IT END?
If you take your mind off the crazy money that this whole thing revolves around, it becomes a little easier. Admittedly, while I was collecting material for the article, flipping through Foundation, Nifty and SuperRare was a pleasure. Everything is so fresh, fashionable and cool moves that just ah!
Previously, collections of memes, GIFs, and juicy renderings were more likely the domain of Tumblr and Pinterest enthusiasts, but now the latest forms of digital art are flourishing at virtual exhibitions under the supervision of specialists. So I would like to wish success to the pioneers – let them do with dusty galleries the same thing that Wikipedia did with Britannica and BSE. The ability to pay talented artists for their work is an important step towards this goal.
Of course, some of the problems I listed can be solved, and with the remaining ones, find ways to somehow get along. But this will not happen immediately. NFT is called "a unique phenomenon at the intersection of virtual and real", but its reverse side will be unique problems at the intersection of technical failures and ordinary criminality.
There is no need to go far for examples: both cryptocurrencies and ICOs experienced a similar sharp start, which soon turned into a series of high-profile scandals and bitter disappointments. Stories like Mt. Gox or The DAO are sure to repeat themselves in the NFT world - you can even figure out where the gap will go at the seams.
Well, in the end, NFT is a scam in the broadest sense of the word. If we put a price on something that can't be immediately useful, and then it's worth something just because we've made others believe it, then someone is bound to shout "cheating is cheating!".
Many types of such "deception" survive for centuries. People have long got used to them and learned to use them carefully, often even for good. We call them words like "money", "shares", "obligations", "diplomas", "originals", "relics" and so on. It is possible that when the initial startup broth stops boiling and bubbling on the fire of opportunism, NFT will also be able to stand on a par with the winning divorces.
Or, as an option, it will boil away and splatter everything around so that no one will want to touch this topic for a long time. With technologies that "shoot" prematurely, this happens all the time.
The idea of NFT boils down to the fact that instead of interchangeable tokens that are used as electronic money, unique, non-interchangeable tokens are issued and recorded in the blockchain. Such a token is no longer a currency, but an individual entity, and each one has its own price. In this case, the token can be associated with a certain product and thus transfer the properties of the token to it.
Information about each token transfer is also recorded in the blockchain, so that it is known who the owner of the product is at the moment, and a double sale is not possible. The products themselves are usually digital, but how exactly they are stored and how they are associated with the token is a separate issue, and different platforms solve it differently.
That's the whole theory. Now look at this fat guy in the bear suit and tell him that paying a little over five thousand dollars for him is a normal, sensible idea.
In the full version, it is animated, but this does not make it any easier to relate it to the price tag. The secret lies in the fact that such "chubbikovs" were generated by 10 thousand pieces and not a single chubbikom more. Buyers are guided by a simple logic: if there is a limited amount of something, then it will only become more expensive — just like, for example, Bitcoin. And if you see a serious flaw in this logic, then do not worry this is completely normal!
There are a lot of similar stories now. For example, the virtual worlds Decentraland and Cryptovoxels sell plots in the manner of Second Life, the collectible card game WAIFU Harem sells cards with anime girls, and the authors of the CryptoPunks project came up with the idea to draw and sell pixel avatars so that the treasure literally becomes the face of its owner.
The sites that sell digital art, primarily the Foundation and Nifty Gateway, were the loudest performers. Paintings and animated videos here go for millions of dollars.
How is it that no one sees the catch and people continue to spend a lot of money on something that is not clear? And do these people even exist? Let's get this straight.
NFT World Map
So far, the NFT market is the Wild West, but cowboys also need to navigate somehow. Let's go through the basics quickly to get a better understanding of what's going on. It is possible that in a year or two from the current realities will not remainthere's no sign of it, so check the article's publication date.
What's inside the NFT?
The technical basis of NFT is most often Ethereum, more precisely, the ERC-721 standard, according to which smart contracts are created that allow you to issue non‑interchangeable tokens. Some sites are considering switching to Tezos, as it requires less electricity-read more about this in the TQ Tezos post.
One of the most important features of Ethereum is the need to pay for "gas". This is a virtual fuel that is consumed during each operation with the blockchain — including the issue of new tokens. So an artist can spend, say, $ 50 to put the work up for auction, and then it will be sold for $ 5.
What do they sell using NFT?
