Non-Fungible Tokens are a real mind fuck. It forces the question—why does art have value and where does the value reside?
In traditional fine art, the artwork and the stamp of authenticity are fused as one. When you buy a Picasso, the signature is embedded in the artwork. Some artworks come with a separate certificate of authenticity. When the artwork is sold, the buyer gets both the art and the certificate. If the artwork is not provably authentic, it is worthless. Likewise, the certificate is worthless without the art.
NFTs de-couple the art and the certificate. The art itself is often just a high resolution JPEG stored on the public cloud. The certificate is an ERC-721 token on the ethereum blockchain. The JPEG has no digital protection of any kind and can be replicated infinite times. The certificate is protected by strong cryptography and cannot be replicated.
When an NFT is sold, in theory the buyer gets both the art and the certificate. But in practice, they are really buying the certificate. The underlying artwork is just a file in the cloud—anyone with the link can download it, replicate it, and enjoy it. But only the buyer gets the certificate—the string of magic numbers that say—I am the true owner of this work.
NFTs are a mind fuck because they decouple the art from the signature. Never in history has an artwork and the abstract idea of its authenticity been de-coupled. When this occurs, where does value reside? Common intuition would say the value resides in the artwork. Empirical evidence—in the form of people voting with their wallets—suggests the value resides in the signature.
What do “signature”, “certificate”, and “authenticity” mean? It is the artist’s declaration that “this is a genuine article of my work”. A Picasso that has a perfect chain of evidence proving its authenticity is worth millions. A perfect replica without proof of authenticity is worth nothing. The fact that both pictures have equal “utility” as wall decorations do not influence their respective value.
At the end of the day, NFTs have value because society values the artist’s intention. Each NFT is minted by the artist. It is the artist saying: “here is my work, there is only one of this piece1, and here is the secure token to prove it.” Society respects this narrative and pays handsomely for it.
Someone who stumbles upon the source file, copies it, then tries to sell it will find no buyer because the artist did not authorize the new copy. It is a bootleg—a perfect bootleg—but a bootleg nonetheless. And society does not value bootlegs.
Ultimately, NFTs prove that society respects artists.
Credit goes to Nic Carter and Griffin Cock Foster for inspiring this piece. Thanks to Nic Carter, JD, and Althéa Labré for providing comments and feedback.
Even when multiple copies are issued for the same work, each copy has a unique number. The lower numbered copies tend to be more valuable.