Crypto art— the art of making money?
Ho Yin Wong
Word counts: 1,771
Abstract
Is the rise of crypto art nothing more than a purely monetary phenomenon? In this essay, I will discuss the different tangents of crypto art and whether crypto art has value beyond its monetary worth.
Disclaimer
The points argued in the following are based on my own interpretations of the study findings, which may not represent others’ position/understanding. All personal investments should be made after thorough research and consideration.
Prologue
The Nyan Cat gif went viral again after a series of intense bidding on the blockchain, the gif was sold online for 300 ETH, amounting to an equivalent of $69 Million US dollars. Not only was I surprised by the extreme figures transacted in cryptocurrency, but I am also curious about the popularity of memes as non-fungible commodities. After reading the articles about this bidding [1], I found crypto art transactions only transfers the ownership of the gif instead of the work itself. I was fascinated by the concept of ownership in digital art as opposed to conventional art auctions. While Christie’s and other auction houses have been dominating the art market [2], crypto art might also be an opportunity for common people to participate in the art market.
Definition
The main definition of crypto art is art trading with cryptocurrency. In order to facilitate easier comparisons between different genres, I will simply categorize all artworks as either non-crypto art or crypto art. Does the work become valuable due to its aesthetic value, or its commercial market value, especially after NFT circulation?
Value and price
For centuries, aesthetics value and monetary values of art have always been entangled, but remain to be very separate entities. For example, artistic value greatly influences one’s culture, education, life experience, and other contextual factors, and monetary values also contribute to the rarity of such work. However the goals diverge here: is art truly just a monetary transaction?
In pre-crypto times, art has stood a long history balancing between art and commerce, through middlemen, curators, galleries, and other infrastructures. A market structure was developed through many efforts. Market values were dependent on supply, demand, and other contextual factors. However, since the onset of crypto art, an artwork’s worth is only determined on its the financial value. While this is perhaps the result of mass media over emphasizing the investment opportunities within the crypto art market, this short-lived hype overshadows other values of crypto art.
The arbitrariness of market value assigned to art is multiplied when intersected with cryptocurrency. Referencing the report by OpenSea, market liquidity also plays an important role in the crypto art market [4]. Unfortunately, crypto art remains to be a speculative market with its focus primarily on monetary investments.
Sustainability
Besides the Nyan Cat phenonemon, the fluctuating prices of crypto art is indeterminate of the true value of such artwork. Could crypto art also be seen as merely a new form of tulip mania? According to this article [3], the answer is maybe.
From this, we can infer that crypto art is not simply trading art with cryptocurrency. What is important about crypto art is the idea of NFTs (Non-fungible tokens). Referencing the blockchain, an entity’s uniqueness is determined by the evidence hard-written in the code on everyone’s computer. With this ‘patina’, it is impossible to fabricate a fake work of art. The artwork’s non-fungible quality then, becomes its authenticity. On that account, crypto art becomes an efficient way to circumvent authorities who were previously responsible for identifying whether an artistic work is genuine or reproduced. Bypassing forensic expertise through art transactions, crypto art may seem convenient to lots of art buyers. As art auction houses have allegedly sold forgeries[5], NFTs offer a great insurance to both collectors and artists avoiding scams. Non-fungible tokens play an absolute neutral role to the conventional transaction systems of art auctions. Crypto art, then, becomes a trust-worthy platform for doing trade, making it a reliable platform for future transactions.
Besides extra protection from false works, another merit of NFTs rely on its accessibility to the market. Anyone can put their work on the marketplace. The openness and inclusivity of crypto art is promising: artists no longer have to be well known, as the artist’s own reputation becomes less tied to the value of their artwork. Moreover, it is always good to have more outlets for artworks to reach to the public.
Limitation
If blockchain transactions is reliable, then why are people hesitating to give it a try? Owing to the fact that NFTs cause a certain degree of environmental impact [6], many eco institutions have expressed their interest against these blockchain environmental costs. To complete a transaction, there are specific requirements to meet with the hardware. Different cryptocurrencies also have their own mining processes, some may limit its fungibility. As for bitcoin, the most popular cryptocurrency right now, this currency adopts the mechanism called “proof of works”. If your computer processes more data, your transaction will be prioritized. Simply speaking, the higher computational power, the quicker the transaction will be. As a result, blockchain transactions have simply become a race of computer hardwares. Along with the increase in demand for hardwares such as GPUs, manufacturers also catch up to release newer hardwares. As more people change hardwares to respond to technological developments, life cycles of hardwares are now further shortened.