Tokens can be divided into three large groups according to the categories of products that are sold using them.
- Art. An analog of traditional works of art. Actually, we will focus on this category in the article.
- Game items. For example, cards in collectible card games, unique characters, space in virtual worlds, and similar things. They differ in that they can be used in some way.
- Collectible items. Virtual cards, figurines, avatars, and other items of questionable utility that are specially created for collecting, but are issued in limited editions (and sometimes created algorithmically).
Gods Unchained-a collectible card game in the spirit of Magic the Gathering and Hearthstone
Collection of three-dimensional shoes on Rarible
Where is all this sold?
Platforms can be divided into two broad groups: those that are curated and those that do not impose any restrictions. Among the first — SuperRare, Nifty Gateway, Foundation, KnownOrigin, MakersPlace. Free ad platforms - OpenSea, Rare, Mintable, Portion, InfiNFT, Cargo. The difference between them is quite obvious the former keep track of what is displayed at them, the latter allow you to issue tokens to anyone who wants.
For artists, it is more profitable to get on Foundation or Nifty, since buyers closely monitor everything that appears there. Many platforms of this type (Nifty, KnownOrigin, MakersPlace) specialize in "drops", that is, limited-time sales of collections of famous artists. Nifty also allows the artist to earn royalties from resales.
OpenSea
As for sites like OpenSea and Rarible, they are more likely for those who advertise themselves. At the same time, OpenSea generally stands a little apart, since it not only allows you to issue tokens and trade them, but also acts as a backend for other platforms.
What is metaverse?
A term that can be used to distinguish the most stubborn dreamers of cryptocurrencies. They see an amazing new world in the ability to create their own currencies and sell digital assets for them. More precisely, even different worlds connected to each other by a market economy.
It is possible that there is something in this. However, in roughly the same words and with no less burning eyes, twenty-something years ago they talked about the Web and bought pixels on the Million Dollar Homepage. An amazing future may come, but some things may be delayed for another twenty years, and during this time the current investment will completely devalue.
BIG DEALS - BIG HYPE
From 2017 to 2021, the NFT world lived on its own and was mostly entertainment for the jaded bitcoin rich. But the first high-profile deals attracted the attention of a wide audience, and with it — and new money.
The first such deal was the sale of the Nyan Cat meme.
Its author Chris Torres put up a specially redrawn and improved version of the animated kitty at the Foundation auction and earned 300 ETH, or 637 thousand dollars at the current exchange rate.
Grimes
The heroine of the next high-profile episode is singer Grimes, known among other things for her famous entrepreneur husband and popular microblogger Elon Musk.
Grimes put up for auction Nifty a series of works WarNymph, which she created together with her brother, the artist Mac Boucher. Actually, Mac was responsible for the visual component, and Grimes composed the music for the short videos.
Animation with the track Grimes, which went to Nifty for $ 7,500
Total revenue for WarNymph was around $ 6 million. Some works were left in a single copy, others in hundreds of copies. Additional PR was provided by Musk. Where, in fact, to look for enthusiasts of such things, if not among his Twitter followers?
Bipl
The real turning point for NFT was the sale of the work Everydays: the First 5000 Days by Michael Winkelmann, better known by the pseudonym Beeple. The transaction amount is still an absolute record for NFT - $ 69.3 million. This is a lot even outside the cryptocurrency world: among the works sold during the artist's lifetime, there are only two that cost more. However, it is not only the price tag that is interesting here.
The work itself is also unusual. "The first 5000 days" is not just a picture, but a collage of five thousand images, each of which Bipl spent one day-hence the name. The result is a gigantic canvas that accumulates work over 13 and a half years.
Fragment of "The first 5000 days"
Another difference of this deal is the participation of the Christie's auction house. Although the Nifty platform was responsible for the technical side, formally the painting was sold in the usual, traditional way for big art. The buyer even received a token issued in the form of a physical souvenir. Apparently, the goal was precisely to convince collectors of the seriousness of the whole undertaking.
"The first 5000 days" and other Bipla works in the form of souvenirs
However, it was not some museum or owner of a private collection of traditional art who bought the painting in the end, but someone under the pseudonym Metakovan. It is noteworthy that this Meta-fan is the owner of an investmentfund that invests in NFT, and he has previously purchased Bipla paintings. By the way, even before the "5000 days" story, he sold his works for $ 3.5 million.
Banksy
Shortly before the Bipl story, Banksy was an unexpected participant in the NFT hype . Moreover, he himself was not involved in the event in any way. His work Morons (White), created in 2006, was bought by the Injective Protocol cryptocurrency company for 95 thousand dollars-specifically to put on a show and advertise its SuperFarm platform .
The painting was burned and the process was recorded on video. What partly repeated the trick of Banksy himself, who in 2018 sold the self-destructing painting "Girl with a balloon". Immediately after the sale, she shredded herself with a shredder built into the thick frame.
Banksy, however, wanted to mock the rich collectors, but the cryptostartappers had another idea — they burned the original, but signed a digital copy using NFT. And immediately arranged an auction, where a digital reproduction of Morons (White) went for 380 thousand dollars.
The idea here is simple: this ritual was needed to destroy the original and thus, as it were, transfer this status to the digital copy. So far, no one has repeated this trick. But if the fashion for burning originals for the glory of NFT suddenly starts, it will be an interesting development!
As for me, the level of irony here is simply unbearable. Banksy's painting depicts the same Christie's auction, and it is called an offensive word for a reason. On it, a heavily framed canvas with the inscription "I can't believe you assholes are buying this" is being auctioned off. Well, after migrating to NFT, this is even harder to believe!
Jack Dorsey
"Just setting up my twttr," wrote Twitter founder Jack Dorsey in 2006, and sent this line, in fact, to twttr (vowels were added to the name later), thus posting the first tweet. Almost exactly 15 years later, Dorsey put it up for sale through the Valuables platform.
The current supply is 1,630 ETH - around three million dollars. However, trading on Valuables can last indefinitely until the owner himself decides that the amount suits him.
Another interesting feature of this platform is that the author of a tweet cannot put it up for sale himself. Only the reader can make a suggestion about this. They assign a starting amount and leave a specially generated link in the comments. The author of the tweet, if he likes this idea, starts the auction.
Dorsey's historic tweet is now leading the price by a huge margin. For example, Elon Musk's tweets are still worth only tens of thousands of dollars, not millions.
By the way, the most popular topic here is jokes about cryptocurrencies. So if you have a suitable vintage tweet, then the first buyer may be knocking soon.
And others
Not every transaction is accompanied by the same hype, although the amounts are sometimes impressive. For example, an artist named Pak sold his work to Finite in mid-March for 444 ETH - almost a million dollars.
Finite
The gold rush has not spared the Russian creators. For example, their most famous works were exhibited by Gudim (his meme Drowning High Five went for about five thousand dollars) and Duran-the famousGnvoerk brought him in the region of four thousand dollars at the current exchange rate of ether.
Even more successful is the sale of the work of the Pussy Riot group, which is widely known abroad. Pieces of clips go for tens of thousands of dollars, and the first one was sold for 100 ETH, or more than 200 thousand.
NFT ISSUES
NFT enthusiasts like to respond to all doubts with phrases like "you just don't understand". A new reality has arrived, they say, and those who do not understand it will simply remain grumbling and spoiling the air on the sidelines of history. However, it's not too late to come to your senses, get your savings, convert them to "ether" and have time to jump into the last car of the departing train.
With some effort, you can really convince yourself that everything is fine. But the more aggressively you are persuaded to accept something on faith, the stronger your suspicions should grow. Therefore, we will still try to understand, understand and find at least the most obvious flaws in NFT.
Problem 1: The copy is completely identical to the original
NFT advocates insist that authenticity is important in art and collecting in general. But is it possible to simply take it and synthesize it using digital tokens?
Here, for example, is the very" Starry Night " that Van Gogh painted while looking out of his bedroom window in the hospital for the mentally ill (where he ended up after the famous ear-cutting incident). People specifically go to New York and pay $ 25 for a ticket to the Museum of Modern Art, so that they can hang out in front of it, and not in front of the reproduction. Here they are, jostling, and I'm jostling with them.
And here is the very" Garden of Earthly Delights " that Hieronymus Bosch wrote back in 1500. People go to Madrid and go to the Prado Museum to see exactly the same triptych (despite the fact that it is much more convenient to look at it on the Internet). I went too.
And here's the trollface. The author of this masterpiece recently sold it through Foundation for $ 70,000.