On top of processor units, storage is also problem. Although the capacity of the storage has soared over the decades, becoming more readily affordable and portable to even devices such as mobile phones. Repositioning this in the blockchain, as each transaction generates loads of data, the storage of such data will also require tons of hard drives. Over time, these hard drives become electronic waste eventually, and their decomposition will also require so much extra cost.
As overwhelming as e-waste may sound, the electricity consumed by the blockchain is even more of an imminent issue. According to some eco institutions, it is indicated that the minting of NFTs produces about 211 kilograms of carbon dioxide. It is equal to an EU resident's electric power consumption for more than a month or a flight to Italy from the United Kingdom. There is no doubt that the pollution caused by crypto art is undeniable, so this is must be taken seriously.
Future
Learning from history and projecting it onto the future, perhaps we should also interrogate the medium of art. Paintings have always played an important role in art history, but there are thousands of pieces drawn with pigments containing toxic chemicals that harmful to creatures and the environment [7]. Are these pieces immediately evil? Obviously not. Is there room to improve? Definitely; We can find alternative materials like acrylic replacing oil but we will always need pigments to paint. This example may perhaps seem irrelevant, but one can imagine the blockchain as the practice of painting, and code as its pigments. While there’s no way to stop climate change and other environmental crises, alternative approaches can help us alleviate some of these costs. For instance, Memo Akten, a London-based digital artist, and computer scientist wrote an article [8] to offer some really constructive advice in the future directions for crypto art to be more eco-friendly. I believe this a good attitude to make our world better.
Moving one step backward, I believe that almost all human activities deprive us of environmental resources, as anthropocentrism has made us prioritize our own lives over the environment we live in. However, we can only try to help the environment for our own survival. Here, I would like to argue that the value of crypto art is not its assigned price, but it signals that the era of blockchain is coming and it is time for us to critically understand our impacts.
Crypto politics
From the past decade, we can see the blockchain’s popularity peaking, and the technologies that surround it mature with its rise. I would like to extend the discussion from crypto art to crypto politics, an edgy concept of using the blockchain for international governance. Last but not least, I would like to make a an art piece for the blockchain as an epilogue of this study.
A normal society’s governance is ruling by law and the law is regulated by the government, based on the trust in the government’s impartiality. Crypto politics will decentralize the power of the government. Every move from citizens will become a record that written in the blockchain, no more law, and contracts. Our real-world and the digital world will be inseparable than ever.
The camera on our phone is a machine eye to see our world that represents the border between reality and digital, so I decide to make a camera filter; when users press the record button, the broken screen animation will be played which confuse the users where is the border, is it still existing?
Below are examples of my friends taking video with the camera filter:
Bibliography
1. Michael Findlay, “The value of art : money, power, beauty”, 1945, 1-207
2. Linda Monsees, “Encryption and Democratic Practices in the Digital Era”, 2019, 1-162
Reference
[1] NFTs: The Method to the Madness of a $69 Million Art Sale - https://www.wsj.com/articles/nfts-the-method-to-the-madness-of-a-69-million-art-sale-11616164200
[2] How Christie’s and Sotheby’s dominate the $67 billion art world - https://www.cnbc.com/2019/11/02/how-christies-sothebys-phillips-land-the-most-expensive-art-deals.html
[3] Art’s NFT Question: Next Frontier in Trading, or a New Form of Tulip? - https://www.nytimes.com/2021/03/30/arts/design/nft-bubble.html
[4] OpenSea raises $23M to scale the largest marketplace for NFTs - https://opensea.io/blog/announcements/opensea-raises-23m-to-scale-the-largest-marketplace-for-nfts/
[5] A London Court Has Upheld a Ruling Ordering an Art Collector to Pay Sotheby’s $5.3 Million for Selling an Allegedly Forged Frans Hals - https://news.artnet.com/art-world/frans-hals-forgery-fairlight-1926818
[6] Blockchain and the environment - https://www.eea.europa.eu/themes/sustainability-transitions/drivers-of-change/blockchain-and-the-environment
[7] Your Paints May Contain Toxic Chemicals. Here’s How to Avoid Harming Yourself and the Environment - https://www.artsy.net/article/artsy-editorial-paints-toxic-chemicals-avoid-harming-environment
[8] A guide to ecofriendly CryptoArt (NFTs) - https://github.com/memo/eco-nft
[9] “Art is waste, definitely.” - https://www.euronews.com/green/2019/04/08/art-is-waste-definitely