You don't have to follow him anywhere, and yet you see exactly the same trollface as me on the screen. It is completely identical to what the author drew, just like any other image created on the computer. It was replicated indefinitely before the sale and will continue to be replicated after. Even after 500 years, it will still be the same, and no one will be impressed that it has been preserved and passed down to posterity through the epochs.
To be fair, there is still something similar to NFT in the art world - these are pictures signed by a photographer. You can print as many physical copies as you want from a digital image or from a film negative, so auctions usually sell cards signed by the photographer by hand. Here, as in the case of NFT, the signature itself is valuable, standing next to the work (for more information, see Jack Rasher's post).
Photographer Henry Levy's signature on the printed image
However, on photographs, at least the signature is made directly by the author's hand, and NFT is at best an analog of a stamp. But much more buyers should be concerned about the lack of a direct connection between the token and the product…
Problem 2. Weak connection with reality
It may seem that investing in an NFT is about the same as buying art objects. Alas, this is only a cleverly created illusion. When you pay for an NFT, you don't buy a product, but a token, and you won't own anything other than the token.
Do not confuse NFT with copyright either. Te is also an informational entity in its own way, but it is completely different. The rights to the sold work remain with the artist, and if you suddenly decide to use his picture for commercial purposes, the author will be able to successfully sue. It is considered, however, that this is not a bug, but a feature.
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There is a scheme in which the author will receive interest on subsequent transactions (for example, a fifth). Isn't it fair that not only the collector will get rich, but also the artist?
Another side effect of the virtuality of what is happening is the complexity of guarantees. Since we are dealing with non-physical entities, it becomes much easier to deceive the buyer. For example, the person selling the token may not be the author of the work. This seems to be an obvious scam, but since you are buying a token, and not a product, this trick will not even violate the law under certain conditions.
To ensure that this does not happen, the platform must also respond with its reputation. But while the platforms are multiplying daily, it's too early to talk about it. An unscrupulous developer may even indulge or collude with scammers.
Speaking of collusion! The classic thimble method is to use fake players to engage the public. The same thing sometimes happens in the world of big art: an artist or reseller comes to an agreement with a fake buyer and pretends to sell the work. And then they advertise the amount of the transaction in every possible way in order to raise the price for this and other products of their own. On the Internet, such things are easier to deal with, because instead of the real names of buyers, we see nothing that says nicknames, and transactions are made for cryptocurrency.
It is rumored that the Bipl "sold" (that is, transferred) "The First 5000 days" in this way. Since Metacovanus had already bought Bipla's work, the hype surrounding the deal made it much more expensive. When asked if he received the money, Bipl says, "100 percent, man!" But you can say anything.
At least in the case of this transaction, it is known that the Christie's auction received its share — about $ 15 million. On the Internet, intermediary platforms also take their share, but this does not prevent us from suspecting that the percentage of unfair transactions may be high. The accompanying expenses may seem like nonsense to businessmen compared to future profits.
Work of the Bipla on "Christie's"
The final touch is the lack of existing examples of how controversial issues are resolved through the courts. Something suggests that the judges will not be happy to face the bizarre world of tokens and blockchains, and the geographical dispersion of the entire system will give fraudsters an additional chance to escape from punishment.
Problem 3: Technical difficulties
"Out of curiosity, I dug up information about how NFTs actually link to media that you "buy", and my eyebrows went into the orbit of the moon", writes Jonty Waring on Twitter continues to conduct a detailed analysis of what is happening.
The root of the problem is that the token and the work are stored separately. For example, the Nifty Gateway platform works like this. A description is created in JSON format for a media file with a piece of art. The most important thing in it is a link pointing to the Nifty server, which, when requested, redirects the browser to the image stored in the IPFS distributed file system.
Does that sound convincing? If so, then don't be fooled. The fact is that the token you buy is a hash sum from the JSON file, and not from the product itself. The token is stored on the Ethereum blockchain. If something happens to Nifty, the connection between them will be severed. And IPFS is not a guarantee of reliability: information is stored here only while it is actively requested.
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A small caveat: IPFS may lose the file, but it leaves the option to download an exact copy of it again. The system stores the hash from the original file and checks it to avoid forgery. For more information about these nuances, see the @scanlime thread.
Both buyers and sellers, in fact, are completely dependent on the owners of the site. What if they turn out to be dishonest? For example, they can just declare some transactions invalid, and nothing will stop them from generating other tokens and selling the works again. Or suddenly the owners will want to roll back the blockchain, giving rise to a fork? This has already happened in the world of cryptocurrencies. Or here's another idea-start blackmailing customers by demanding that they pay for keeping links afloat. There are plenty of options!
While the reputation of trading platforms is at stake, it is unlikely that their owners will do anything that will scare off customers. But what if things get worse and there's nothing to lose? The painting in his personal vault would not have been affected by the collapse of the auction house, or the sudden decision of its owners to have plastic surgery and escape to Ecuador. NFT is very different in this respect.
Problem 4. It may not take off
"I have two cryptokits, I want to sell them and stop doing this, "I saved the link to this post on Reddit three years ago as an excellent demonstration of the problem with such stories. The author writes: "I paid $ 300 for them and I think I overpaid. Can someone show me how to sell them so I don't have to think about them anymore? And how much do they cost? How do I evaluate them at all? I'm ready to lose money, I just want to get it over with."
In response to him soobthey think that kittens now cost around $ 5 for both, and he laments: "Why did this happen?" Kittens, by the way, are still not sold.
The CryptoKitties project was one of the first cases when NFT attracted the attention of the general public. According to the idea of the developers, players were supposed to acquire and cross cats, breeding rare breeds. In reality, it turned into a typical pyramid. Only their creators and first breeders earned money on cryptokits. And most buyers, as happens in such cases, were left with illiquid assets in their hands, as soon as the hype subsided and the influx of suckers began to dry up.
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The developers of CryptoKitties (Dapper Labs) avoided high-profile accusations of fraud, because they cleverly came up with the idea of calling what is happening a game. Kittens, they say, are bought for fun, and if someone wanted to seriously invest in them and lost money, then this is their problem.
Artistic works, unlike endlessly breeding kittens, at least are released either in one copy or in a limited edition. However, nothing insures them from oblivion. If public interest in the technology suddenly begins to wane, prices will go into a tailspin and may never return.
Traditional art genres are associated with similar risks the paintings of a fashionable artist can also be overrated. But at least it doesn't happen that the paintings will be overrated in principle, or in a couple of years everyone will decide that the sculptures are bullshit. With NFT, and even more so with some specific sites-it's easy! You don't have to worry about artists - they will easily move to a new place, but expensive purchases will not.
HOW WILL IT END?
If you take your mind off the crazy money that this whole thing revolves around, it becomes a little easier. Admittedly, while I was collecting material for the article, flipping through Foundation, Nifty and SuperRare was a pleasure. Everything is so fresh, fashionable and cool moves that just ah!
Previously, collections of memes, GIFs, and juicy renderings were more likely the domain of Tumblr and Pinterest enthusiasts, but now the latest forms of digital art are flourishing at virtual exhibitions under the supervision of specialists. So I would like to wish success to the pioneers – let them do with dusty galleries the same thing that Wikipedia did with Britannica and BSE. The ability to pay talented artists for their work is an important step towards this goal.
Of course, some of the problems I listed can be solved, and with the remaining ones, find ways to somehow get along. But this will not happen immediately. NFT is called "a unique phenomenon at the intersection of virtual and real", but its reverse side will be unique problems at the intersection of technical failures and ordinary criminality.
There is no need to go far for examples: both cryptocurrencies and ICOs experienced a similar sharp start, which soon turned into a series of high-profile scandals and bitter disappointments. Stories like Mt. Gox or The DAO are sure to repeat themselves in the NFT world - you can even figure out where the gap will go at the seams.
Well, in the end, NFT is a scam in the broadest sense of the word. If we put a price on something that can't be immediately useful, and then it's worth something just because we've made others believe it, then someone is bound to shout "cheating is cheating!".
Many types of such "deception" survive for centuries. People have long got used to them and learned to use them carefully, often even for good. We call them words like "money", "shares", "obligations", "diplomas", "originals", "relics" and so on. It is possible that when the initial startup broth stops boiling and bubbling on the fire of opportunism, NFT will also be able to stand on a par with the winning divorces.
Or, as an option, it will boil away and splatter everything around so that no one will want to touch this topic for a long time. With technologies that "shoot" prematurely, this happens all the time.
